House Standing Committee on Judiciary & Hawaiian Affairs

Welcome to the- Could you mute that over there? Somebody's got a- Could you mute that, please? My name is David Tarnas, Chair of the House Judiciary and Hawaiian Affairs Committee. It is Tuesday, February 17th at 2pm in Conference Room 325. With me is Vice Chair Poepoe.

Other Members are monitoring the hearing from their offices and we will be recording this so that it will be a resource for everyone to view at their convenience.

Today is an information briefing and the purpose of this informational briefing is to learn from our experts about the current regulatory framework and industry trends in Hawaii for medical cannabis and hemp, as well as best practices for managing these industries that protect public safety and public health and support a viable and well regulated industry that successfully attracts consumers and suppliers away from the illegal and unregulated market.

The briefing will also address the need for a robust public health campaign to prevent cannabis use by those under 21 and prevent impaired drivers from operating a vehicle while under the influence of cannabis. We have a number of presenters today and thank you to all the presenters that have joined us.

We'll go through all the presentations first and then we'll take questions from Members of the Committee. There is no public testimony today. This is really an educational opportunity for legislators to learn from our agency representatives that are currently regulating our legal cannabis products in the state.

So first up we've got the Chief and Chief Andrew Goff and epidemiologist Lihn-Vi Le, with the Office of Medical Cannabis Control and Regulation in the Department of Health.

And we're looking forward to learning from the two of you about your current program, what's working, what's not, and what are some things that any words of wisdom you can pass on to us. So let me turn it over to you, Andrew Goff.

Thank you, Chair Andrew Goff, Chief of the Office of Medical Cannabis Control and Regulation with me today. Also Dr. Linh-Vi Le, she is our epidemiologist. Thank you for allowing for us to present today. I know it's a busy time.

I'm going to go start today with a high level overview of the current state of cannabis in Hawaii and also touch on some federal updates. These slides here might have a little more detail.

We have a full agenda today, so I'm going to kind of move through them very quickly, but I will provide the slides at the end for people to review. Currently, Hawaii has two cannabinoid product regulatory systems, one for medical cannabis and one for hemp. Both are regulated by the OMCCR.

And today I'm going to provide updates on the expansion of the medical program, new hemp registration and trends in hemp products, OMCCR outreach efforts, our reference lab project, the state of the public health and information on public health and a market demand study. So we're going to move really quickly on this.

Our mission is to ensure safe access to medical cannabis and to promote public health and safety for cannabis and hemp derived products. Our office is basically three sections.

Patient and registry, registers patients caregivers and providers, dispensary licensing licenses dispensaries and deals with product regulations for both cannabis and hemp and our surveillance education and science staff that does all of the data. And Linh is the head of the SESS. So medical cannabis update. Last session Act 241 passed expanding patient access.

This expands telehealth options, allows hospice providers and primary treating providers to certify patients, caps provider fees and streamlines dispensary wholesales and expands dispensary inventory. So far, since July of last year, we have already updated the dispensary rules. Those went into effect in November 2025. Those allow for wholesale and expanded inventory.

We updated, we're drafting the registry rules that update the rest for providers and for patients. And we're preparing outreach and rulemaking hearings. Those will go through formal rulemaking. As part of the outreach efforts, we, we provided guidance documents and drafted those for patients and providers. Those are on our website.

We've also done information sessions for certifying providers and impacted stakeholders to go over these changes so that they know what to expect and how we're planning on implementing them through the rules. We're also planning information sessions and listening sessions for patients across the state.

Before we get into hemp, just briefly, on the federal level for cannabis, the President did issue an Executive order asking to expedite the process of rescheduling cannabis from schedule one to schedule three. We don't really have a lot of updates on that until the DEA starts the rulemaking process. There is no timeline for that.

We don't even know what the process is to actually do that. So once those, once it's a little clear on, on that end, we can provide more updates.

But we are hopeful that will provide us an opportunity to interface with the Federal Government in order to maybe carve out or get some guidance on how the state can run its program. Now on to hemp, just a brief crash course on hemp. In 2018, the Federal Government allows hemp products under the Controlled Substances Act.

It is defined as 0.3% Delta 9 THC. Delta 9 THC being the intoxicating cannabinoid most prevalent in cannabis. The USDA or the states regulate the growing of the plant in Hawaii, the USDA regulates growing plants. So if you want to be a hemp farmer, you get a USDA license.

It's worth noting here, consumable products are still not approved by the FDA. So if you have a hemp gummy or a hemp drink with a cannabinoid in it that is not FDA approved, the FDA has only approved hulled hemp seeds, hemp seed protein powder and hemp seed oil.

So if you want a product sold in the state, the state has to actually carve out an exception for those hemp products. Now, what was problematic about the definition of hemp in the federal law? They use Delta 9 THC by weight. This is okay for the plant itself because the plant has more mass.

When you extract the cannabinoids and put them into a product, it becomes the weight of the product and the extract, which is much different. So as you can see here, under these, the federal definition, you can have a 12 ounce can of a hemp derived drink that has up to a thousand milligrams of THC.

And just for reference, 10 milligrams of THC is a medical dose and will get you intoxicated. So this is an order of magnitude beyond that, which can be very concerning. Another loophole, they only focus on Delta 9 THC. There are other THC isomers in the plant. They're in very small doses in natural quantities.

But they have discovered you can take CBD isolate and chemically turn it into any one of these THC isomers. And that's where you see your Delta 8 THC, Delta 9, your Delta 10 THC's and create cannabinoids that don't exist in nature too.

So you see this kind of derivative market expanding with vapes and gummies, and those are in higher concentrations too. So as I was saying before, the state has to carve out exceptions for these hemp products. We don't allow high potency hemp products.

Currently we allow gummies, tablets, capsules, powders, soft gels and gel capsules with 1 milligram of THC per serving and 5 milligrams of THC per container. That is a fairly low dose compared to the rest of the nation. There are other states that outlaw it completely though, and have less too.

For beverages, we allow a 12 ounce can to have 0.5 milligrams of THC per can and we allow Tinctures to be full spectrum and topicals to be full spectrum.

The issue there is because it's federally legal, there's a lot of stuff online, there's a lot of distribution on the mainland that you can order direct to your home or to your business. Things that are not compliant with state law. We have state processors that do process compliant product. We have retailers.

And because we didn't have a registration system or a licensing system, we were seeing them in gas stations, in beer distributors, in vape shops, in a lot of different retail locations, even in wellness locations that were not compliant. So in 2025, Act 269 creates a hemp and retail- retail and distribution registration.

So anyone selling these hemp products has to register with us so we know who is selling it and who is not selling it. And includes age gating, so you can only sell up to people over 21. And importantly, it also includes enforcement mechanisms that we did not previously have. So the registry makes it pretty clear cut.

You don't have to do any testing, you don't have to do take the product and see if it's 0.3% THC, see what the actual potency of the product is. If you are not registered with us, then we can do an enforcement action. And those enforcements include fines, embargoing products, seizing the products off the shelves.

It also includes nuisance abatement, which the AGs will probably talk about in a little more depth. But essentially nuisance abatement allows you to civilly enforce a criminal law and also consumer protection actions. To implement this, we've already done a lot of outreach to industry stakeholders.

Information sessions, press releases, news articles, contact with known retailers both in state and online. Contact with all the tobacco and vape retailers. We drafted the rule amendments and reviewed those within an info session and allowed an opportunity to comment on those.

We have a subscription email services for updates for industry folks and we've also drafted guidance and FAQs that are available on the website for both industry and consumers. The law went into effect July 2025. By January 2026 we launched a registry portal to register hemp retailers, and we adopted rules early February.

And we are currently coordinating efforts with the AGs and law enforcement entities to help with enforcement aspects. See in other states are moving towards these lower potency hemp edibles which are around 5 milligrams. You see this in Minnesota, states were-

Were starting to adopt this in lieu of adult use or on top of adult use to allow 5 milligram drinks, 5 milligram gummies, you might see those online. In Minnesota, they were very popular. States were starting to move in that direction.

And to be honest, we were going to start having that discussion with the hemp retailers once we registered them to see if we could do that. We can do it in rules. What kind of safeguards would need around that and what kind of. If we need legislative changes to allow that.

But in 2025, the Federal Government, to open the government up in an appropriations act, redefined what can be sold as a cannabinoid hemp product under the federal farm Bill. This heavily restricts hemp products to 0.4mg THC per container. That is much lower than what we currently allow. Even in our beverages, it's lower than that.

And I should note, we have the authority to change potency and rules. We are planning on aligning with whatever the Federal Government comes out with. It goes into effect November 2026, so there's still time to change or whatever, but we have the flexibility to adapt to that. So that's our hemp update.

To touch on our outreach efforts, we have begun community engagement projects. We do extensive public education. We've done patient education events, patient newsletters. We've issued CMEs for medical providers. We've done community events. We started a youth prevention campaign partnering with ADAD. We're planning a second campaign discussing what parents need to know and how to talk to kids.

And we're planning a workforce development project. I know this is a lot of stuff all at once, so if anyone has questions, please let me know. Our reference lab project, we are partnering with UH Hilo to update a reference lab, and we are hoping to get that online next year or shortly thereafter.

That will support regulatory oversight, and that's funded through our special fund, not through General Funds. So now I'm going to pass it off to Dr. Linh-Vi Le to go over some of the public health concerns and the market demand study that we issued.

So, good afternoon, Chair Tarnas and Members of the Committee. Thank you for having me here to talk a little bit more about the public health and the evidence and science behind the concerns. Because I know that you and the public and many people are aware that cannabis does have harm, while it also has very therapeutic values.

So I'll talk about some of the harms and why we really do need substantial investment in the prevention, harm reduction, education, but not just stopping there, also in the treatment, treatment services and enforcement capacity. Our major concern is more evidence coming out of a link of increased likelihood for psychosis.

And when you get that likelihood that first acute psychosis, your progression to schizophrenia is quite high. And all of this obviously occurs during the development in youth, but it also can affect older adults as well in terms of the young adults.

And while we always hear that the brain is developing up to 25, you all are actually developing up to 30 something as well. So with all of these access to cannabis, what we want to do is to be able to ramp up on all of these efforts. Andrew already spoke about some of the things we're doing.

What we don't know is that while we are doing these youth campaigns, we don't know how effective they are. And we are going to try to measure that. We are working with experts from mainland to do this prevention campaigns.

We are getting input from our communities here, but we need to learn more how to apply what's learned already in terms of prevention to our diverse cultures. We have so many different diversity, diverse populations here that we need to address. So the disruption of adolescent and young adult brain development is a concern.

While we know that our Hawaii residents don't necessarily have the same understanding, recently we did a survey to using the behavioral risk factor surveillance to measure knowledge of teenage harms. And the over one third of adults do not think or are unsure that teenagers are at greater risk of harm than adults. So we need to address that.

We don't have current youth use data yet because our data is still from 2023, but that actually from that we have 14% of high school seniors using cannabis in the past month. So that really needs to be addressed.

Other issues you're aware of prenatal exposure, new signs are coming out showing preterm birth as well, not just low birth weight. In jurisdictions where there been increased use. There's also been increased unintentional pediatric poisoning.

And also a large study looking at Medicaid records show that there has been in the last decade increased cannabis use disorder and cannabis poisoning among the general population and just not children. So I'll be around to answer more in detail about the science if you have questions.

I will move on to the market demand study, about a few years ago the Legislature requested OMCCR to look at the licensing and regulatory framework to see how well the medical program is servicing patients in terms of access. And then we were also asked to predict the demand for adult use cannabis and impact.

So I'll go through that in more detail. So this study was conducted by Cannabis Public Policy Consulting. It was an independent assessment. OMCCR was there to help provide access to surveys and data, but all the analysis were theirs. They surveyed cannabis and hemp consumers across Hawaii, registered medical patients, legacy farmers, potential tourists last year.

So it took quite a while because there was a lot of surveys that were sent out to ensure that we can get the most accurate and precise data as possible.

They conducted economic and statistical modeling and used our program data as well as the population based surveys like the national drug use surveys and behavioral risk surveys to adjust the modeling to be more accurate.

So for the results in terms of the current medical demand, they found that the registered patients access cannabis mainly from licensed dispensaries and that among those who access the dispensary, 68% report plenty of supply and the travel time is 23 to 30 minutes.

Now this aligns with a patient survey that OMTCR had conducted in 2024 that was representative. So the findings are similar. Now you see in the table there that the dispensaries capture the majority of the medical market in terms of expenditure captured.

If you look to the column at the right, in terms of units captured, the dispensary is capturing a little less. So what this is is looking at units as opposed to costs. And so because the costs are high, they will capture that higher.

But if we're looking at units alone, there's also a lot of access from friends, families are gifted from others and also from home grow. One of the questions that were raised a couple of years ago is what about the Cooperatives? How much are they capturing in terms of the medical market demand?

And the study found that there was limited competition. Note, however, that this is among current patients that are being surveyed, which means that some of them who are accessing the Cooperatives might be moving out of our patient registry and not a part of this analysis.

In terms of the current demand by adults 21 and over for use other than medical purposes, these are the findings here. That the current spending is around 27.6 million per month with a confidence interval shown there. 20 million of that is from the Hawaii residents and 7.6 million that of that is from tourists.

And in the table you can see that the demand is highest for flower and edibles. When they project and predict the future adult market.

How they did this was they took what's currently reported in terms of Hawaii's consumer use and applied the growth rate, the average growth that they saw for different parameters from 11 other states on the mainland. And what they found is by the first month of year five, that there would be 67.8 million in spending.

Now that's the total market and that includes the medical market as well. I think that some people, and I heard it in the testimony this morning that they multiply that by 12 and got almost a billion. But please note that this is a monthly projection of that month.

And it's like stock projections where there's going to be a lot of seasonality and change. And so you can't apply that to the whole year. You actually have to look at all the factors.

And if you do that, the numbers reflect more of what the Dual Use Task Force Department of Taxation have come out with around the $300 million amount. With respect to the tax rate. And what would be optimal. In looking at the total tax rate with GET included, the researchers found 15% to be optimal.

And if Hawaii is interested in retaining a larger legal market and a smaller gray or illicit market, then that could be at 10% in terms of the dispensaries, the number of dispensary needed. The table shows the breakdown of a total of 65 and by island for the cultivation, licensing.

There wasn't any recommendation because it also depends on whether it's going to be indoor and outdoor or a mix of that. But the report does detail the square footages that would be needed to meet demand. So it could be, for instance, it's all indoor, then it would be 34 facilities or more if outdoor.

There are a lot of concerns around how adult use legalization would affect tourism, particularly from Japan, because those are the tourists of interest for Hawaii. So they we asked the researchers to look at the Japanese market, but not only them, but Canadians as well, because today the Canadians make up the largest group of our international tourists.

So the responses here you see in the tables here in the blue with the largest pie section, the majority of tourists are saying that legalization would not affect motivation to visit Hawaii. And then you can see to the left of that pie, the grays are whether they would less likely or much less likely to go.

And then the top sections of the pie are more likely to go. Are much more likely to go. So you see there is a difference between the Japanese and the Canadians. To the Japanese there will be some net loss and the Canadians would be net gains. And that concludes our presentation. Thank you.

Thank you very much. I know we have questions, but I think we'll continue on with the presentations and then we'll circle back to have an opportunity to ask questions of all the presenters. So thank you very much to the Office of Medical Cannabis Control and Regulation.

Next up we're going to be hearing from the Department of the Attorney General. We have our folks from the Investigation Division and a deputy attorney in General. Would you come up to the right in the center here? Be great. These two chairs would be great. Thank you very much.

If you'd be so kind to introduce yourselves and educate us on the nuisance abatement. What is it that you do and how's it going?

Okay, let me just make sure I am all set up here. Share my screen.

Yep, there it is.

All right, great. Thank you. My name is Alana Bryant. I'm a Deputy Attorney General for the Health Division. And I'm here today with Tom Alipio, who is the Chief Special Agent in the Investigations Division. And we are here to talk about a few different topics. This is a sort of an overview.

I wanted to discuss the Department of the Attorney General's position on non-medical adult use cannabis legalization. Also, talk a little bit about HB 1625 and its companion bill, SB 2421, that was heard this morning.

I'll also talk a bit about Act 269 and Act 241 from last year and touch on enforcement against unlawful hemp and developments on the federal level. So in 2024, the Department of the Attorney General prepared a report that's entitled "Report regarding the Final Draft Bill" entitled "relating to cannabis."

And this report was very extensive, and it shows our office's commitment to ensuring that if legalization does occur, that it's done in the most effective way possible.

The report made clear that while the Department of the Attorney General does not support legalization of adult-use cannabis, that we will not oppose the passage of a cannabis legalization bill as long as it includes provisions intended to protect public safety and that provisions intended to protect public health remain in the bill.

And provisions that are unacceptable to the Department are not included in one of these bills. In drafting the report, our Department collaborated with the Department of Health, the Department of Commerce and Consumer Affairs, numerous state legislators, the Department of Taxation, the Banking Commissioner, Department of Law Enforcement.

We also met with regulators and state attorneys from eight states that have already legalized cannabis, and met with policy experts. After all of this information gathering, our Department settled on six pillars that we believe are the most important parts of any cannabis legalization bill. So I'll go over what those six pillars are.

So the first is legal safe harbor from state and county criminal prosecution for those who strictly comply with the cannabis legalization laws. The second is the creation of an independent governing authority with the power to regulate all aspects of the cannabis plant, which would include non-medical adult use, medical use, and hemp.

And the third pillar is the continuing role of law enforcement agencies in addressing illegal cannabis operations that aren't acting in accordance with cannabis legalization laws. This is, we think this is really important because we know that after legalization, the illicit market won't just disappear.

So emphasizing the continuing role of law enforcement will hopefully combat the continued illicit market. And the last three pillars are a well-funded social equity program with the intent to bring greater economic opportunity to disadvantaged regions of our state.

A social equity program could award grants to applicants to help them enter the legal market or to community organizations to help address community needs. The fifth pillar is a delayed effective date of at least 18 months for adult use, non-medical cannabis, and first retail sales.

This would allow the governing authority, law enforcement, and the public to prepare, and it would be important for implementing a public education campaign as well. And finally, number six is the implementation of extensive, well-funded public health protections, including public education campaigns to inform the public about new laws and continuing risks to public health, especially to children.

So moving on to HB 1625, our position on this is that our Department would not oppose HB 1625. It includes the most important aspects of what a legalization bill should have.

It includes legal safe harbor, it creates a comprehensive regulatory authority, it stresses public health and education, it creates several grant programs, and it highlights the importance of law enforcement in implementing cannabis legalization. SB 2421, which is the companion Bill to HB 1625, was heard this morning.

The Department of the Attorney General did submit testimony with comments on that bill, suggesting search and revisions. So I will go over some of the suggestions that we made. So the first is regarding the effective date of the bill. So in this bill, adult use legalization would be triggered by one of three things.

It's either federal descheduling of marijuana, U.S. Supreme Court action recognizing states' authority to regulate marijuana without federal preemption, or by a state constitutional amendment legalizing cannabis. Triggers like this have been used in other states in other contexts. So it's not unprecedented in this context.

However, we believe that rather than adult use being implemented as soon as the trigger occurs, we would suggest that adult use begin 18 months. Sorry about that.

Drink some water.

Yeah, thank you.

Please. I want you to be comfortable.

Thank you so much. Sorry, I'm getting a very dry mouth.

Certainly.

So we would suggest that rather than adult use being implemented as soon as the trigger occurs, that we suggest it begin at least 18 months after the trigger date. This is consistent with the position that we took in our report, as it would create a more orderly transition and allow for public education prior to adult use implementation.

In our testimony, we also noted that on page 257, there are proposed amendments to HRS section 322-1, which is the DOH Nuisance Abatement Statute. The proposed amendments would categorically exempt cannabis products and hemp products and their related odors from the definition of nuisance in that section.

As a matter of public policy, our office feels it may be too broad and that the language could be narrowed. Our Department is concerned it may be a limiting a possible tool for investigating and enforcing against legitimate nuisances.

HB 1625 and SB 2421 also proposed repealing Act 269, which created a framework for enforcement against unlawful hemp distribution and retailing. So it appears that the intent of the repeal is to repeal Act 269 but retain the enforcement mechanism in HB 1625.

We would just note that Act 269 did amend HRS section 712-1270 to explicitly include unlawful hemp distribution and retailing as a nuisance under that statute.

So if the intent is to repeal Act 269 but keep its hemp enforcement in place, we would suggest that HB 1625 keep that particular amendment to Section 712-1270. And finally, the Department would support increased funding for drug recognition expert training for law enforcement.

Moving on to Act 269 (2025), from 2025 and Act 241, session laws of Hawaii 2025, I know that Mr. Goff touched on this a bit earlier, but I do want to mention that Act 269 created a registry for hemp distributors and retailers who are doing business in the state.

The Office of Medical Cannabis Control and Regulation has already passed rules for the registry. Act 269 also amended our nuisance abatement law, which I just discussed, which is section 712-1270, to include violations of HRS 328G-B, which is the Hemp Processors Law. Act 241 was also passed last year.

It created six new positions in our Department of the Attorney General, specifically for investigating nuisances relating to cannabis and hemp. The positions include five investigators and one analyst. Illegal cannabis and hemp has been difficult to regulate, so Acts 269 and 241 together were passed to increase the state's ability to enforce against illegal cannabis and hemp.

All right, so enforcing against unlawful hemp. Like I just said, Act 241 created positions specifically to investigate unlawful hemp retailing and distributing. Anyone that wants to sell legal hemp products, with few exceptions, is required to register with OMCCR.

The Department of the Attorney General's hemp investigators will be tasked with investigating businesses that fail to register but sell hemp products anyway. The investigators will be looking for products that violate our hemp laws based on their packaging and labeling. But they'll also have the capacity to test products if necessary.

If violations are found, a civil nuisance abatement action would be filed against the violator. The goal of that type of action is to stop the illegal business from operating as soon as possible, using a civil injunction mechanism while the lawsuit is pending. If criminal activity is identified, the Investigations Division would pursue criminal charges.

Our Department also has the ability to enforce consumer protection laws against sellers that don't comply with the hemp registry. And funds for the investigation positions have been allotted. And I believe as of this past Friday, Dherb gave our Department the green light to start the hiring process, so that is great news.

And finally, developments on the federal level. You know, Mr. Goff talked about this a little bit as well, but I will mention that the President signed an Executive Order on December 18, 2025, directing the U.S. Attorney General to take the necessary steps to reschedule marijuana to Schedule III of the Controlled Substances Act.

There is no time frame for that rescheduling, so we don't know when it will happen. We don't know what it would look like at this time. So it's still a bit speculative. Rescheduling to Schedule III may make the medical use of cannabis federally legal, but it would not make non-medical adult use legal.

And in November of this year, the new definition of hemp in the Farm Bill will go into effect. The new definition regulates not only the amount of Delta 9 THC, but also other types of cannabinoids that would be found in hemp. The new definition is more restrictive than our current hemp rules.

And from what I understand, OMCCR anticipates amending its hemp rules to align with federal standards. And with that, we are available for any questions.

Okay, thank you.

Thank you.

Would you like to say anything?

Honestly, we're ready. Today, we were able to overcome a few hurdles, and we got the authorization on Friday to proceed. So we're going to start building the team. Partnering with OMCCR and all the other entities that we need to. I know my division is ready to go and do what we need to do. Make sure things are done safely.

Okay, thank you. I appreciate that. That's a good pep talk. I appreciate that. And glad that you got the go-ahead to start hiring.

Me, too.

And let's go ahead with the other presenters, and then we'll circle back for any questions. Thank you very much. Next, we'll be hearing from Sergeant Thomas Koyanagi.

Sergeant Koyanagi is with the Hawaii Police Department, and he is the Area II Commander, Traffic Enforcement Unit, and Drug Recognition Expert Instructor, and he's the Agency Drug Recognition Expert Coordinator. So if I could ask you to join us. Thank you for joining us. Sergeant Koyanagi, the floor is yours. Please tell us about your work.

Thank you. Aloha, ladies and gentlemen. Thank you again, Chairman Tarnas, for your invitation. In the past, after going to many traffic safety conferences on the mainland and with other states that have gone through medicinal and full recreational adult use cannabis, I didn't want to get caught behind the eight balls.

A lot of departments said that they were more reactive than proactive. So I saw a need to go ahead and do something about it. So after meeting with several people, especially with Chairman Tarnas, and we expressed our concerns, I wanted to go ahead and take the bull by the horns and come up with a program and start Hawaii's first Green Lab. Let me share my screen.

Okay, so I want to provide you all with informational overview of what the Green Lab Program that I came up with, as well as explain the background and identify the training needs that we needed to accomplish, especially with the apparent use of adult use, as many states have accomplished.

And also wanted to go ahead and see what kind of outcomes we would have and future considerations that we would go ahead and be faced with.

So with the history of cannabis and THC products, we've seen a rise in the states, especially in Colorado, that we wanted to go ahead and make sure that we were ready, and we didn't want to see any type of arrest or any type of identification, impaired drivers getting away from us and making sure that we kept the road safe.

So by doing so, we needed to go ahead and see if the training we had to identify the impaired driving detection was sufficient up to date and also any challenges that we see, but ultimately too that we wanted to make sure our officers were doing good arrests and impair and arresting impaired drivers and not just anyone that smelled like they were using cannabis or any type of cannabis products.

So by doing so, I wanted to go ahead and ensure that we enhanced our ability as officers, drug recognition experts, as well as officers who have received standard field sobriety testing, as well as advanced roadside and impaired driving enforcement training, to better themselves.

But also, to this by doing so would be twofold because it would give officers the opportunity to increase their knowledge regarding impaired driving. But also, it would support all of the testing that we had to our SFSTs, the ARIDE, and our Drug Recognition Expert Program.

But also too, that by doing so, we were seeing that a lot of times, a lot of these cases went to court and they were not getting prosecuted because it seemed like it was a failure of the training that they received.

But also too, the officers weren't able to articulate what they saw, were documenting it correctly, and also too, that they seem to be not prepared for courtroom testimony.

So, back in 2022, after going to many conferences after the great COVID pandemic, I met with officers from Colorado, and they had expressed their frustrations with what they were not prepared to do.

So I came back, spoke with our chief, and asked the chief that, you know, with the medicinal use right now, currently we have, inevitably in the future, I foresee that we're going to have full adult recreational use of cannabis. And I told him what I wanted to do.

And next thing I know, I was on a trip going to Maryland and meeting with Officer Jayme Derbyshire, who is the leading expert on the East Coast in conducting green labs. But what the green labs considered were they were a full medicinal state only a few years back.

And what they came up with is that they wanted ways to train officers in a controlled environment with verified registered cannabis patients that were using it for medical use in a controlled environment, test them to see if one, how the per se limit in certain states played, but also two, to see the level of impairments.

And they also documented what type of cannabis products, THC amounts that they were using, anywhere from either smoking flower, edibles, tinctures, any other type of cannabis products they're using to treat their illnesses. So with the help of Responsibility.org, that provided a book, they actually laid the groundwork for how to conduct a greenlab.

So that's what I use and went on from there. But also too, by doing so, I wanted to mainly focus on educating the officers, but also wanted to make sure that we're doing things correctly, taking in the legal considerations, but also conferring with our local prosecutors.

But also too, once we did train people and we got the knowledge. How do we apply it in the field? And that's the other thing that we wanted to make sure. So what happens is by doing so, we had to come up with a classroom outline. So we use the book for how to conduct the lab.

And also too, with meeting with my drug recognition expert instructors as well as other professionals in the field and also taking into consideration actually meeting with the two dispensaries here on the Big Island and meeting with their compliance officers, the CEOs, COOs from them and express of joint partnership with them to see, hey, what can we do that we can help each other out to make sure that we do things correctly and also want to get away from the stigma that we would arrest people that were using cannabis medical conditions.

So we wanted to build the bridge between the medicinal community and law enforcement and get away the stigma that the police are here to arrest everybody. So once we started to get that in the planning stages, we wanted to go and make sure that, you know, we had things they could train on.

So we came up with scenario-based practical exercises, as well as we had prosecutors go over with what they had saw the issues were with report writing and other issues that we referred to laws, and make sure that we did everything within the legal ways that we make sure that we did everything correctly.

So, to date, from 2024, which is our first green lab, we've conducted three green labs so far. And we also trained a total of 38 officers, which it was within our Department with the Hawaii County Police Department.

We had a couple of drug recognition experts and instructors from the Kauai Police Department, the Department of Land and Natural Resources, their Enforcement Section, Department of Defense, the Pōhakuloa Training Area Police, and we also had a drug recognition expert from the National Park Service that attended this training.

Total hours of training so far we conducted was going to be 48 hours. And the training we did have, it was, we had the patients coming in, and we did a pre-screen on them. So when they came in, we were told that the participants that were going to be consuming cannabis, we told them if they could abstain for at least 12 hours prior to coming and being a participant in our labs.

And what would happen is once they arrived, we did a pre-screening which consisted of checking their blood pressure, their temperature, going over the standardized field sobriety tests, and also then documenting what we were finding was.

And after completing that, we would go on to either a 30 to 45 minute period of consumption where they could consume THC products either through a vaporizer, they wanted to smoke flour or edibles. And we would document the level of THC that were in these items, and the dosage, and what they consumed.

Once that was completed, about an hour later, we then transported them via our vehicles, and then we had them go through the full 12-step evaluation by a drug recognition expert.

And what we found is, I also shared this information with Chairman Tarnas, is we had six total participants on the first round, and out of the 6, 5 of the participants had a measurable amount using a SoToxa oral fluid tester had readings of over 25 nanograms of THC in their saliva.

Out of the 6, 5 would not have gotten arrested due to the lack of impairment, which was surprising to a lot of the drug recognition experts because they felt with the knowledge of consuming that they probably would have seen a lot more apparent signs of impairment.

They were surprised that they did not. On the second round, which is about an hour later, they then realized that they had consumed more and then had noticeable signs of impairment.

What we also learned from conducting the green lab is after the first round of tests that the participants had with our drug recognition experts, I then had a ohana meal where I provided dinner for the participants and the drug recognition expert.

And we sat down for about an hour, had a meal, and they could share information back and forth. What we learned is the patients were the best source of information, where they knew the levels of THC that they consume.

They knew exactly how much they would need to treat their medical conditions, and they had a very good conversation with the drug recognition expert. It was an open forum. There was no badges. Our officers were dressed in polo shirts or aloha attire. So there was no signs of any type of law enforcement there.

So we try to make the participants as comfortable as possible. And we did get a lot from them. And that's why we wanted to consider doing it again. And then we had done it two more times since then.

What we noticed for our operational impact was we did notice that a lot of the officers who might have not been confident to arrest someone under an [inaudible], there was other than alcohol, we did see the number did increase when we're still trying to get those numbers.

But also once those numbers of impairment were obvious, that these officers were detecting impairment of cannabis and other THC products, that our drug recognition experts were being called out more often.

And we noticed a significant increase in evaluations where the drug recognition expert themselves were reporting to me, since I'm the Coordinator for the West Hawaii side of the island, that they were being a lot more busy. So we also noticed that a lot of people did sign up for additional training.

Some of the other officers that did not become drug recognition experts had signed up for the standardized field sobriety test refresher, as well as in the ARIDE or the Advanced Roadside Impaired Detection Education courses, to better their understanding of impaired driving.

What we noticed in the courtroom especially that supervisors had commented that officer's report were better written, had focused more on the impairment. So they weren't able to articulate what they were observing at traffic stops.

Also, two officers were more successful as far as reporting in court when they were testifying that they weren't afraid of testifying more in court because they were given the tools that they could testify effectively, and especially that they did cover it well in the reports.

Also too, the prosecutors that expressed that they noticed that there was a lower case dismissal rate due to officers either not being prepared or not being able to articulate or place in their reports what they needed to do to have a successful prosecution if they, in fact, were impaired. Public safety considerations.

We wanted to make sure that the overall outcome was that we wanted to make sure that our roadways became safer. By taking those people who did use any type of products, either legally or illicitly, to make sure that our roadway stays safe for all of our families as well.

Also too, that we wanted to make sure that everybody received the most up-to-date standardized field sobriety test training.

And also too, that we wanted to make sure that we were transparent, especially with the general public, that we weren't targeting people because of any past or any type of, that they were labeled of having a 329 card or they were a medical cannabis patient.

We wanted to make sure that everybody understood that if there was any kind of prosecution for any kind of impaired driving, it was solely on impairment that the officers had observed and actually will be able to articulate in the reports.

So the future considerations that we wanted to do is, I wanted to go ahead and expand the training across the state. I've worked with several other drug recognition expert as well as other coordinators from the other three counties, and actually have offered them to attend ours and will be willing to help them as well.

And also too, that as time goes on, which each course that we run, we do learn things that we need to change or make us better. So we're going to go ahead and refine that as well. And also too, that we wanted to go ahead and collaborate more with stakeholders, especially with the policymakers in return.

But we wanted to make sure that we have everybody involved. So we've even reached out to several other schools as well.

And there's another program called DITAP specifically for schools to help their staff, their medical staff on campus to detect and determine, in fact, if students are using any type of illicit drugs to help them better and make sure that, you know, if they notice a change in a student's behavior, that there might be an underlying reason that they might be able to identify that, in fact, if it is pertaining to some type of drug use.

In conclusion, the green lab that we had provided a lot of information for us, as well as sharing them with the medicinal cannabis industry, especially sharing the information with the dispensaries as well, and actually having them observe the green lab so they could see firsthand what we would do, especially as part of the 12-step Drug Recognition Expert Evaluation.

Also too, that we wanted to make sure that we increase or enhance our impaired driving enforcement capabilities, but educating officers new and old, that they can make a difference and if they're given the tools to make better judgment, as well as being able to detect impaired driving by actually intoxicated or impaired drivers, to go ahead and do so and make the judgment call.

And also too, that we wanted to make sure that we remain professional and conduct ourselves in an ethical way with everyone we meet. And that concludes my presentation.

Thank you very much, Sergeant Koyanagi. I really appreciate you taking the time and joining us by Zoom from Hawaii County. We're going to move on to the next presenter and then circle back to you for questions, so please stand by. I appreciate you joining us. Next we're going to hear from the Department of Agriculture and Biosecurity.

Jun Tulio is our hemp program specialist and will fill us in on the hemp program, specifically industrial hemp within the Department of Agriculture and Biosecurity. Mr. Tullio, floor is yours. Please proceed.

Good afternoon, Chair Tarnas, Vice Chair Poepoe, members of the committee. My name is Jun Tulio. I serve as the hemp program specialist for the Department of Agriculture and Biosecurity. So today I will be-- my topic is overview of the National Hemp Program. So I will focus on four areas: the historical background, the Industrial Hemp Pilot Program, then the third one is the USDA Hemp Program, and then our current Hemp Program at the department.

So-- sorry. This historical overview summarizes the key milestones in the development of Hawaii's Industrial Hemp Program at the Department of Agriculture and Biosecurity. This is from its inception under the 2014 Farm Bill and to the state's transition to use USDA oversight and recent legislative changes. So I will just focus on 2016, where in Act 228, created the pilot program, and then in June of 2018-- so the pilot issued the first license for the farmers and then coincided also with this 2018 Farm Bill.

In 2020, Act 14 ended the pilot program and also transitioned to USDA oversight. And also in November 1st of 2020, the USDA issued the first license for Hawaii farmers. In 2023, the Act 263 amended the commercial production laws in the state.

And in 2024, under also 2000s Act 263, the department hired a hemp consultant to work with the task force, the Hemp Task Force, which jointly convened with the Department of Health. And then this year, as mentioned by Andrew Goff, there's changes in the definition for the marijuana-- I mean the hemp.

And also, there's also a testing delay for hemp due to shortages in the testing capacity, so that's not till December in 2027. So the Act 263 will expand. Act 228 created this Industrial Hemp Program and managed by the Department of Agriculture at the time. The department issued licenses to pilot-- the pilot program issued licenses to hemp farmers, specifically for research, cultivation of hemp, and academic research. This pilot license was good for two years. Then the department required registration with DEA for seed importation.

Then the department also required hemp farmers to get their hemp tested by third-party labs, and the cultivation was restricted to state-designated agriculture lands. So here are some of the data for the pilot program. So from 2018, there were 10 licenses issued by the program, and then it increases up to 60 licenses in 2020.

So there's a lot of, you know, enthusiasm from the farmers until it ends, you know, the program. So in green graph, although license acreage increased significantly--so that's from 65 to 69 in 2020--the actual planted acres were much lower. So in-- there's less than 10 acres in 2018, 19 acres in 2019, and then 109 acres in 2020.

So many farmers obtained licenses but did not fully commit to planting. So that's the reason why, you know, the low numbers there. So the harvest data shows zero acres in 2019 and only 9 acres in 2020-- I mean, 2018, and 9 acres in 2019, with no data available for 2020. So this is the transition to USDA.

So the reason for this might be because of the failure in the harvest abandonment, also the compliance complexities, so, destruction of crops. The pilot program generated high interest from the farmers but low actual output.

So the key function of the U.S. hemp program is to regulate the production of hemp, including licensing, testing, harvesting, and disposal of hemp. So USDA approves the state and tribal hemp plants and regulates the state hemp's grower under the USDA plan. So USDA-- Hawaii is one of the 12 states under the authority of the USDA program.

So USDA issues the producer license with a three-year validity. USDA requires farmers to get their samples tested within 30 days of harvest and they are also required to submit a remediation or dispose of plants in case compliance issues with the THC levels.

The local farmers, the Hawaii farmers, apply for the license through the Hemp Program and submit a criminal history background within the last 10 years. And they also pay zero dollar application fee.

The farmers are required to establish and report acreage to the Farm Service Agency, or FSA, and after planting, and then also, they are also required to submit annual production report to the USDA annually. So what's the role of DAB here? DAB serves as the primary liaison between the USDA and local farmers.

This role is critical because it ensures that federal regulations and programs are effectively implemented at the state level while addressing the unique needs of Hawaii's agricultural community. So basically, we act as a bridge for information flow so farmers' concerns, questions, and compliance challenges are communicated to USDA.

USDA responses, guidance, and regulatory updates are relayed back to farmers in a clear manner. So DAB also provides technical assistance to the farmers for compliance-- or compliance support regarding licensing, testing, sampling, record keeping, and also reporting obligations to FSA. The department also offers one-on-one consultations to help farmers navigate complex regulations and adopt best practices.

So DAB also meets regularly with USDA and FSA. We discuss changes in federal hemp rules and how they impact the local farmers and to advocate for local farmers' interest in federal decision-making. So when farmers encounter issues such as licensing delays, compliance disputes, or interpretation of rules, our department steps in to mediate and resolve these matters with USDA. So here are some of the data from the USDA Hemp Program.

So the number of hemp licenses rose steadily from 62 in 2020--that's in blue graph--to 89 in 2023, in yellow bar. So there's an initial growth and interest in hemp production here. However, there was a sharp decline in 2024 to 56 licenses, and the downward trend continued into early 2026 with only 40 licenses.

So what this means, after the initial search, the farmers dropped significantly, likely due to market volatility, or complexity of regulatory compliances, or reduced profitability. So in the pie chart--so it shows here in 2023, that's the 89 licenses issued by USDA--so the majority of the licenses were issued to Hawaii Island, so around 38,000, followed by Oahu, and then to Maui. But this year, early this year-- so there's a significant drop, so almost 45%. So now the Hawaii Island only got 13 licenses, Oahu 16, and Maui 7.

So it means that there's regional shifts in interest or operational viability for hemp farming. So in green table, the U.S. industrial hemp value was 824 million in U.S. dollars in 2021. It dropped 71% in 2022 and recovered in 2023. In 2024, the value rebounded by 40% to 445 million U.S. dollars.

So this likely due to oversupply of hemp, falling prices, or demand issues. Then for acreage, in 2021, Hawaii planted and harvested 17 acres each of hemp. But after that, in 2022 to 2024, the acreage data was withheld to protect confidentiality, which usually happens when very few farmers are active.

So it means the hemp production in Hawaii remains small in scale and the lack of reported data suggests limited participation or consolidation among a few growers. So this is our current program at the Department of Agriculture and Biosecurity. So we monitor growing buffer zones and the transportation of hemp. So why buffer zones and transportation monitoring matters?

So hemp can cross-pollinate with other cannabis varieties or nearby crops, which may affect THC levels or seed purity, and buffer zones reduce the risk of pollen drift that could impact non-hemp crops or organic certifications.

So for growing buffer zones, the hemp production is limited to within 300 feet of the childcare facility, the schools and playgrounds, and also 100 feet within the residential structures, and you cannot grow it inside the buildings. So for monitoring transportation-- for monitoring the transportation of hemp, why it matters, so during transport, documentation ensures the product is legal and not mistaken for marijuana.

Monitoring prevents diversion of hemp into illicit markets and ensures accountability from farm to processing facility. So at DAB, we verify the documents that they submit to us. So they submit transportation report, so they have to have a USDA license, they have to have their certificate of analysis for THC compliance, and also identification for those who transport the hemp. Then next, as I mentioned earlier, we partner with USDA and FSA, but also on a local level, we partner with Department of Health.

Industrial hemp regulations involve multiple layers, so federal, state, and local should need to meet together. So DAB collaborates with these agencies to ensure compliance, streamline processes, and support farmers effectively. So I've mentioned already how we work with USDA.

Then for FSA, we collaborate so that farmers can access federal programs like small farmers loan, crop insurance, and disaster assistance. For Department of Health, so this partnership is critical for public health and product safety, and DAB and DOH coordinate on ensuring hemp direct products meet safety and labeling requirements, informing producers and processors about health regulations latest update, latest with, you know, state level regulations, and compliance for hemp-based products. So DAB and DOH also collaborated by jointly convening the Hawaii Health Task Force last year.

Could you start wrapping up any final comments?

So the future outlook for DAB, with Act 263 set to expire in 2027 and federal rules tightening THC definitions, the program will likely shift towards stricter compliance and expanded collaboration with DOH and exploring new market opportunities, such as fiber and industrial application to sustain hemps-- the Hawaii hemps industry. Thank you very much.

Thank you very much. Appreciate that update, and we'll come back to you with questions. Next, we're going to go to Tai Cheng, president and owner of Aloha Green Apothecary. I ask you to come front and center. That way we can-- you can be on TV. Thank you so much for joining us, Mr. Cheng, and please fill us in on the medical cannabis industry from your perspective.

Thank you, Chair and committee members. Thank you very much for holding this information briefing today. Let me just set up my slideshow here. A little bit about myself, my name is Tai Cheng. I'm the president and owner of Aloha Green, one of the medical cannabis dispensaries here on Oahu.

There's eight in the state, and we're one of the three that are here located on Oahu. Today I'll be talking a little bit about how the program has been going and just some recent updates, maybe state as well as federal.

Aloha Green also operates a hemp business, one that is actually registered with the state and the Department of Health, so we can provide some also insights on how the hemp registry is going and how retailers are being affected. A little bit about the news, I guess, of what's been happening, there has been this talk of rescheduling cannabis as Schedule III from Schedule I. Many people are asking why this is happening now.

You take a little bit-- if you dig a little bit deeper into President Trump's rationale for what he's trying to do, you can see that he's receiving a lot of money from the cannabis industry, especially out of Florida. There's a number of, I guess, insiders within Trump's orbit, and I've listed those individuals on my chart, including his son-in-law, his chief of staff. Three of these people are on Mar-a-Lago's membership as well.

And so in the last couple years, there's been a coordinated push by the cannabis companies to affect the Trump Administration in first rescheduling cannabis as a Schedule III, and the rumor is that there will be be a descheduling commission that will be established sometime this year to look at descheduling cannabis by the time that President Trump leaves office at the end of his term. Some things about the Hawaiian medical market. We started in 2017.

We've seen flat-- some declining growth and flat growth in patient numbers over the last couple years. The height, of course, was during Covid when many of our community were stuck at their homes and could not leave their house, and so during that time, as an essential business, the medical dispensaries actually did quite well in providing cannabis to their patients. If you look at this slide, you can see the overall revenues, and I think we're pretty much on track for about 60 million this year in total medical cannabis sales.

And the Department of Health keeps very good data on the amount of GT of course that's collected as well as the number of patients that are in the program. We are seeing a slight decline at this current time and there's many factors that play into it.

Last year's bill, though, that allowed for telemedicine and as well as a capping of the fee to about $110, $120 has helped, and I think that we will see a return of some patients back into the program. There was some great articles in Hawaii Business Magazine, actually this month's issue, and I think one of the best pieces was an op-ed from the editor where she mentioned that the choice is no longer between legalization and prohibition.

The choice is between thoughtful governance and continued ambiguity. Legalization is not about endorsement. It's about safety, accountability, and fiscal responsibility. The gray market here already exists, and that's very much true. And I'll talk a little bit about the hemp industry at the end of my presentation.

Currently, as mentioned by the Department of Health, they have a great study that they just put out, market study, that does kind of put our current market around 200 million to about $385 million a year now for all cannabis that's being exchanged or sold in the state. Next slide.

We talked a little bit of the tax projections and we have some of those numbers. The DOH estimates the market between 5 to 95 million monthly if the program was to get up and running in five years' time, and there would be, of course, substantial tax revenue.

The numbers that Department of Health provided are actually higher than the numbers at the industry had pulled about two years ago. The industry itself actually thought there would only be about a 400 million dollar market in total, and that was based on our estimates.

But the estimates provided by the DOH show that we're within that range and it could be, of course, higher than what we estimate. A little bit about Aloha itself, our company, we have almost 100 employees now. We have four dispensaries on this island. We operate one of the largest growing facilities in the state when it comes to medical cannabis.

We have about 60,000 square foot under roof. There's a newly built facility just to produce medical cannabis. The industry projected that there'd be additional 3,000 jobs that would come to the state if adult-use legalization were to occur and that they would be high-paying jobs. Despite some people saying it's just retail-facing, there actually will be a requirement for cultivation and the use of more, I guess, sophisticated growing techniques to meet the demands for an adult-use cannabis market.

In fact, a number of our cultivators come from the UH Manoa program for Agriculture and Soil Sciences, which, actually, the university is very good at. So these are opportunities for Hawaii graduates to stay within the state and operate. You know, one good news story that we like to talk about is two local wahine. They own this brand called Auntie Aloha, and it's a Californian brand because they were not able to get one of the licenses here in the State of Hawaii at the time.

And so they left Hawaii and they started a Hawaiian branded company that deals in adult-use cannabis in California. We were able to partner and license with those ladies, and actually one of them was able to move back to Hawaii because of that, and she's able to work between California and Honolulu because of this opportunity.

And so, there are a number-- we know stories of many, many, of course, local residents who have left the islands and have gone to work in Nevada's industry in Las Vegas, but also California as well.

Tourism demand, I wanted to touch on this a little bit because I guess it wasn't clear from previous years, but we do-- we have one dispensary in Ko Olina, we have one dispensary in Waikiki, and we easily turn away 5 to 10 people coming into those stores every single day asking, can I buy some cannabis?

Of course, mostly Canadians, but also medical patients from other states as well, and tourists are also coming from states that have legal adult-use as well. And so we turn them away. We tell them, sorry, you can get a card. There is telemedicine now, which makes it a little bit easier, but it will take time for you to gain access. It takes two business days at least, or one to two business days, and sometimes longer, but if you're staying for a week or you're staying for a longer period of time, then it makes sense for you to do that.

There was a study that came out maybe about three months ago. DBEDT was the one who issued it. It was done by MMGY Global. It found that there is a actual interest in cannabis tourism here in Hawaii.

They found that actually 46% of Hawaiian tourist prospects would like to try to experience the intoxicating effects of cannabis, which is much higher than the average U.S. number, which was at 39%. And so if you looked at the study--it's available online as well--it was published by the Hawaii Tourism Authority.

It shows that there is great-- there is a demand for visitors and tourists who are coming to our state. And when we don't fill that demand as a state, then it ends up going to the illicit and the black market, and you can buy cannabis from the valets of most of the major hotels here.

They know people that can-- they don't sell it themselves, but they, of course, help to introduce our tourists and visitors to people who can purchase cannabis, and as well, tourists can walk along and buy from kiosks and hemp stores that litter Waikiki as well.

A little bit about illicit cannabis, the Department of Health, it has started, as of January, to register retailers and implement the new hemp rules that were put into place. There are stricter guidelines now that ensures that we don't have these 100 milligram THC drinks, or gummies, or edibles that can be purchased right now in a hemp store, but only about 23 retailers have registered so far in the state to be a hemp retailer.

There is no enforcement action that's being taken yet as we are still trying to set up and establish the investigators and the process in which we will shut these people down, and so, you know, what I hear from retailers, though, from hemp retailers, is there's no reason for them to register if the state is not going to crack down on the bad actors that are participating in industry.

There is no-- it is opening up-- the registration requires the lease of the retailer to be provided to the Department of Health, which is a little, I guess, intrusive for some of the operators. It's a reason, of course, for the DOH to be able to go to the landlord and say, hey, you're selling an illegal product. You should kick these tenants out.

But a lot of the, like, supermarket chains, they feel, why do we have to give up this information to the Department of Health to get registration? Yeah, that's right. So it's starting to happen, and I think once the Department of Health and once the Attorney General begins to crack down on the gray market and illicit hemp, you will start to see, I think, people fall into line and begin to abide by the rules.

But currently, you know, Aloha Green is one of the dispensaries, but if you search for dispensaries in Hawaii, you'll find that there's multiple hemp stores that cater and deliver drugs to hotel rooms, and they don't age check, they don't check ID, and even though they say they provide lab testing, a lot of that lab testing is just around potency of the product and really nothing about what is actually contained in the product. Finally, Hawaii continues to be the last Democratic trifecta state to have not legalized cannabis.

You can see on the list it's a number of states that have already legalized, even Republican trifecta states--Ohio, Montana, Missouri--have legalized adult-use cannabis, and you see that Minnesota, Vermont, Virginia, there's-- these are the--these green states here are the states that have legalized through the State Legislature and not through a ballot initiative, which is the common way that most states have gone. But if Hawaii does look to legalize, then likely it'll be through Legislature, so we can learn a lot from them. That's pretty much it. I'm available for questions.

Thank you very much, Mr. Cheng. I appreciate you being here today to educate us on the industry. Our final presenter, if he's available online, is Judiah McRoberts with the Kauai Hemp Company. If you're there, Mr. McRoberts, please join us and give us an insight into the hemp industry from your perspective. Please go ahead.

Absolutely. Can you all hear me?

Yes.

Great. I will try to be conscious of everyone's time because I'm sure we have questions coming up, so I will power through this presentation as fast as possible. See if I can share my screen here.

Is it working?

Not yet.

What about now?

Now we see it. Yes.

Awesome. Okay.

Looks good. Please proceed.

All right, sounds good. Again, my name is Judiah McRoberts. I am President of Kauai Hemp Company, and we are going to give a short presentation on the challenges and opportunities from a farming hemp and manufacturing CBD perspective. Quick disclaimer, this presentation is for educational purposes only. Kauai Hemp Company, nor myself, is selling, marketing, or promoting any products.

We are here just to share factual insight on the industry challenges and some opportunities moving forward.

The purpose of the presentation is, again, to share our perspective of Hawaii's hemp and CBD industry, outline some key challenges facing farmers and CBD manufacturers here in the state, highlight opportunities for local agriculture and economic growth and provide some real world context, inform legislative discussions. A little bit about Kauai Hemp Company, we are a 10-acre certified organic hemp farm and CBD manufacturer here on the island of Kauai.

We offer several different services, the first being toll processing and extraction services. So, this is for any hemp farmers throughout the state who want to send their hemp to us to either be processed into bulk hemp ingredients or turned into CBD products.

We also do contract manufacturing where we use our own in-house CBD ingredients to make CBD products for other people who want to then sell them either here in the state of Hawaii or on the U.S. mainland.

And we also create bulk CBD ingredients that we can sell to other manufacturers who wish to use high quality Hawaii CBD in their products. We also do some in-house CBD product lines that include CBD tinctures, topicals, and pet wellness products. So, some industry challenges from a farming and manufacturing perspective.

Obviously, any kind of business in Hawaii has high operating costs. Land, labor, water, all that stuff definitely is a lot more expensive to produce here than it is on the mainland. Crop risk from strict THC thresholds and testing variability. We do have some unique growing conditions here in Hawaii because of the UV rays.

The hemp plants react differently. A lot of them are actually bred in the mainland and when you grow them here in Hawaii, they actually produce more THC.

So, we do have to harvest a little bit earlier here in Hawaii, which actually reduces the amount of crop size and production that we can get out of a out of a crop. Another challenge is the level of capital investment required for processing and manufacturing and also, policy uncertainty.

We—over the past five years or so, I believe we've had a new hemp bill or hemp changes to the hemp program every single year. So, this is a major deterrent when you're looking to seek outside capital as most investors want a little more certainty if they're going to be investing for the long term.

Industry challenges from a regulatory environment or perspective, hemp-derived CBD is federally legal, but the federal and state laws do have some slight differences. Limited legal pathways for in-state manufacturer manufacturing of finished products.

So, this specifically I can see as a challenge for us and other producers on the island and in the state where if we are to create a CBD ingredient and then sell it to them, suppose it's like a masseuse or something that wanted to then create a massage oil and then be able to produce that and sell that massage oil, that masseuse would then have to go through the registration process which includes a $500 processor fee, which is a major deterrent.

And so, I believe some of what has caused the market to kind of decrease here in Hawaii has been just the pathways for people to become processors has become increasingly more difficult since it was during the pilot program. Another challenge is restrictions on food, beverage, and supplement categories. The gummies and ingestibles and beverage products are the largest sectors.

Ineffectively, we are not able to compete with the mainland brands who are able to produce these products at higher doses than we are. So, it's—we've seen a huge pivot when we first started in 2019 to now where tinctures, early when we started on, were the number one product category.

Now, gummies and beverages seem to be taking that over, and here in Hawaii, we can't really participate that. Product categories. So, we are seeing a huge decrease in sales due to that. And finally, the compliance focused operators, like ourselves, face disadvantages versus the mainland brands who kind of operate in the gray.

I think Ty Chang kind of mentioned, alluded to some of that. A lot of these products that are coming in from the mainland are definitely not legal. And where we're trying to do the right thing and produce legal products, we ultimately can't compete with these gray market products.

Industry opportunities for Hawaii/ One of our major advantages is we do have a beautiful climate that allows for year-round growing which the mainland can't, can't compete with. So, that's, that's a strict advantage that we have over them. The opportunity to support diverse local agriculture. We just operate in the CBD space.

But there also is hemp fiber, grain, and feed that I think Hawaii could really start to participate in if some of the laws loosened up for that to allow it to happen. And job creation.

I think as an Agriculture 2.0, as we like to call it, we could create more jobs here in the state with diversification of different hemp products. Public safety and consumer protection opportunity.

I think when we increase more local manufacturing of CBD products that enables stronger oversight of these specific products, in comparison to the products that are coming in from the mainland. This includes accurate labeling, batch testing, and product traceability. I've witnessed many products that you can buy online actually have little labeling or no traceability whatsoever.

And I think clear regulation proves consumer safety and more effectively helps with prohibition. A couple key takeaways. I truly believe that Hawaii's hemp industry faces real structural and regulatory challenges. Most local farmers that I talk to or we interact with want to operate in a complicit manner.

Three suggestions for improvement that we would recommend from our perspective would be one, enabling responsible product expansion. This would include supporting low dose gummies, beverages, and other consumer formats within safe THC limits. Two, have the state of Hawaii promote Hawaii-made hemp products through label enforcement.

One of the most recent changes to the law requires anyone who's advertising that they are Hawaii-made, or Hawaii-grown product actually state that percentage, which I don't think anyone is doing. Also, if they could allow for more grant opportunities for farmers and producers, I think that would greatly help.

And then, also, reviewing the Hawaii Hemp Task Force recommendations. We were part of it, along with other members throughout the state. I think there was a lot of really good suggestions in there, not just for CBD but also for the fiber industry, grain, feed, and oil. And that is it.

Thank you very much, Mr. McRoberts. I appreciate you taking the time to educate us. At this point, I'd like to open up to questions to the members. If you have questions of any of our presenters today, we've got them all available in the room or on Zoom. Let me just open it up.

If anybody has any questions. Representative Belatti, you want to start?

Sure. Are they all coming to the table?

You can go ahead and ask your questions and we can make sure that they're here.

Okay. For, I believe, Mr. Gough, you said that one of the three triggers in the bills is the state authority to regulate cannabis without federal preemption. Is there currently a Supreme Court case or anything moving through the courts that that triggers that trigger?

Nothing I'm aware of.

Not that I'm aware of, no. Because that was, that was something new I heard. Right? So, that's the idea, right, that there could be a challenge and basically said a court case saying that it would be the state's authority to regulate cannabis without federal redemption.

Right. That is one of the triggers that is in there. But I'm not aware of any case currently where that could be the decision.

There was a Supreme Court case, I think, a couple months ago. The Supreme Court declined to hear it, but they did—I think the petitioners were asking for either interstate or intrastate authority.

Do you know what state was leading the charge on that?

I don't recall. I can find out for you.

That would be important to know. Also, I know that I've been away from this area for a little while, so I'm not up to speed on everything.

Is the state—is DOH part of a trade part organization or regulators organization where you guys are having discussions about maybe what there might be some state strategies to ensure the preservation of all medical cannabis programs, whatever the state outcome? And what are some of the conversations you're having in those association meetings?

Sure. We are members of CANNRA, which is the National Regulators Association for Cannabis Regulators, and we do routinely talk with other states on how they are handling different regulatory challenges. There's two meetings per year that we attend on the mainland to talk to both the regulators and one is external, so we talk to industry folks too.

So, we are able to keep kind of abreast of the newer developments on the mainland that way.

Has there been any conversations about a way, I mean, just like the—some of the state attorney generals are working to ensure that, you know, our laws and we're okay, you know, within this federal context. Is there any kind of activity going on, any kind of leadership that states are taking to, to maybe band together and make sure that our interested states are being protected more proactively?

Right. So, in the rescheduling conversation, the last time this happened under Biden, when Biden directed it to be rescheduled, we did have those conversations with states and with CANNRA. The conversation was around whether CANNRA would submit basically a statement to, as part of the process, part of the rulemaking process, there was a hearing.

Would we ask to be a part of that hearing? Would different states ask to be a part of the hearing? Would there be like a kind of like the AGs do with a letter that people can sign on to? That just never actually happened because that process stalled out and went away.

So, we'll see with this new one. I am hopeful that we do get that opportunity. And if there is a hearing, we can, either on the state level or as a part of a group, participate.

I think it would be great to keep us surprised. And then also, like as legislators who are very interested in preserving our powers, that maybe there's an opportunity even for state legislators to weigh in on the rulemaking process to really emphasize our point to protect our patients.

Good point.

I have lots of questions, but I don't want to.

Thank you. You're very kind. Let other members ask questions and then we can circle back. Rep. Shimizu.

First of all, can we get copies of your PowerPoints and your contact information?

We will share that. We were provided that, and we will share it with all members and post it on the committee's website.

One question that I just got from the handout is talking about establishing the HCHO and advisory board. And I know there's currently OMCCR in place.

So, I guess coming from, you know, private industry, always wondering, why reinvent the wheel when you have something—would it make sense to beef that up and improve it where it's lacking instead of just starting something new? Can you kind of?

Sure. So, as part of the Bill that was introduced, and I didn't introduce the Bill, but I can speak to, basically just renames the Office of Medical Cannabis and creates an attached agency.

So, all of our authorities, all of our personnel, the special fund that we operate, and all the regulations that we currently have would just move over into this new office. So, it's creating a new office that deals with both medical cannabis, hemp and adult use altogether. And that's really preferable, especially when you're dealing with cannabis.

It's a complicated, nuanced area, and if we have three or four different regulatory agencies that all regulate differently, that creates gaps and enforcement issues.

Okay, thank you.

Shall I go to Garcia next?

Sure. Are you the OMCCR manager?

Question, is your team currently talking with federal agencies like the DOJ, the DEA, to figure out how to reharmonize the state and federal regulation of cannabis to protect our current program in light of the soon coming federal rescheduling?

Yes, sir.

Sure. And I think that's, that's kind of what we were speaking to previously. The process hasn't started, so we don't have a clear indication of how we kind of fit in to the discussions.

But when the process does start, we'll work with either other states or Canada or on our own to make sure that, you know, ideally we get some kind of either a regulation or guidance from the Federal Government that says whatever is in the state law, whatever you guys are doing for medical cannabis, you know, is protected on some level.

So, no conversation right now with the DOJ or DEA on that because I think 329D-25 requires the Department to have these discussions with federal agencies to ensure that the law is being followed, correct?

Yeah, but like I said, the process hasn't started yet. So, once the process does start, we'll initiate those conversations.

So, we'll wait and see then.

Yeah, I mean, hopefully it's soon. That's, that's a federal thing. It's up to the DEA.

Cool. Okay.

Round two questions back to you, Rep. Belatti.

Sure. If the directive has been for the Department of Justice to reschedule cannabis to Schedule 3, my understanding, and again, this is—I've not looked at it in a long time. Are Schedule 3 drugs supposed to be manufactured in particular kinds of settings? And then, what are people doing? Because we're not, we're not in that.

That's the problem. Right? We don't fit into the Schedule 3 model at this point in time. So, what have been the conversations about that? Because, yes, the DEA may not have initiated, but you know what Schedule 3 is. So, what are some of the things that we can be doing proactively?

Right. So, I mean, essentially, no cannabis program is going to be compliant with Schedule 3 as it is, because the FDA doesn't approve botanical drugs for prescription. The FDA has been asking for some kind of regulatory pathway, whether it's a new schedule or separate from the schedules, to be able to regulate cannabinoids.

So, we might see that as part of the Schedule 3 discussion. But, and I think to the discussion, as soon as we have any guidance from the Federal Government, you know, it would be ideal to be able to work in what the actual, like, realities of our program are with how that fits with the federal law.

Can I do a real quick follow up?

Real quick. And then I have.

So, according to the Schedule 3, right, we do have, and we do know there are cannabis companies like in Great Britain that are doing pharmaceutical grade cannabinoids. Are they going to be able to slide immediately into the Schedule 3?

Because they're going to be FDA—are they, are those individual, are those kinds of products FDA approved?

So, there are currently two or three FDA approved cannabinoid-based drugs. The Epidiolex is a CBD and then there's Marinol and that's basically a synthetic THV. Now, that would require FDA approval and that can be prescribed right now through the prescription system.

And so, if they move to Schedule three, you'll see more drugs like that on the pharmaceutical level. We would not deal with that in the medical cannabis program. We would have a separate program, again, that kind of carves out the specific products, the edibles and the tinctures and the flower, that would not be FDA regulated.

So, what we'd be looking for at the federal level is some guidance on if we have these laws on the books that do allow these products that are not FDA approved to be sold at the state level, that that is still protected and still okay.

Thank you.

Sure. So, let me ask a couple questions. Mr. Chang had mentioned the reluctance of some retailers to even bother with registering because they don't see enforcement. Could you speak to that about what the plans are to make sure that the industry knows there will be enforcement coming? You could speak to that.

And then I could ask our Attorney General team to speak to that as well as about what kind of enforcement do we see forthcoming.

Sure. And I mean, I totally understand that that is a concern. You know, retailers don't want to raise their hand and have us show up and say, you can't be doing what you're doing when the guy down the street doesn't raise their hand and no one does anything.

And so, that's why I think it's important to have even enforcement all around. At this point, we are in the education and outreach phase of our registration to make sure that everyone who wants to participate can and is participating and making sure that their paperwork is correct, that they know what the standards are.

We'll start doing inspections and then, on the enforcement of the unregistered, we are going to partner with the AGs. They did just get approval to start hiring.

You know, it's going to take a little bit of time to get it up and running, but the plan is to do an even handed enforcement and support the regulated industry by making sure the unregulated industry also can't keep selling their products.

Yes. Yeah, exactly. Any comments from the Attorney General about that? I mean, we would look to you for being a big part of this enforcement.

And this is why the passing of Acts 269 and Act 241 last year were so important because it creates the framework for our office to be able to do nuisance abatement. And we do have these six new positions in the investigations division that will really ramp this up.

So, we're eagerly awaiting for those people to be hired under your leadership. Thank you. And so, that we can actually move forward with this parallel approach. So, this even enforcement across the board. Over here, Garcia.

Thank you. For the AG. So, just question, has there been any type of enforcement yet or are you just waiting on this new staffing to get up and running and then you go out and start enforcement?

We are waiting on it because that will allow us to actually begin the investigations, which is what we need to do the nuisance abatement.

Has there been any collection of data? Like have, have people been submitting or giving tips to your Department of hey, you know, so and so vape shop is selling this and it's technically legal.

And is there a list of places to go when you have your staff or you just plan to kind of visit all the vape shops and kind of just see what's available?

We have received some tips, usually people calling the public line number. There's also the Hawaii AG email address. But we've got a couple of tips. I think, fortunately for us, because we do also tobacco enforcement, they were selling tobacco products, which allowed me to send a team over and do an inspection and take a look at the vaping part as well. That was about as much as we could do for now.

But to answer your question, yes, we are receiving tips and we're compiling a list as best we can because when the team's up and running, that's all they'll do. They'll do not—no other types of investigations, solely this, this, this project.

Do you folks have a timeline of when you plan to have those positions filled and start enforcement?

We just got approval Friday. So, my plan is to look internally first and fill as many as I can, including the supervisor's position. And then from there, what's left, open it up to the outside recruitment because I have had interest, folks contact the office, reach out to me and the other supervisors and show interest.

So, I feel fairly confident that we should be able to because people want to do this. So, I feel very confident that we should be able to get this team up and running. Given the hiring hurdles that we're faced with, hopefully we can reduce some of that.

But I don't want to put a date just yet, let anybody down, but we just got the word Friday, and the recruitment internally has already gone out.

Thank you.

And if I could just add to that, we actually do collect that data too. We have a report button on our system online, so if anybody wants to report anything, they can go there. We do get reports of people selling hemp products and we also have done extensive outreach in the industry using the tobacco and vape lists.

So, we keep a tab on everybody that we are—all the touch points that we have to make sure that we can show we at least reached out to everybody and said need to start complying and this is how you do it.

Thank you.

Let me ask a question of our epidemiologist here. You know, when I hear concerns from our members, one of the top priority concerns is health impacts. The addictive nature of cannabis, different concerns about whether is it indeed a gateway drug, how is this being used for pain management, is it better than the alternatives?

You know, what is this harm reduction business where if they're on opioids, is it better for them to be on cannabis? Could you speak to how we can protect public health and have a regulated cannabis market?

I think that would take a long time to respond because there's just a lot of science out there that's just coming out about this. So, I hope to be able to synthesize it well here and not go on too long about that. But regarding the addiction, there's new science that's coming out, right?

Because just starting with the basics, your endocannabinoid system is your largest signaling system. So, when your nervous system is sending signals, your endocannabinoid system helps to counteract that somehow to balance you. And the endocannabinoid system actually is—plays a major role in, during the prenatal period, adolescent period and young adult period to shape all those neuron transmissions.

And they also—new science has found that they also shape how other drugs receptors are developed. Now, there is not enough science yet for there to be any conclusion, but with that information, you can understand that there will be risks, right?

There will be risks towards addiction or towards anything else whereby there's a substance that's going to be acting on your brain. Alcohol does it, opioids does it, every drug does that. So, whether—so, the Department of Health is always concerned about the net harm.

So, any drugs out there, like, even though opioids are accessible medicinally, you know, there is access outside of that and we have access for cannabis outside of us.

So, whether or not we move towards adult use or not, the Department of Health can do a lot in terms of following the science, doing research, and we thank you for giving us research funding, starting last year, to start looking more specifically into what these harms would be, looking at how we can do prevention better among our youth, because there's no questioning about the harm that would—that cannabis would increase.

Now, adult use legalization, there, you know, there's lots of people—well, I hear people arguing that there's been a decrease in youth use, you know, over this time, of other states legalizing. True that there's been youth use in states, but it's, it's a trend across all states.

Even in Hawaii, we have seen youth use decrease, but that decreases also seen in alcohol and in tobacco, together with cannabis. Those three are usually linked. But if you're looking and looking at studies and doing—there's a recent study that came out from Johns Hopkins and Harvard that looked at the true association between those states that have legalized and states that have not, for recreational only.

Well, actually, they looked at both medical and recreational. With medical, once you legalize, there has not been any evidence of youth increased use. For medical recreational, there actually is evidence of increased youth.

So, we do actually need to follow the evidence a little bit more. And you know, we're grateful that we have more time here to take a look at that and this whole recommendation of patient...is great. What do we need?

We need to ramp up a lot of the studies, but not only studies to inform us about what's going on, but studies to inform us about how we can prevent the access, similarly to opioids or any other, anything else that becomes available in the illegal market.

Thank you. I asked a question with a lot of detail, and I appreciate you summarize that. We'll need to learn more as we continue this conversation about cannabis regulation. Members, I'd like to wrap it up really soon. We haven't had a chance to ask questions of others. Let me turn it back to any last questions.

Rep. Shimizu, one last question.

I had a question for sergeant. Yeah, he mentioned a green lab experiment, for lack of a better word. Does he have a report on that, that kind of details the process and you know?

Do you have a write up on that, Thomas, about your green lab experience that we could share with the Committee?

I do have one. I gotta go look for it. If you send me your information to my contact, I can go ahead and forward it to you on my findings from that you.

If, Sergeant, if you could just send it to me, to Chair Tarnas, and then I can share it with the Committee, that would be most efficient.

Will do.

Great. Thank you, Sergeant. Appreciate that. So, I'll share it with all the members. Last question, Rep. Belatti.

How many registrations have been made on the system for the—for Act 269?

Registration, I think as of Friday, we were looking at 30 retail registrations, six distributors, and there were 11 that were currently applications to be.

Okay.

Okay.

If I can follow up.

Yeah, I mean we, we've run out of time, but I—Mr. Chang, you know, I, you're, you're here representing the industry. Final words, if you have a suggestion for us to move forward.

Well, I think that the Bill actually has had a lot of work put into it and the industry fully supports what the Legislature has tried to accomplish the last few years. I think that there is a trend. There was some discussion today actually in the Senate when we were hearing the companion bill about how things have changed.

And even the New York Times have—their Op Ed section has changed their stance on legalization, but they still believe that cannabis should be legalized, but that it should be stricter in how it is legalized.

And I think the Bill, HB 1625, shows a much stricter way than other states such as Colorado, Oregon, and Washington, and California have legalized cannabis. The, the way that Hawaii is looking at doing it is actually I would say stricter than, than most. So, I think that's a good start.

But I know there's still a lot of hesitation from lawmakers about how they want to legalize.

Appreciate those comments. If I could just remind all the presenters, if you could share with us your presentations so that way we can post them on our Committee website and share it with members and the public, that would be very helpful. And with that, I just would like to express my appreciation for all the presenters here today, to the members for showing up to ask questions, and to the public for watching us.

We have a lot more to discuss about this complex matter, but this is a good start. So, with that, with that, I will adjourn our meeting today and look forward to further conversation about this. We are adjourned.