2018: Governor Doug Ducey Signs Arizona Hemp Bill

On May 14th, 2018, Arizona Governor Doug Ducey signed Senate Bill 1098 into law, agreeing to fund a pilot program that allows certain organizations to cultivate industrial hemp. Hemp is the fibrous form of the cannabis plant. According to the bill, universities and others with licenses from the Arizona Department of Agriculture (AZDA) can grow, harvest, and process or transport industrial hemp as an agricultural product. Here are all the details on the new Arizona hemp bill.

About SB 1098

Senate Bill 1098 was an act to amend Title 3, Chapter 2, of the Arizona Revised Statutes, introduced to the state Senate in the 53rd Legislature in 2018. It was one of 347 new bills the state passed into law, going into effect on August 3rd, 2018. SB 1098 recommended an amendment to the law that would add Article 4.1 and amend five existing sections relating to industrial hemp and agricultural licensing.

When Gov. Ducey signed the bill, the following changes passed into law:

  • The state now authorizes an industrial hemp program, designed to research the market of industrial hemp, hemp seeds, and hemp products. The program will use $750,000 in state money to operate.
  • All growers, harvesters, processors, and other license-holders involved in the program must adhere to the rules and orders of the article.
  • According to the bill, no industrial hemp produced in the state may contain more than 0.3% THC (the psychoactive agent in cannabis).
  • Institutions of higher learning and the AZDA may develop and regulate industrial hemp and related products as for the purpose of research into its growth, processing, and marketing, as authorized by the Agricultural Act of 2014.
  • Licensed parties may now commercially grow, cultivate, and market industrial hemp as authorized by federal law. Parties may only plant hemp seed the AZDA authorizes for the program.
  • Industrial hemp is now an agricultural product, subject to AZDA regulation, in the state of Arizona.
  • The Program Director must adopt rules to oversee industrial hemp licensing, production, and management. Only those with a valid fingerprint clearance card may obtain a license.
  • The AZDA has the power to revoke or refuse to issue/renew an industrial hemp license for violating a state or federal law, or any rule or order from the Director.
  • The state has set up the Industrial Hemp Trust Fund to implement and support industrial hemp licensing in the future. It receives money from licensing fees and legislative appropriation. The Director is a trustee and administrator.

Parties involved in industrial hemp processes (including growers, harvesters, and transporters) must keep records of their processes, which directors have the right to audit or inspect to ensure Article compliance. The Director may also physically inspect industrial hemp sites and collect samples to validate compliance. Breaking any of the rules and requirements of SB 1098 could result in fines and penalties.

How Will the Hemp Bill Help Arizona?

The language of the bill explains why the bill passed into law: the legislature found that cultivating and using industrial hemp could help the “economy and agricultural vitality” of Arizona and believes that the government can regulate the production of industrial hemp in a way that doesn’t interfere with prior marijuana regulations. Gov. Ducey’s office says that 34 other states have passed similar industrial hemp laws and have seen benefits to their economies.

Hemp can create a variety of products, including paper, textiles, food, and construction materials. Gov. Ducey stated in a Tweet that he was “glad to sign a bill that could have positive economic impacts for #AZ.” He believes the new agricultural product will bring in more money for Arizona’s economy far into the future and hopes Arizona citizens will begin to reap the benefits of industrial hemp manufacturing over the next few years.