Department of Finance and Administration
Legislative Impact Statement
Bill: HB1605
Bill Subtitle: TO PROVIDE REGULATION OF HEMP-DERIVED PRODUCTS BY THE ARKANSAS
TOBACCO CONTROL BOARD; AND FOR OTHER PURPOSES.
Basic Change:
Sponsors: Rep. J. Moore, Sen. J. Bryant, Sen. Irvin, and Sen. Hester
HB1605 bill defines “hemp-derived product” and prohibits hemp-derived products from being sold in
the state without a permit from ATC. The bill further requires hemp-derived products to be
prepackaged, shelf stable, and prohibits hemp-derived products from containing or including any
alcoholic beverages, products containing nicotine or tobacco, inhalable products other than
hemp-derived e-liquid products defined in the bill, medical devices, prescription drugs, or other
FDA-approved drugs.
“Hemp-derived product” does not include products intended for animal consumption, cosmetics,
marijuana, medical marijuana, or other cannabis products as regulated under Amendment 98, raw
hemp products, dietary supplements, FDA-approved drug, or fabrics, textiles, cordage, fiber, fuel,
paper, construction material, plastic, seed, seed meal, and seed oil.
HB1605 requires, before commencing business, or if already in business, before continuing business,
an annual privilege fee and permit from the Director of Arkansas Tobacco Control for retailers,
manufacturers, and wholesalers of hemp-derived products. The bill authorized ATC to review permit
applications, issue permits, issue fines, suspensions, and revocations, and promulgate rules.
The bill requires a background check on hemp-derived permit applicants and prohibits ATC from
issuing a retail, wholesale, or manufacturer permit to a person who has pleaded guilty or nolo
contendere to or been found guilty of a felony or a business owned or operated, in whole or in part, by
a person who has pleaded guilty or nolo contendere to or been found guilty of a felony.
HB1605 requires on hemp-derived product label or product packaging the name of the manufacturer
and the distributor, product labeling clearly showing that the product contains material derived from
hemp and not marijuana or medical marijuana, and any other marking, words, statement or symbol as
required by ATC by rule. The bill also prohibits advertising, marketing, or offering for sale hemp-derived
products using, in the labeling or design of the product, its packaging, or in its advertising or marketing
materials, trade dress, trademarks, branding, or other related imagery certain terms or imagery listed
that are marketed to or commonly associated with children or minors.
The bill prohibits any person from giving, bartering, or selling to a person under the age of twenty-one
(21) a hemp-derived product. A person who pleads guilty or nolo contendere to or is found guilty of
giving, bartering, or selling to a person under the age of twenty-one (21) a hemp-derived product is
guilty of a Class A misdemeanor. ATC is also authorized to conduct compliance checks at retail
locations and issue civil penalties against permittees for sale-to-minor violations. Under this bill, it is
unlawful for a permittee to sell or distribute hemp-derived product in a vending machine, sell or
distribute hemp-derived products through a self-service display, or advertise or promote hemp-derived
products in a manner intended to appeal to children.
HB1605 requires testing of all hemp-derived products sold in the state by an approved, third-party
laboratory. The bill also provides requirements for testing and marking of packaging as to the make-up
of the hemp-derived product. The ATC Director is authorized to investigate and issue subpoenas to
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Department of Finance and Administration
Legislative Impact Statement
Bill: HB1605
Bill Subtitle: TO PROVIDE REGULATION OF HEMP-DERIVED PRODUCTS BY THE ARKANSAS
TOBACCO CONTROL BOARD; AND FOR OTHER PURPOSES.
any permittee or approved laboratory used by a permittee that the director has reasonable suspicion of
intentionally producing falsified test results.
Revenue Impact:
HB1605 establishes annual privilege fees for permits as follows: (1) Wholesale Hemp=derived
Products Permit - $1,000; (2) Retail Hemp-Derived Products Permit - $200; and (3) Manufacturer
Hemp-Derived Products Permit - $10,000. Permit fees are collected by Arkansas Tobacco Control and
submitted to the Arkansas Tobacco Control Revenue Fund.
This bill also authorized ATC to levy civil penalties up to $5,000 per violation. Such civil penalties are
collected by ATC and submitted to General Revenue.
Taxpayer Impact:
A retailer delinquent in payment to a wholesaler may be subject to suspension of the retailer’s permit,
civil penalties up to $5,000 per violation, as well as prohibited from continuing to purchase product and
prohibited from using tender other than cash.
Resources Required:
ATCB rules would need to be promulgated. ATC Staff, law enforcement, and permit holders would
need to be educated. ATCB would also need to be educated. ATC anticipates that the following
additional staff would be required:
▪ Five (5) agents at $100,000 each for the first year (includes salary, benefits, as well as any
necessary vehicles or equipment); and $50,000 for each agent each additional year.
▪ One (1) Auditor / Investigator at $110,000 each for the first year (includes salary, benefits, as
well as any necessary vehicles or equipment); and $60,000 for each agent each additional
year.
▪ One (1) administrative support person $40,000.
Time Required:
Adequate time is provided for implementation.
ATC must file final promulgated rules with the Secretary of State for adoption on or before January 1,
2024 or, if approval under 10-3-309 has not occurred by January 1, 2024, as soon as practicable after
approval under 10-3-309. This fill also requires ATC to file proposed rules with the Legislative Council
sufficiently in advance of January 1, 2024.
Procedural Changes:
Department employees will need to be educated and trained as well as the permittees. ATC’s records
management system will need to be updated and ATC forms and permit applications will need to be
created or updated.
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2
Department of Finance and Administration
Legislative Impact Statement
Bill: HB1605
Bill Subtitle: TO PROVIDE REGULATION OF HEMP-DERIVED PRODUCTS BY THE ARKANSAS
TOBACCO CONTROL BOARD; AND FOR OTHER PURPOSES.
Other Comments:
None.
Legal Analysis:
None.
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Statutes affected: HB 1605: 19-6-831(b), 19-6-831(c), 26-57-247(b), 26-57-249(b), 26-57-255(g), 26-57-256(a), 26-57-256(b)