BOARD OF SUPERVISORS - M. MEDINA

1. Consider adoption of an interim ordinance as an urgency measure to establish a temporary moratorium on the cultivation of industrial hemp within the unincorporated areas of San Benito County; 

2. Read Title of the Urgency Ordinance for the record;

3. Make a motion finding that the proposed Urgency Ordinance is exempt from environmental review under CEQA Guidelines sections 15060, subd. (c)(2), 15061, subd. (b)(3), and 15308; Direct the County Administrative Officer to cause a Notice of Exemption to be filed; and 

4. (a) Make a motion to accept the introduction, waive further reading of the Urgency Ordinance and adopt the Urgency Ordinance (requires four-fifths vote); or, (b) absent the required four-fifths vote, make a motion to accept introduction, waive further reading of the ordinance and continue the matter to April 16, 2019 for adoption.

SBC FILE NUMBER: 156

ORDINANCE NO: 981

Current State of Industrial Hemp in San Benito County

San Benito County’s current ordinance regulating commercial cannabis activities and cannabis businesses (Ch. 7.02) does not address industrial hemp, which is defined differently under federal and state law.

Summary of State and Federal Laws Related to Industrial Hemp

On September 27, 2013, the California Industrial Hemp Farming Act (SB 566, Chapter 398, Statutes of 2013) was signed into law to authorize the commercial cultivation of industrial hemp in California, however, by its terms it would not become operative “unless authorized under federal law.”

At that time, federal law stated, in pertinent part,

Notwithstanding the Controlled Substances Act (21 U.S.C. 80 I et seq.), the Safe and Drug-Free Schools and Communities Act (20 U.S.C. 710 I et seq.), Chapter 81 of Title 41, United States Code, or any other Federal law, an institution of higher education (as defined in section IO I of the Higher Education Act of 1965 (20 U.S.C. I 00 I)) or a State department of agriculture may grow or cultivate industrial hemp if: (I) 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.

(7 U.S.C. §5940.) Prior to federal law authorizing cultivation of industrial hemp for commercial purposes, on January 1, 2017,  the California Industrial Hemp Farming Act became effective due to a provision in the Adult Use of Marijuana Act (Prop. 64, November 2016), to wit, amendment of section 81010 of the Food and Agricultural Code.

Thereafter, on December 20, 2018, President Trump signed H.R. 2, the Agriculture Improvement Act of 2018 (the 2018 Farm Bill) into law allowing hemp cultivation more broadly than the previously allowed pilot programs for studying market interest in hemp-derived products. The 2018 Farm Bill allows the transfer of hemp-derived products across state lines for commercial or other purposes. It also puts no restrictions on the sale, transport, or possession of hemp-derived products, so long as those items are produced in a manner consistent with the law.

Additionally, State agencies wishing to maintain their own industrial hemp regulatory programs must submit their plan to the United States Department of Agriculture (“USDA”) for review and approval. State programs deemed at least as restrictive as the federal hemp laws will not be pre-empted by federal law.

The California Hemp Program is overseen by the California Department of Agriculture who will have to submit their “pilot program” to the USDA for review and approval. The current program will be effective within the state prior to that review and is subject to change to conform with federal law. It is anticipated that modifications to state law, including the current state definition of an Established Agricultural Research Institution, will be necessary.

It remains to be seen what the federal regulations will be and whether or not California’s program will need to be modified to comply.

California Food and Agricultural Code Sections 81000-81011

The state recognizes different types of industrial hemp cultivation, each with differing requirements as noted in the chart below:

Of note are the differences in the requirements regarding registration and levels of THC (at or below 0.3%) contained in the industrial hemp plants – both of which “established agricultural research institutions” are exempt.

Pursuant to the Industrial Hemp Farming Act, the California Department of Food and Agriculture (“CDFA”) is developing a program to administer its provisions. So far, the CDFA has established an Industrial Hemp Advisory Board to advise the California Secretary of Food and Agriculture and make recommendations to the Secretary pertaining to the cultivation of industrial hemp, including, but not limited to, “developing the requisite industrial hemp seed law and regulations, enforcement, and the setting of an assessment rate.” (FAC §81001, subd. (e).) Additionally, CDFA has proposed the following regulation:

§4900. Registration Fees.

1. The Secretary establishes the following fees for registration of growers of industrial hemp for commercial purposes and seed breeders to be submitted along with the registration application:

   1. (1) Prior to cultivation, a fee of nine-hundred dollars ($900) per applicant shall be submitted with the application to the commissioner.

   2. (2) A separate registration is required for each county in which the applicant intends to grow industrial hemp.

   3. (3) This registration is valid for one year from date of issuance by the commissioner.

2. (b) The Secretary establishes the following fees for registration renewal of growers of industrial hemp for commercial purposes and seed breeders:

   1. Upon expiration of registration, a fee of nine-hundred dollars ($900) per registrant shall be due to the commissioner in each county in which the applicant intends to continue to grow industrial hemp.

   2. (A) If the renewal fee is not fully paid within 30 days after expiration of registration, the registration is forfeited.

      (B) The forfeited registration may be restored upon payment of any unpaid fee amount, plus a penalty of 15% of the unpaid fee amount, to the commissioner.

      (C) The commissioner may waive the penalty upon receiving a signed statement from the registrant that the registrant did not cultivate industrial hemp during the period of nonregistration unless there is substantial evidence otherwise.

   3. Renewed registration is valid for one year from date of issuance of renewal by the commissioner.

The CDFA’s industrial hemp regulation (§4900) is currently under review with the Office of Administrative Law (“OAL”), and, according to the website, the OAL Deadline of April 3, 2019. Once the regulations are implemented, any commercial industrial hemp grower or seed breeder wishing to cultivate commercial industrial hemp must register with the County Agricultural Commissioner prior to such cultivation, if such cultivation is not otherwise prohibited. Until such time, the commercial cultivation of industrial hemp is prohibited.

However, an “Established Agricultural Research Institution” is exempt from this requirement. Unfortunately, the definition of “Established Agricultural Research Institution” is vague and there exists no guidelines on how the County can identify whether a cultivator claiming to be an “Established Agricultural Research Institution” is legitimate or that the cultivation constitutes “agricultural or academic research.” As a result, cultivation of industrial hemp by “Established Agricultural Research Institutions” is not contingent upon the development of a regulatory framework addressing hemp seed, cultivation, etc. It is foreseeable that individuals or organizations may exploit the exemptions afforded to “Established Agricultural Research Institutions” in an effort to prematurely cultivate industrial hemp for commercial purposes, or to cultivate cannabis under the disguise of “agricultural or academic research.”

To further complicate matters, industrial hemp and cannabis are derivatives of the same plant, Cannabis sativa L., and are virtually indistinguishable absent a laboratory performed chemical analysis for tetrahydrocannabinol (“THC”) content. Under State law, industrial hemp may not contain more than 0.3% tetrahydrocannabinol, else it is considered “cannabis.” Additionally, individual hemp is often cultivated in a manner similar to cannabis cultivation.

Due to these similarities between industrial hemp and cannabis, but the different status each enjoys and the regulations unique thereto, law enforcement is unable to readily distinguish between a “hemp farm” and a “cannabis farm,” between a hemp plant and a cannabis plant, and whether a cultivation site is lawful or unlawful.

Moreover, whether cultivated by an "Established Agricultural Research Institution" or commercially, industrial hemp (1) creates a pungent seasonal odor that is similar in type and intensity to the pungent seasonal odor created by cannabis cultivation, and (2) poses a threat of crosspollination to permitted cannabis cultivation businesses within the County (and other nearby jurisdictions), thereby degrading the cannabis plants.

For the reasons set forth above, staff recommends establishing a temporary moratorium on the cultivation of industrial hemp within the unincorporated areas of San Benito County. Allowing the cultivation of industrial hemp prior to the adoption of reasonable local regulations, if any, may result in violations of the County's cannabis regulations, evasion of the County’s cannabis tax, interfere with the County's ability to effectively regulate land use, and may threaten the existing cannabis industry. As an urgency measure, this interim ordinance prohibits the cultivation of industrial hemp for forty-five (45) days and may thereafter be extended as provided by law. Staff is not recommending a permanent moratorium on industrial hemp cultivation. Rather, the purpose of this ordinance and any extensions thereto is to give the County the opportunity to study the land use issues, to formulate and adopt regulations to mitigate or avoid negative effects of such grows, e.g., cross pollination.

The proposed urgency ordinance is exempt from CEQA review for various reasons, as set forth in the ordinance. If the Board adopts the Urgency Ordinance, staff will file a Notice of Exemption.

BOARD OF SUPERVISORS - M. MEDINA

1. Consider adoption of an interim ordinance as an urgency measure (the "Urgency Ordinance") to establish a temporary moratorium on the cultivation of industrial hemp within the unincorporated areas of San Benito County;

2. Read Title of the Urgency Ordinance for the record;

3. Make a motion finding that  the proposed Urgency Ordinance which preserves the status quo and prohibiting a new land use that might impact the environment, is exempt from environmental review under the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines sections 15060, subdivision (c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15061, subdivision (b)(3) (there is no possibility the activity in question may have a significant effect on the environment). In addition to the foregoing general exemptions, the Board of Supervisors further finds that the Urgency Ordinance is categorically exempt from review under CEQA section 15308 (“Class 8 Categorical Exemption”) because it is a regulatory action taken by the County pursuant to its police power and in accordance with Government Code section 65858 to assure maintenance and protection of the environment pending the evaluation and adoption of contemplated local legislation, regulation, and policies; and it consists of a temporary prohibition on industrial hemp cultivation within the County, which is currently unregulated at the local level; Direct the County Administrative Officer to cause a Notice of Exemption to be filed;

and

4. Make a motion to accept the introduction, waive further reading of the Urgency Ordinance and adopt the Urgency Ordinance, thereby establishing a temporary moratorium on the cultivation of industrial hemp within the unincorporated areas of the County (requires four-fifths vote);

or,

Absent the required four-fifths vote, make a motion to accept introduction, waive further reading of the ordinance (with changes as directed by staff or specified by the Board), and continue the matter to April 16, 2019 for adoption.