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.     * * * * *