By: King of Uvalde, et al. (Senate Sponsor - Perry) H.B. No. 3948
(In the Senate - Received from the House May 5, 2021;
May 13, 2021, read first time and referred to Committee on Business &
Commerce; May 14, 2021, rereferred to Committee on Water,
Agriculture & Rural Affairs; May 21, 2021, reported adversely,
with favorable Committee Substitute by the following vote: Yeas 8,
Nays 0; May 21, 2021, sent to printer.)
Click here to see the committee vote
COMMITTEE SUBSTITUTE FOR H.B. No. 3948 By: Perry
A BILL TO BE ENTITLED
AN ACT
relating to the production and regulation of hemp and consumable
hemp products; providing administrative penalties; creating a
criminal offense.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 122.001(5), Agriculture Code, is amended
to read as follows:
(5) "Institution of higher education" and "private or
independent institution of higher education" have [has] the
meanings [meaning] assigned by Section 61.003, Education Code.
SECTION 2. Section 121.003, Agriculture Code, is amended by
adding Subsection (e) to read as follows:
(e) Not later than the 120th day after the date a change to a
state statute, federal statute, or federal regulation takes effect,
the department shall submit to the secretary of the United States
Department of Agriculture any amendments to the state plan
necessary to incorporate and implement the change.
SECTION 3. Subchapter A, Chapter 122, Agriculture Code, is
amended by adding Section 122.005 to read as follows:
Sec. 122.005. HEMP RESEARCH BY INSTITUTIONS OF HIGHER
EDUCATION. (a) The department shall issue a license to an
institution of higher education or private or independent
institution of higher education in this state that requests the
license.
(b) Notwithstanding any provision of this chapter or
department rule other than Subsection (c):
(1) an institution of higher education conducting
research involving hemp is not required to pay a fee collected by
the department under this chapter; and
(2) an institution of higher education or private or
independent institution of higher education conducting research
involving hemp:
(A) is not required to obtain from the department
a lot crop permit or other permit for each location where hemp is
grown;
(B) is not required to obtain preharvest testing
under Section 122.153 before harvesting plants, except as provided
by Subsection (c);
(C) may cultivate and handle varieties of hemp
seed and plants that are not certified or approved under Section
122.252;
(D) may collect and research feral hemp; and
(E) is not subject to Section 122.403(c) or (d).
(c) An institution of higher education or private or
independent institution of higher education may not sell or
transfer hemp to another person unless the institution complies
with the requirements of Sections 122.153 and 122.356.
(d) An institution of higher education or private or
independent institution of higher education may conduct research
involving hemp in conjunction with a license holder at a facility
designated by the license holder for research use only.
(e) Subsections (b)(2) and (c) apply to a license holder and
facility described by Subsection (d).
SECTION 4. Section 122.051, Agriculture Code, is amended by
adding Subsection (c) to read as follows:
(c) Not later than the 90th day after the date a change to
this chapter, a federal statute, or a federal regulation takes
effect, the department shall propose any rules necessary to
incorporate and implement the change.
SECTION 5. Section 122.055, Agriculture Code, is amended by
adding Subsection (c-1) to read as follows:
(c-1) The department by rule may adopt a different shipping
certificate, cargo manifest, or other requirement for the shipment
or transportation of a sample of hemp to:
(1) a testing laboratory; or
(2) another destination if the sample contains not
more than 15 grams of hemp and is accompanied by the results of a
laboratory test indicating the delta-9 tetrahydrocannabinol
concentration of the lot or plot from which the sample was taken.
SECTION 6. Section 122.151, Agriculture Code, is amended by
adding Subsection (g) to read as follows:
(g) A laboratory that performs testing required by this
chapter shall report the delta-9 tetrahydrocannabinol
concentration, the total tetrahydrocannabinol concentration, and
the concentration of any other federally regulated cannabinoid of
the sample on a dry weight basis and the measurement of uncertainty
in the test result. The measurement of uncertainty must comply with
International Organization for Standardization ISO/IEC 17025 or a
comparable or successor standard and any provisions of federal law
governing the measurement of uncertainty. For purposes of this
chapter, the delta-9 tetrahydrocannabinol concentration of the
sample is the lowest possible value given that measurement of
uncertainty.
SECTION 7. Section 122.201(a), Agriculture Code, is amended
to read as follows:
(a) A license holder shall harvest the plants from a plot
not later than the 30th [20th] day after the date a preharvest
sample is collected under Section 122.154 unless field conditions
delay harvesting or the department authorizes the license holder to
delay harvesting. This subsection does not prohibit the license
holder from harvesting the plants immediately after the preharvest
sample is collected.
SECTION 8. Section 122.202, Agriculture Code, is amended by
adding Subsection (c) to read as follows:
(c) The delta-9 tetrahydrocannabinol concentration shall be
determined as provided by Section 122.151(g).
SECTION 9. Subchapter E, Chapter 122, Agriculture Code, is
amended by adding Section 122.203 to read as follows:
Sec. 122.203. HARVEST WHILE LICENSE SUSPENDED OR REVOKED.
(a) A person whose license is suspended or revoked after planting
hemp plants may obtain preharvest or postharvest testing under
Subchapter D and may harvest the plants under Section 122.201 in the
same manner as a license holder.
(b) The department by rule shall establish fair and
objective standards for determining whether a person whose license
is suspended or revoked may use or sell plants harvested under
Subsection (a), based on the circumstances of the suspension or
revocation. Based on those rules, the department shall:
(1) prohibit a person from selling or using plants
harvested under Subsection (a) while the person's license is
suspended or revoked; or
(2) if the delta-9 tetrahydrocannabinol concentration
of the plants is not more than 0.3 percent on a dry weight basis,
allow a person to sell or use plants harvested under Subsection (a)
in the same manner as a license holder under Section 122.202 while
the person's license is suspended or revoked.
(c) A person whose license is reinstated may sell or use
plants harvested under Subsection (a) as provided by Section
122.202.
SECTION 10. The heading to Subchapter F, Chapter 122,
Agriculture Code, is amended to read as follows:
SUBCHAPTER F. HEMP SEED AND PLANTS
SECTION 11. Section 122.252, Agriculture Code, is amended
to read as follows:
Sec. 122.252. CERTIFICATION OR APPROVAL OF SEED AND PLANT
VARIETIES. (a) Subject to Subsection (b), the [The] department or
an entity authorized to certify seed and plants under Chapter 62
shall identify and certify or approve varieties of seed and plants
confirmed to produce hemp.
(b) The department or entity may not certify or approve a
variety of hemp seed or plant if the variety [seed] is tested and
confirmed to produce a plant that has delta-9 tetrahydrocannabinol
concentration of more than 0.3 percent on a dry weight basis. For
purposes of this subsection, the department may partner with a
private entity or an institution of higher education to test seed
and plant varieties for the purpose of certification or approval
under this section.
(c) The department may authorize the importation of hemp
seed and plant varieties certified in accordance with the law of
another state or jurisdiction that requires as a condition of
certification that hemp be produced in compliance with:
(1) that state or jurisdiction's plan approved by the
United States Department of Agriculture under 7 U.S.C. Section
1639p; or
(2) a plan established under 7 U.S.C. Section 1639q if
that plan applies in the state or jurisdiction.
(d) The department shall maintain and make available to
license holders a list of hemp seed and plant varieties [seeds]
certified or approved under this section.
SECTION 12. Subchapter F, Chapter 122, Agriculture Code, is
amended by adding Section 122.254 to read as follows:
Sec. 122.254. SEEDLINGS AND OTHER IMMATURE PLANTS. (a) In
this section, "immature plant" means a hemp seedling, clone, or
cutting that is not flowering and requires substantial cultivation
and further growth before the beginning of the period under Section
122.201(a) when the plant may be harvested.
(b) A person may transport into this state, and a license
holder may obtain and cultivate, immature plants propagated outside
this state if the plants are accompanied by shipping documentation
that:
(1) complies with any requirements of the state of
origin;
(2) indicates the grower of the immature plants is
licensed by the state of origin;
(3) lists the recipient license holder in this state
and the recipient's license number; and
(4) shows that the variety of the immature plants is
certified or approved under Section 122.252.
(c) A license holder may obtain and cultivate immature
plants propagated in this state by another license holder if the
plants are accompanied by the shipping certificate or cargo
manifest required by Section 122.055 that shows that the variety of
the immature plants is certified or approved under Section 122.252.
The immature plants are not subject to preharvest testing under
Section 122.153. The license holder shall maintain records, as
required by the department, that match the lot crop permit number
issued by the department for the location where the immature plants
were propagated with the lot crop number for the location where the
plants were cultivated.
(d) A license holder may transplant immature plants
propagated by the license holder from one plot to another plot
controlled by the license holder. The department by rule shall
waive the requirement that a license holder obtain a lot crop permit
for and may not require a license holder to pay any fee for a
greenhouse or other location used to propagate immature plants if
the plants are transplanted to another plot controlled by the
license holder and are not sold or transferred to another person.
The department by rule may waive the requirement that a person
obtain a shipping certificate or cargo manifest to transplant
immature plants from one plot to another plot operated by the
license holder.
SECTION 13. Section 122.403, Agriculture Code, is amended
by amending Subsection (a) and adding Subsection (e) to read as
follows:
(a) If the department determines that a license holder
negligently violated this chapter or a rule adopted under this
chapter, the department shall enforce the violation in the manner
provided by 7 U.S.C. Section 1639p(e) and 7 C.F.R. Section 990.6.
(e) A license holder is not subject to more than one
negligent violation related to cultivation per calendar year.
SECTION 14. Subchapter I, Chapter 122, Agriculture Code, is
amended by adding Section 122.4035 to read as follows:
Sec. 122.4035. PENALTIES FOR CULTIVATING HEMP WITHOUT A
LICENSE; CRIMINAL OFFENSE. (a) On determining that a person
violated Section 122.101, the department may:
(1) if the person has not previously received a
penalty under this section:
(A) issue a written warning to the person;
(B) impose an administrative penalty in the
amount of $500;
(C) require the person to obtain a license; and
(D) allow the person to continue to cultivate or
handle the hemp plants that are the subject of the violation,
harvest those plants, and, after obtaining the license, sell or use
those plants as provided by Section 122.202;
(2) if the person has received a penalty under
Subdivision (1) for a previous violation but has not previously
received a penalty under this subdivision:
(A) issue a second written warning to the person;
(B) impose an administrative penalty in the
amount of $500;
(C) require the person to obtain a license;
(D) seize and dispose of the hemp plants that are
the subject of the violation; and
(E) require the person to reimburse the
department for reasonable costs of disposal under Paragraph (D);
and
(3) if the person has received a penalty under
Subdivision (2) or this subdivision for a previous violation:
(A) refer the matter to the appropriate
prosecuting attorney for criminal prosecution under Subsection
(b);
(B) seize and dispose of the hemp plants that are
the subject of the violation; and
(C) require the person to reimburse the
department for reasonable costs of disposal under Paragraph (B).
(b) A person commits an offense if the person:
(1) violates Section 122.101; and
(2) has received a penalty under Subsection (a)(2) for
a previous violation.
(c) An offense under Subsection (b) is a Class B
misdemeanor.
SECTION 15. Subchapter A, Chapter 443, Health and Safety
Code, is amended by adding Sections 443.005 and 443.006 to read as
follows:
Sec. 443.005. CONSUMABLE HEMP PRODUCTS ACCOUNT. (a) The
consumable hemp products account is an account in the general
revenue fund administered by the department.
(b) The account consists of:
(1) appropriations of money to the account by the
legislature;
(2) public or private gifts, grants, or donations,
including federal funds, received for the account;
(3) fees collected under this chapter or under Chapter
431 as it applies to consumable hemp products;
(4) interest and income earned on the investment of
money in the account;
(5) penalties for violations of this chapter or
Chapter 431 as it applies to consumable hemp products; and
(6) funds from any other source deposited in the
account.
(c) The department may accept appropriations and gifts,
grants, or donations from any source to administer and enforce this
chapter and Chapter 431 as it applies to consumable hemp products.
Money received under this subsection shall be deposited in the
account.
(d) Money in the account may be appropriated only to the
department for the administration and enforcement of this chapter
and Chapter 431 as it applies to consumable hemp products.
Sec. 443.006. TETRAHYDROCANNABINOL CONTENT. (a)
Notwithstanding any other law, a person may not manufacture, sell,
or purchase a consumable hemp product in this state:
(1) that has a delta-9 tetrahydrocannabinol
concentration of more than 0.3 percent on a dry weight basis;
(2) that contains synthetically derived
tetrahydrocannabinols, as defined by department rule, including
synthetically derived acids, isomers, or salts of
tetrahydrocannabinol;
(3) that, in the form and quantity as packaged for
consumer use, is reasonably determined by the department to have an
intoxicating effect;
(4) that exceeds any federal limit for
tetrahydrocannabinol; or
(5) if additional tetrahydrocannabinol in a
concentration greater than 0.3 percent on a dry weight basis has
been applied to the product.
(b) Chapter 481 prevails to the extent of any conflict with
this section.
SECTION 16. Section 443.103, Health and Safety Code, is
amended to read as follows:
Sec. 443.103. APPLICATION; ISSUANCE. An individual or
establishment may apply for a license under this subchapter by
submitting an application to the department on a form and in the
manner prescribed by the department. The application must be
accompanied by:
(1) the physical address [a legal description] of each
location where the applicant intends to process hemp or manufacture
consumable hemp products [and the global positioning system
coordinates for the perimeter of each location];
(2) written consent from the applicant or the property
owner if the applicant is not the property owner allowing the
department, the Department of Public Safety, and any other state or
local law enforcement agency to enter onto all premises where hemp
is processed or consumable hemp products are manufactured to
conduct a physical inspection or to ensure compliance with this
chapter and rules adopted under this chapter;
(3) any fees required by the department to be
submitted with the application; and
(4) any other information required by department rule.
SECTION 17. Subchapter C, Chapter 443, Health and Safety
Code, is amended by adding Section 443.106 to read as follows:
Sec. 443.106. EXPEDITED LICENSING PROCESS. The department
by rule may provide an expedited licensing process for the
purchaser of a business that requires a license.
SECTION 18. Section 443.152, Health and Safety Code, is
amended by adding Subsection (d) to read as follows:
(d) The executive commissioner by rule may exclude a
substance that is generally recognized as having no risk of
contaminating a finished consumable hemp product, including a
microorganism or other substance that is inevitably destroyed or
removed while processing or manufacturing the product, from the
testing required under Section 443.151.
SECTION 19. Section 443.201, Health and Safety Code, is
amended by adding Subsection (c) to read as follows:
(c) A person may transport and deliver a consumable hemp
product to a consumer who purchased the product in compliance with
this chapter. The person transporting and delivering the consumable
hemp product is not required to:
(1) obtain a license under Section 443.101, unless the
person processes or manufactures the product delivered; or
(2) register under Section 443.2025, unless the person
sells the product delivered.
SECTION 20. Section 443.2025, Health and Safety Code, is
amended by amending Subsections (b), (d), and (f) and adding
Subsection (d-1) to read as follows:
(b) A person may not sell or distribute consumable hemp
products containing cannabinoids to consumers [cannabidiol at
retail] in this state, other than products generally recognized as
safe by the United States Food and Drug Administration, unless the
person registers with the department each location owned, operated,
or controlled by the person at which those products are sold. A
person is not required to register a location associated with an
employee or independent contractor described by Subsection (d).
(d) A person is not required to register with the department
under Subsection (b) if the person is:
(1) an employee of a registrant; or
(2) an independent contractor of a registrant who
sells the registrant's products to consumers [at retail].
(d-1) A person is required to register with the department
under Subsection (b) if the person, as an employee or independent
contractor of a person located outside this state who is not a
registrant, sells or distributes products covered by Subsection (b)
in this state.
(f) The department by rule may adopt a registration fee
schedule that establishes reasonable fee amounts for the
registration of:
(1) a single location at which consumable hemp
products containing cannabinoids [cannabidiol] are sold; and
(2) multiple locations at which consumable hemp
products containing cannabinoids [cannabidiol] are sold under a
single registration.
SECTION 21. Section 443.203, Health and Safety Code, is
amended by adding Subsection (c) to read as follows:
(c) A person who sells, offers for sale, or distributes a
consumable hemp product commits a false, misleading, or deceptive
act or practice actionable under Subchapter E, Chapter 17, Business &
Commerce Code, if the person:
(1) claims the product is made in this state and the
product contains any hemp that was not grown and processed in this
state solely by persons who hold the appropriate licenses under
Chapter 122, Agriculture Code, and this chapter;
(2) claims the product is "grown in Texas" and the
product was not grown in this state by a license holder under
Chapter 122, Agriculture Code; or
(3) claims the product is "processed in Texas" and the
product was not processed in this state by a license holder under
this chapter.
SECTION 22. Section 443.205(a), Health and Safety Code, is
amended to read as follows:
(a) Before a consumable hemp product, including hemp plant
material, that contains or is marketed as containing more than
trace amounts of cannabinoids may be distributed or sold, the
product must be labeled in the manner provided by this section with
the following information:
(1) batch identification number;
(2) batch date;
(3) product name;
(4) a uniform resource locator (URL) that provides or
links to a certificate of analysis for the product or each
hemp-derived ingredient of the product;
(5) the name of the product's manufacturer; and
(6) a certification that the delta-9
tetrahydrocannabinol concentration of the product or each
hemp-derived ingredient of the product is not more than 0.3
percent.
SECTION 23. Section 122.403, Agriculture Code, as amended
by this Act, and Section 122.4035, Agriculture Code, as added by
this Act, apply only to conduct that occurs on or after the
effective date of this Act. Conduct that occurred before that date
is governed by the law in effect when the conduct occurred, and the
former law is continued in effect for that purpose.
SECTION 24. This Act takes effect September 1, 2021.
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