H.B. 563
GENERAL ASSEMBLY OF NORTH CAROLINA
Apr 4, 2023
SESSION 2023 HOUSE PRINCIPAL CLERK
H D
HOUSE BILL DRH10279-MLfa-121B
Short Title: Regulate Cannabinoid Products & Kratom. (Public)
Sponsors: Representative McNeely.
Referred to:
1 A BILL TO BE ENTITLED
2 AN ACT TO REGULATE THE SALE AND DISTRIBUTION OF PRODUCTS CONTAINING
3 A HEMP-DERIVED CANNABINOID AND TO ESTABLISH A REGULATORY
4 FRAMEWORK FOR THE COMMERCIALIZATION OF KRATOM.
5 The General Assembly of North Carolina enacts:
6
7 PART I. REGULATION OF HEMP-DERIVED CANNABINOID PRODUCTS
8 SECTION 1.(a) The General Statutes are amended by adding a new Chapter to read:
9 "Chapter 18D.
10 "Regulation of Hemp-Derived Cannabinoid Products.
11 "§ 18D-100. Definitions.
12 Unless the context requires otherwise, the following definitions apply in this Chapter:
13 (1) ALE Division. – As defined in G.S. 18B-101.
14 (2) Batch. – A single stock keeping unit with common cannabinoid input or a
15 hemp flower of the same varietal and harvested on the same date
16 manufactured during a defined cycle in such a way that it could be expected
17 to be of a uniform character and should be designated as such.
18 (3) Commission. – As defined in G.S. 18B-101.
19 (4) Hemp-derived cannabinoid. – The plant Cannabis sativa (L.) and any part of
20 that plant, including the seeds thereof and all derivatives, extracts,
21 cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or
22 not, with a delta-9 tetrahydrocannabinol concentration of not more than
23 three-tenths of one percent (0.3%) on a dry weight basis.
24 (5) Manufacture. – Compound, blend, extract, infuse, cook, or otherwise make or
25 prepare products containing a hemp-derived cannabinoid, including the
26 processes of extraction, infusion, packaging, repackaging, labeling, and
27 relabeling of products containing a hemp-derived cannabinoid.
28 (6) Proof of age. – A valid drivers license or other government-issued
29 identification card that contains a photograph of the person and confirms the
30 person's age as 21 years of age or older.
31 (7) Serving. – A quantity of a hemp-derived cannabinoid product reasonably
32 suitable for a single person's daily use.
33 "§ 18D-101. Offenses involving the manufacture, distribution, and sale of hemp-derived
34 cannabinoid products.
35 (a) Offenses. – It is unlawful for a person to do any of the following:
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1 (1) Knowingly sell or distribute a product containing a hemp-derived cannabinoid
2 to a person who is under 21 years of age.
3 (2) Knowingly purchase a product containing a hemp-derived cannabinoid on
4 behalf of a person who is under 21 years of age.
5 (3) Knowingly persuade, entice, send, or assist a person who is under 21 years of
6 age to purchase, acquire, receive, or attempt to purchase a product containing
7 a hemp-derived cannabinoid.
8 (4) Knowingly distribute samples of products containing a hemp-derived
9 cannabinoid in or on a public street, sidewalk, or park.
10 (5) Knowingly sell or distribute a product containing a hemp-derived cannabinoid
11 without having first obtained proof of age from the purchaser or recipient.
12 (6) Engage in the business of manufacturing, distributing, or selling a product
13 containing a hemp-derived cannabinoid without a valid license issued in
14 accordance with G.S. 18D-104.
15 (7) Knowingly manufacture, distribute, or sell a product containing a
16 hemp-derived cannabinoid that has a delta-9 tetrahydrocannabinol
17 concentration of more than three tenths of one percent (0.3%) on a dry weight
18 basis.
19 (b) Exception. – Nothing in this section precludes law enforcement efforts involving
20 either of the following:
21 (1) The use of a minor if the minor's parent or legal guardian has consented to this
22 action.
23 (2) The use of a person under 21 years of age who is not a minor if the individual
24 has consented to this action.
25 (c) Penalty. – A violation of subsection (a) of this section is a Class A1 misdemeanor.
26 Additionally, punishment imposed for a violation of subdivision (7) of subsection (a) of this
27 section shall include the following:
28 (1) For a first offense, the Commission shall impose a civil penalty on the
29 distributor in the amount of five thousand dollars ($5,000).
30 (2) For a second offense within a three-year period, the Commission shall
31 suspend, for a period of 30 days, the licenses issued under G.S. 18D-104 to
32 the manufacturer and distributor of the product that exceeded the limitation
33 set forth in subdivision (7) of subsection (a) of this section and impose a civil
34 penalty on each in the amount of ten thousand dollars ($10,000).
35 (3) For a third offense within a three-year period, the Commission shall suspend,
36 for a period of one year, the licenses issued under G.S. 18D-104 to the
37 manufacturer and distributor of the product that exceeded the limitation set
38 forth in subdivision (7) of subsection (a) of this section and impose a civil
39 penalty on each in the amount of fifteen thousand dollars ($15,000).
40 (d) Proceeds of Civil Penalty. – The clear proceeds of any civil penalty imposed under
41 this section shall be remitted to the Civil Penalty and Forfeiture Fund in accordance with
42 G.S. 115C-457.2.
43 (e) Forfeiture. – Any product manufactured, distributed, or sold in violation of
44 subdivision (6) or (7) of subsection (a) of this section shall be subject to forfeiture pursuant to
45 the procedures set forth in G.S. 18B-504.
46 "§ 18D-102. Offenses involving the purchase, possession, or receipt of hemp-derived
47 cannabinoid product by a person under 21 years of age.
48 (a) Offenses. – It is unlawful for a person under 21 years of age to do either of the
49 following:
50 (1) Knowingly purchase, possess, or accept receipt of a product containing a
51 hemp-derived cannabinoid.
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1 (2) Knowingly present purported proof of age that is false, fraudulent, or not
2 actually that person's for the purpose of purchasing or receiving a product
3 containing a hemp-derived cannabinoid.
4 (b) Exception. – Nothing in this section precludes law enforcement efforts involving
5 either of the following:
6 (1) The use of a minor if the minor's parent or legal guardian has consented to this
7 action.
8 (2) The use of a person under 21 years of age who is not a minor if the individual
9 has consented to this action.
10 (c) Penalty. – A violation of subsection (a) of this section is a Class A1 misdemeanor.
11 "§ 18D-103. Enforcement.
12 (a) Authority. – The ALE Division shall enforce the provisions of this Chapter in a
13 manner that may reasonably be expected to reduce the extent to which products containing a
14 hemp-derived cannabinoid are sold or distributed to persons under 21 years of age and shall
15 conduct random, unannounced inspections at locations where products containing a
16 hemp-derived cannabinoid are sold or distributed to ensure compliance with the provisions of
17 this Chapter.
18 (b) Report. – Beginning January 1, 2025, the ALE Division shall submit an annual report
19 to the General Assembly describing in detail the ALE Division's enforcement efforts under this
20 Chapter. The ALE Division shall also make the report required under this subsection on the ALE
21 Division's website.
22 "§ 18D-104. Licensing for manufacturing, distribution, and selling of hemp-derived
23 cannabinoid products.
24 (a) Requirement. – A person or entity that is in the business of manufacturing,
25 distributing, or selling products containing a hemp-derived cannabinoid in this State shall obtain
26 a license from the Commission authorizing the person or entity to engage in that business prior
27 to the commencement of business or by January 1, 2024, whichever is later.
28 (b) Qualifications. – In order to obtain and maintain a license under subsection (a) of this
29 section, a person shall meet all of the following criteria:
30 (1) Submit to the Commission any information determined by the Commission to
31 be necessary for the efficient enforcement of this Chapter.
32 (2) Pay to the Commission a fee as follows:
33 a. For a manufacturing license, a fee of five thousand dollars ($5,000).
34 b. For a distribution license, a fee of two thousand five hundred dollars
35 ($2,500).
36 c. For a sales license, a fee of one hundred dollars ($100.00) per location.
37 (3) Consent to reasonable inspection and sampling by the ALE Division of the
38 person's inventory of products containing a hemp-derived cannabinoid.
39 (c) Ineligibility. – A person is not eligible to obtain or maintain a license under subsection
40 (a) of this section while serving a sentence for, or for 10 years following completion of a sentence
41 for, a drug-related felony offense in any state or federal jurisdiction.
42 (d) Duration and Renewal. – A license issued pursuant to this section is valid for a period
43 of one year and may be renewed annually. The Commission shall charge an annual renewal fee
44 as follows:
45 (1) For a manufacturing license, a renewal fee of one thousand dollars ($1,000).
46 (2) For a distribution license, a renewal fee of five hundred dollars ($500.00).
47 (3) For a sales license, a renewal fee equal to the initial licensing fee established
48 under subsection (b) of this section.
49 (e) Rules. – The Commission shall have authority to adopt, amend, and repeal rules to
50 carry out the provisions of this Chapter. Those rules shall become effective when adopted and
51 filed pursuant to the provisions of Chapter 150B of the General Statutes.
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1 (f) Distribution of Revenue. – The revenue collected from fees established under this
2 section shall be remitted to the Department of Revenue on a monthly basis. The Department of
3 Revenue shall then remit that revenue to the ALE Division to be used to cover costs incurred by
4 the ALE Division from enforcing the provisions of this Chapter. To the extent the funds described
5 in this subsection are deemed unappropriated, the funds are hereby appropriated for the purpose
6 set forth in this subsection.
7 "§ 18D-105. Testing.
8 (a) Requirement. – A product containing a hemp-derived cannabinoid shall be tested after
9 being manufactured to determine the presence and amounts of any of the following:
10 (1) Cannabinoids.
11 (2) Heavy metals.
12 (3) Microbials.
13 (4) Mycotoxins.
14 (5) Pesticides.
15 (6) Residual solvents.
16 (b) Laboratory Qualifications. – A manufacturer or distributor shall contract with a
17 third-party laboratory to provide the testing required under subsection (a) of this section. A
18 third-party laboratory performing such testing shall be ISO 17025 accredited and be registered
19 with the United States Drug Enforcement Administration.
20 (c) Testing Method. – A laboratory providing testing required under subsection (a) of this
21 section shall use high-performance liquid chromatography for any separation and measurement
22 required in the testing.
23 (d) Batch Testing. – Each batch manufactured shall undergo testing and obtain a
24 certificate of analysis by a third-party laboratory qualified under subsection (b) of this section.
25 (e) Expiration Date. – An expiration date on the label of a product containing a
26 hemp-derived cannabinoid shall be in conformance with applicable federal law.
27 (f) Commission Duties. – The Commission shall do all of the following:
28 (1) Adopt rules specifying pass or fail action levels for safety and toxicity with
29 respect to the testing required under subsection (a) of this section.
30 (2) Maintain and post on its website a registry of testing laboratories that are
31 qualified to test intermediate manufactured material and finished products
32 containing a hemp-derived cannabinoid.
33 (3) Develop an application and process by which qualifying laboratories are listed
34 on its website. The application submitted by a potentially qualifying
35 laboratory shall include a sample certificate of analysis issued by the applying
36 laboratory.
37 "§ 18D-106. Additional requirements and restrictions for hemp-derived cannabinoid
38 products.
39 (a) Packaging Requirements. – A product containing a hemp-derived cannabinoid that is
40 sold in this State shall meet both of the following requirements:
41 (1) The product shall satisfy the child-resistant effectiveness standards under 16
42 C.F.R. § 1700.15(b)(1) when tested in accordance with the requirements of 16
43 C.F.R. § 1700.20.
44 (2) The product shall be labelled with all of the following:
45 a. A list of ingredients and possible allergens and a nutritional fact panel.
46 b. The words "CANNABIS USE WHILE PREGNANT OR
47 BREASTFEEDING MAY BE HARMFUL. CONSUMPTION OF
48 CERTAIN CANNABINOIDS IMPAIRS YOUR ABILITY TO
49 DRIVE AND OPERATE HEAVY MACHINERY. PLEASE USE
50 EXTREME CAUTION."
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1 c. A statement that the product is not approved for any medical use by
2 the United States Food and Drug Administration.
3 d. The words "KEEP OUT OF REACH OF CHILDREN. CONSULT
4 YOUR PHYSICIAN BEFORE USE IF YOU ARE PREGNANT,
5 BREASTFEEDING, OR TAKING ANY MEDICATIONS."
6 e. If the product is ingestible, the amount of cannabinoid in each serving
7 of the product, measured in milligrams.
8 f. The total amount of hemp-derived cannabinoid in the entire package,
9 measured in milligrams.
10 g. The net weight of the product.
11 h. A code that can be scanned to access a website providing the product's
12 batch number, date received, date of completion, and method of
13 analysis for the testing required under G.S. 18D-105.
14 i. An expiration date in accordance with applicable federal law.
15 (b) Advertising Restrictions. – A manufacturer or distributor of a product containing a
16 hemp-derived cannabinoid shall not advertise, market, or offer for sale the product by using, in
17 the labelling or design of the product or product packaging or in advertising or marketing
18 materials for the product trade dress, trademarks, branding, or other related imagery or scenery
19 that depicts or signifies characters or symbols known to appeal primarily to persons under 21
20 years of age, including, but not limited to, superheroes, comic book characters, video game
21 characters, television show characters, movie characters, mythical creatures, and unicorns.
22 (c) Ingestible Product Restri