Assigned to NREW FOR COMMITTEE
ARIZONA STATE SENATE
Fifty-Sixth Legislature, First Regular Session
FACT SHEET FOR S.B. 1271
hemp-derived products; regulation
Purpose
Updates the Legislature's findings and determinations regarding the legalization of
industrial hemp and outlines licensing, regulation and inspection requirements.
Background
The federal Agricultural Act of 2014 (2014 Farm Act) allows an institution of higher
education or a state department of agriculture to grow or cultivate industrial hemp if: 1) the
industrial hemp is grown or cultivated for purposes of research conducted under an agricultural
pilot program or other agricultural or academic research; and 2) the growing or cultivating of
industrial hemp is allowed under the laws of the state in which such institution of higher education
or state department of agriculture is located and such research occurs (2014 Farm Act).
Laws 2018, Chapter 287 established a state agricultural pilot program, and authorized
industrial hemp production, processing, manufacturing, distribution and commerce conducted by
licensed growers, harvesters, transporters and processors. The legislation established licensing and
regulation requirements of industrial hemp and the Industrial Hemp Trust Fund.
On December 20, 2018, the federal Agriculture Improvement Act of 2018 (2018 Farm Bill)
was enacted and federally authorized the production of hemp, and removed hemp and hemp seeds
from the U.S. Drug Enforcement Administration's schedule of Controlled Substances. Under the
2018 Farm Bill, the U.S. Department of Agriculture (USDA) must issue regulations and guidance
to implement various hemp production programs and to create a consistent regulatory framework
and federal oversight around the production of hemp (2018 Farm Act).
There is no anticipated fiscal impact to the state General Fund associated with this
legislation.
Provisions
Industrial Hemp Legalization
1. States that the purpose of the Legislature's findings and determinations regarding industrial
hemp is to allow commercial production of industrial hemp as authorized by federal law while
maintaining strict control of marijuana.
2. Authorizes the production, harvesting, transporting, processing, manufacturing and retailing
of industrial hemp in Arizona pursuant to rules and orders adopted by the Director of the
Arizona Department of Agriculture (AZDA). FACT SHEET
S.B. 1271
Page 2
3. Allows industrial hemp research to be conducted in Arizona under an exempt fee license issued
by the AZDA if industrial hemp produced does not enter the stream of commerce and is
disposed of pursuant to rules and orders adopted by the Director of the AZDA.
4. Allows hemp seed produced under an exempt fee license to be sold or distributed.
5. Declares the Legislature's intent that the adopted fees be used to fund AZDA activities in
regulating hemp-derived products.
Licensing and Regulation
6. Adds to the requirements of the Director of the AZDA:
a) overseeing and prescribing requirements for labeling and retail sale of hemp-derived
products in Arizona;
b) establish, rather than adopt, fees;
c) authorize qualified applicants to produce or manufacture industrial hemp; and
d) protect the health, safety and welfare of consumers.
7. Allows the Director of the AZDA or their designee to enter any public or private premises
during regular business hours to:
a) access regulated products and records; and
b) evaluate compliance.
8. Allows the Director of AZDA to seize and destroy any hemp-derived product that does not
comply with outlined rules and regulations.
9. Requires a manufacturer or retailer to obtain and apply for an industrial hemp license from the
AZDA pursuant to rules and orders adopted by the Director of the AZDA.
10. Exempts an industrial hemp retail license applicant from providing proof to the AZDA of
having a valid fingerprint clearance card for the purpose of validating applicant eligibility.
11. Validates an industrial hemp license for the year the industrial hemp license is issued, rather
than for one year.
12. Removes the ability for a member of an Indian tribe to apply for an industrial hemp license.
13. Requires the industrial hemp licensee to carry the licensing documents as evidence that the
industrial hemp was produced in compliance with prescribed rules and regulations, rather than
grown by a licensed grower.
14. Removes the requirements for a licensed grower to notify AZDA of the sale or distribution of
industrial hemp, the name and address of the person or entity receiving the industrial hemp, or
the amount of the industrial hemp sold or distributed.
Inspection
15. Requires official analysis, rather than analysis, by the State Agricultural Laboratory or a
certified laboratory of a representative sample taken by the Director of AZDA or their designee
during any physical inspection of an industrial site. FACT SHEET
S.B. 1271
Page 3
16. Allows, if the official analysis determines a crop contains within an acceptable margin of error
a Total Delta-9 Tetrahydrocannabinol (THC) Concentration that exceeds 3/10 percent on a
dry-weight basis or violates pesticide law, rather than an average Carboxylated Delta-9 THC
Concentration, the AZDA to take corrective action.
17. Allows the Total Delta-9 THC Concentration to be calculated by using:
a) a chromatograph technique that uses heat, such as gas chromatography, through which
THC Acid is converted from acid form to neutral form, known as THC; or
b) a liquid chromatograph technique that uses the conversion [Total THC = (0.877 X THC
Acid) + THC].
Definitions
18. Removes the definition of agricultural pilot program.
19. Adds to the definition of crop any industrial hemp that is grown under a single industrial hemp
license issued by the AZDA, any other USDA authorized industrial hemp program, Indian
tribe, U.S. Territory or an industrial hemp program under the authorization of the Director of
the AZDA or the USDA.
20. Removes the definition of hemp products.
21. Defines hemp-derived products as any product or by-products that are derived from the flower
or flower parts or any derivative, extract, cannabinoid, isomer, acid, salt or salt of isomers of
an authorized industrial hemp crop that is intended for human or animal consumption,
inhalation or topical application, not including:
a) hemp seed;
b) industrial hemp products not intended for human or animal consumption; or
c) any drug that does not qualify for an outlined exception.
22. Adds, to the definition of industrial hemp or hemp, the seeds and all derivatives, extracts,
cannabinoids, isomers, acids, salts and salts of isomers.
23. Defines industrial hemp products as the products and by-products made from the sterile seed,
the stem, the stalk or the immature plant of a crop, not including:
a) hemp seed;
b) hemp-derived products;
c) any hemp flower or flower parts; or
d) any derivative, extract, cannabinoid, isomer, acid, salt or salt of isomers of industrial hemp.
24. Adds to definition of the "licensee" a manufacturer or retailer with a valid license.
25. Defines manufacturer as an individual, partnership, company or corporation that is licensed by
the AZDA to receive industrial hemp or hemp-derived product components for manufacturing
hemp-derived products.
26. Defines retailer as an individual, partnership, company or corporation that offers for sale
hemp-derived products. FACT SHEET
S.B. 1271
Page 4
27. Defines Total Delta-9 THC Concentration as the value determined after the process of
decarboxylation, or the application of a conversion factor if the testing methodology does not
include decarboxylation, that expresses the potential Total Delta-9 THC Content derived from
the sum of the THC and Tetrahydrocannabolic Acid content and reported on a dry-weight
basis.
Miscellaneous
28. Deems it an affirmative action defense to any prosecution for the possession or cultivation of
narcotic drugs that the defendant is an industrial hemp licensee, or a designee or agent of a
licensee who is in compliance with outlined regulations.
29. Excludes an affirmative action defense to a charge of possession, sale, transportation or
distribution of narcotic drugs that is not industrial hemp.
30. Exempts the AZDA from rulemaking requirements for one year.
31. Becomes effective on the general effective date.
Prepared by Senate Research
February 7, 2023
RA/slp