SF 2352 (LSB 5341SV (2) 90)

SENATE FILE 2352

BY  COMMITTEE ON JUDICIARY

(SUCCESSOR TO SSB 3159)

A BILL FOR

An Act providing for the regulation of hemp and hemp products, providing penalties, and making penalties applicable.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

DIVISION I
IOWA HEMP ACT

    Section 1.  Section 204.2, Code 2024, is amended by adding the following new subsections:
   NEW SUBSECTION.  01.  “Advertise” means to present a commercial message in any medium, including but not limited to print, radio, television, sign, display, label, tag, or articulation.
   NEW SUBSECTION.  6A.  “Distribute” means to transfer possession.
   NEW SUBSECTION.  15A.  “Registrant” means a person who is registered with the department of health and human services pursuant to section 204.7.
    Sec. 2.  Section 204.2, subsection 2, paragraph c, Code 2024, is amended to read as follows:
   c.  A hemp product is deemed to be a consumable hemp product if it is any of the following all of the following apply:
   (1)  It is any of the following:
   (a)  Designed by the processor, including the manufacturer, to be introduced into the human body.
   (2)  (b)  Advertised as an item to be introduced into the human body.
   (3)  (c)  Distributed, exported, or imported, offered for sale, or distribution sold to be introduced into the human body.
   (2)  Its maximum tetrahydrocannabinol concentration is less than or equal to the maximum tetrahydrocannabinol concentration allowed under section 124.204, subsection 7.
    Sec. 3.  Section 204.7, subsection 8, paragraph a, subparagraph (3), Code 2024, is amended to read as follows:
   (3)  The consumable hemp product complies with packaging and labeling requirements, which shall be established by rules adopted by the department of health and human services by rule.
    Sec. 4.  Section 204.7, subsection 8, paragraph a, Code 2024, is amended by adding the following new subparagraphs:
   NEW SUBPARAGRAPH.  (4)  The consumable hemp product complies with restrictions upon the sale or other distribution of a consumable hemp product established by rules adopted by the department of health and human services.
   NEW SUBPARAGRAPH.  (5)  The consumable hemp product meets requirements for total delta-9 tetrahydrocannabinol potency on a per serving and per container basis, as set forth by rules adopted by the department of health and human services.
    Sec. 5.  Section 204.7, subsection 8, Code 2024, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  0b.  (1)  A person is engaged in the retail sale of a consumable hemp product, if any of the following apply:
   (a)  The person offers to distribute a consumable hemp product to a consumer in exchange for consideration.
   (b)  The person is an owner of a business that distributes consumable hemp products to consumers in exchange for consideration.
   (c)  The person is a business that distributes consumable hemp products to consumers in exchange for consideration and presents a consumable hemp product to a consumer in the form of a gift.
   (2)  A person, including a business, is engaged in the sale of a consumable hemp product regardless of whether the person is registered with the department of health and human services as provided in this section.
    Sec. 6.  Section 204.12, subsection 1, Code 2024, is amended to read as follows:
   1.  A Unless another civil penalty is otherwise provided in this chapter, a person who violates a provision of this chapter is subject to a civil penalty of not less than five hundred dollars and not more than two thousand five hundred dollars. The department shall impose, assess, and collect the civil penalty. Each day that a continuing violation occurs may be considered a separate offense.
    Sec. 7.  Section 204.14A, Code 2024, is amended by adding the following new subsection:
   NEW SUBSECTION.  1A.  A person shall not possess, use, manufacture, market, transport, deliver, or distribute a consumable hemp product if it is capable of inhalation by using either method described in subsection 1, paragraph “b” or “c”.
    Sec. 8.  Section 204.14A, subsection 2, Code 2024, is amended to read as follows:
   2.  A person who violates subsection 1 or 1A is guilty of a serious misdemeanor.
    Sec. 9.  NEW SECTION.  204.14B  Sale of consumable hemp product —— failure to register —— civil penalty.
   1.  A person engaged in the retail sale of a consumable hemp product in this state without being registered with the department of health and human services as required in section 204.7 shall be subject to a civil penalty of not more than ten thousand dollars. The department of health and human services shall impose, assess, and collect the civil penalty. Each day that a continuing violation occurs may be considered a separate offense.
   2.  All civil penalties collected under this section shall be deposited into the general fund of the state.
   3.  A person in violation of this section is not also subject to a civil penalty as provided in section 204.12.
    Sec. 10.  NEW SECTION.  204.14C  Sale of consumable hemp product —— failure to register —— criminal penalty.
   1.  a.  A person engaged in the retail sale of a consumable hemp product who is not registered with the department of health and human services as required in section 204.7 commits a serious misdemeanor.
   b.  A person engaged in the retail sale of an item advertised as a consumable hemp product that is not a consumable hemp product commits a serious misdemeanor.
   2.  This section shall be presumed not to be in conflict with or limit a prosecution for a violation of any other provision of law, including but not limited to chapter 124 or 21 U.S.C. ch. 13.
    Sec. 11.  NEW SECTION.  204.14D  Persons under legal age —— criminal offense.
   1.  A person shall not sell, give, or otherwise distribute a consumable hemp product to a person under twenty-one years of age.
   2.  A person who violates subsection 1 is guilty of a simple misdemeanor.
    Sec. 12.  NEW SECTION.  204.14E  Persons under legal age —— scheduled violation and community service.
   1.  A person under twenty-one years of age shall not consume, possess, purchase, or attempt to purchase a consumable hemp product.
   2.  A person who violates subsection 1 shall be subject to a scheduled violation in the form of a civil penalty pursuant to section 805.8C, subsection 3, paragraph “d”.
   3.  In addition to the imposition of a civil penalty as provided in subsection 2, a person who violates subsection 1 shall be subject to a court appearance as provided in section 805.10. The court shall sentence the person to perform a specified number of hours of unpaid community service as deemed appropriate by the court subject to the following:
   a.  For a first violation, eight hours, unless waived by the court.
   b.  For a second offense, twelve hours.
   c.  For a third or subsequent offense, sixteen hours.
   4.  A person who violates this section is not subject to a civil penalty as provided in section 204.12.
   5.  A person does not violate subsection 1 by possessing a consumable hemp product if the person is employed by a registrant and the person is possessing the consumable hemp product as part of their employment.
    Sec. 13.  NEW SECTION.  204.14F  Persons under legal age —— exception —— cooperation with department of public safety or local law enforcement agency.
   1.  a.  A person who would otherwise act to commit an offense under section 204.14D is not guilty of that offense if the person acts under the direction or consent of the department of public safety or a local law enforcement agency as part of an enforcement investigation.
   b.  A person who would otherwise act to commit a violation under section 204.14E is not subject to that offense if the person acts under the direction or consent of the department of public safety or a local law enforcement agency as part of an enforcement investigation.
   2.  In enforcing this section, the department of public safety or a local law enforcement agency shall take all measures necessary to ensure that a consumable hemp product is not introduced into the body of a person under the age of twenty-one.
   3.  Notwithstanding chapter 22, any personal information identifying the person committing an offense or violation as described in this section shall be confidential.
    Sec. 14.  NEW SECTION.  204.15A  Hemp products —— order of confiscation and disposal.
   1.  The department of health and human services may order the confiscation and disposal of a hemp product based on any of the following:
   a.  It is falsely advertised, sold, or distributed as a consumable hemp product.
   b.  It exceeds the maximum tetrahydrocannabinol concentration allowed under section 124.204, subsection 7, or this chapter.
   c.  It is a consumable hemp product manufactured, sold, or distributed by a person who is not registered with the department of health and human services as is required in section 204.7.
   2.  The department of health and human services shall act in consultation with the department of public safety. The department of health and human services may request assistance from the department of public safety or a local law enforcement agency as necessary to carry out the provisions of this section. The department of health and human services, upon request, shall deliver any sample of the item to the department of public safety or a local law enforcement agency.
   3.  A person required to be registered with the department of health and human services as provided in section 204.7 shall pay the department of health and human services all actual and reasonable costs of the destruction of the item. If that department assumes any amount of the costs, it may charge that amount to the person.
    Sec. 15.  Section 805.8C, subsection 3, Code 2024, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  d.  (1)  For violations of section 204.14E, the scheduled fine is as follows:
   (a)  If the violation is a first offense, the scheduled fine is seventy dollars.
   (b)  If the violation is a second offense, the scheduled fine is one hundred thirty-five dollars.
   (c)  If the violation is a third or subsequent offense, the scheduled fine is three hundred twenty-five dollars.
   (2)  The fine shall be imposed as a civil penalty.
   (3)  The crime services surcharge under section 911.1 shall not be added to the penalty, and the court costs pursuant to section 805.9, subsection 6, shall not be imposed.
   (4)  Notwithstanding section 805.12, any civil penalty paid under this subsection shall be retained by the city or county enforcing the violation. 
    Sec. 16.  Section 805.10, subsection 1, Code 2024, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  e.  When a violation charged involves the consumption, possession, purchase, or attempt to purchase of a consumable hemp product as provided in section 204.14E, for which there is a community service sentence.
DIVISION II
REGULATION OF ALCOHOLIC BEVERAGES

    Sec. 17.  Section 123.49, subsection 2, Code 2024, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  l.  Sell, give, or otherwise supply any alcoholic beverage containing tetrahydrocannabinol as described in chapter 124, including any isomers, derivatives, or analogs of tetrahydrocannabinol, whether naturally occurring or synthesized, to any person on the licensed premises.
    Sec. 18.  NEW SECTION.  123.49A  Restriction on alcoholic beverages containing tetrahydrocannabinol.
   A holder of a license, permit, or certificate of compliance issued by the department under this chapter shall not manufacture, import, or sell at wholesale in this state an alcoholic beverage containing tetrahydrocannabinol as described in chapter 124, including any isomers, derivatives, or analogs of tetrahydrocannabinol, whether naturally occurring or synthesized.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   BACKGROUND. This bill amends Code chapter 204, the “Iowa Hemp Act” (IHA) (Code section 204.1), authorizing the production of a certain type of cannabis (sativa L.) and the sale of products processed from hemp (Code section 204.7). Hemp is defined as composed of a species of cannabis (sativa L.) having a maximum concentration of delta-9 tetrahydrocannabinol (THC) that does not exceed three-tenths of 1 percent on a dry weight basis (Code section 204.2). 
   The IHA removed hemp from the list of schedule I controlled substances and the excise tax imposed on the sale of controlled substances (see Code chapters 124 and 453B). The applicable criminal penalty for an offense under those Code chapters ranges from imprisonment for not more than six months or a fine of not more than $1,000 to 50 years imprisonment and a fine of not more than $1 million (see Code sections 124.401 and 453B.12). 
   In order for cannabis to be classified as hemp and not a controlled substance, a person must comply with IHA requirements. The IHA in turn must satisfy certification requirements adopted by the United States department of agriculture (USDA) under the federal Agriculture Improvement Act of 2018 (federal hemp law) (Pub. L. No. 115-334), which allows states and tribes to assume primary regulatory authority over its production, including harvest, storage, and distribution. The IHA and the USDA has designated Iowa’s department of agriculture and land stewardship (DALS) as primarily responsible for regulating hemp production in cooperation with the department of public safety (DPS). 
   The IHA defines a hemp product as derived from or made by processing hemp or parts of hemp. Generally, the IHA allows a person to engage in the retail sale of a hemp product so long as the hemp was produced in this state or another state in compliance with the federal hemp law (Code section 204.7). By its own terms, the federal hemp law is not construed to affect or modify certain federal law, including the federal Food, Drug, and Cosmetic Act (21 U.S.C. §301 et seq.). Generally, the United States food and drug administration (FDA) regulates human foods and additives, dietary supplements, drugs, and cosmetics (see 7 U.S.C. §1639r), but the FDA has not adopted a comprehensive regulatory framework. In the meantime, the IHA recognizes a consumable hemp product (CHP) that is metabolized when introduced into the human body, including by ingestion or absorption but excluding inhalation (Code sections 204.2 and 204.14A). A person is prohibited from possessing, using, manufacturing, marketing, transporting, delivering, or distributing harvested hemp or a hemp product if the intended use is introduction into the body by an article that utilizes an electronic, chemical, or mechanical process, or a device such as a cigarette, cigar, cigarillo, or pipe. 
   The IHA requires a person manufacturing or selling a CHP to register with the department of health and human services (HHS) (Code section 204.7 and 641 IAC ch. 156). HHS’s regulations include packaging and labeling requirements. 
   A person violating the IHA is subject to a civil penalty of not less than $500 and not more than $2,000 (Code section 204.12). DALS may impose, assess, and collect the civil penalty (Code section 204.12). DALS in cooperation with DPS or a local law enforcement agency (county sheriff or municipal police department) may also confiscate and destroy illegally produced hemp. DALS or the attorney general may seek injunctive relief in order to restrain a person violating the Code chapter by petitioning the district court (Code section 204.13). The injunction could address either hemp or a hemp product.
   BILL’S PROVISIONS —— CONSUMABLE HEMP PRODUCTS (THC POTENCY).  The bill authorizes HHS to adopt rules regulating the sale of consumable hemp products. The bill also authorizes HHS to adopt rules setting forth the THC potency of consumable hemp products on a per serving and per container basis (amended Code section 204.7).
   BILL’S PROVISIONS —— CONSUMABLE HEMP PRODUCTS (USE IN INHALATION —— CRIMINAL PENALTY). The bill prohibits a person from possessing, using, manufacturing, marketing, transporting, delivering, or distributing a CHP if it is capable of inhalation by using an article or device (Code section 204.14A). A person in violation of the provision is guilty of a serious misdemeanor. A serious misdemeanor is punishable by confinement for no more than one year and a fine of at least $430 but not more than $2,560.
   BILL’S PROVISIONS —— CONSUMABLE HEMP PRODUCTS (CRIMINAL AND CIVIL PENALTY FOR FAILURE TO REGISTER). The bill provides that a person engaged in the retail sale of a CHP who is not registered with HHS commits both a serious misdemeanor and is subject to a civil penalty assessed as an administrative remedy (new Code sections 204.14B and 204.14C). The civil penalty cannot exceed $10,000, with each day of a violation constituting a separate offense.
   BILL’S PROVISIONS —— CONSUMABLE HEMP PRODUCTS (SALE TO MINORS —— CRIMINAL PENALTY AND SCHEDULED VIOLATION). The bill provides that a person who sells or otherwise distributes a CHP to a person under the age of 21 is guilty of a simple misdemeanor (new Code section 204.14D). A simple misdemeanor is punishable by confinement for no more than 30 days and a fine of at least $105 but not more than $855. The bill also provides that a person under the age of 21 is prohibited from possessing or purchasing a CHP (new Code section 204.14E). The penalty is a scheduled violation. The first offense is subject to a scheduled fine of $75, the second offense is subject to a scheduled fine of $135, and the third and each subsequent offense is subject to a scheduled fine of $325. Each fine is a civil penalty (amended Code section 805.8C). In addition, the person subject to the violation may also be sentenced to perform a number of hours of community service; ranging from 8 to 16 hours depending upon the number of previous offenses committed. The bill provides an exception for an offense committed by a person under the age of 21 acting in cooperation with the DPS or a local law enforcement agency (new Code section 204.14F).
   BILL’S PROVISIONS —— CONSUMABLE HEMP PRODUCTS (CONFISCATION AND DISPOSAL). The bill authorizes HHS to order the confiscation and disposal of a hemp product under three circumstances: it is falsely advertised, sold, or distributed as a consumable hemp product; it exceeds the maximum THC limit; or it is a consumable hemp product manufactured, sold, or distributed by a person who is not registered as required (Code section 204.7). The person may be assessed costs associated with the order (Code section 204.15A).
   BILL’S PROVISIONS —— CONSUMABLE HEMP PRODUCTS (REGULATION OF ALCOHOLIC BEVERAGES). The bill regulates persons engaged in the business of selling alcoholic beverages (wine, beer, or spirits) in this state, including under a license, permit, or certificate issued by the department of revenue (Code chapter 123). The bill prohibits such a person from manufacturing, selling, giving, importing, or otherwise supplying any alcoholic beverage containing tetrahydrocannabinol. By operation of law, a person violating these provisions is subject to criminal penalties set forth under Code sections 123.90 and 123.91.