Honolulu, Hawaii
                                                     , 1999

                                   RE:  H.B. No. 32
                                        H.D. 2
                                        S.D. 1

Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 1999
State of Hawaii


     Your Committee on Economic Development, to which was
referred H.B. No. 32, H.D. 2, entitled: 


begs leave to report as follows:

     The purpose of this measure is to allow privately-funded
industrial hemp research to be conducted in Hawaii when the State
Department of Public Safety issues a controlled substance
registration and the United States Department of Justice, Drug
Enforcement Administration, issues a federally-controlled
substance registration for research on the agronomic potential of
industrial hemp. 

     Testimony in support of this measure was received from the
Board of Agriculture, Department of Business, Economic
Development, and Tourism, ILWU Local 142, Hawai'i Nurses'
Association, Life of the Land, Hemp Industries Association,
Hemptech, Island Hemp Wear, Frederick Brewing Co., The Larch
Company, and four individuals.

     Testimony in opposition to the measure was received from the
Honolulu Police Department, Hawaii Island Economic Development
Board, Kona-Kohala Chamber of Commerce, MacFarms of Hawaii, and
an individual. 

     The Office of Information Practices and the Hawaii Farm
Bureau Federation submitted comments on the measure. 

a                                                     HB32 SD1   
                                   STAND. COM. REP. NO. 1137
                                   Page 2

     Your Committee finds that with the decline of the sugar and
pineapple industries in Hawaii, the State must explore ways to
diversify its agricultural base.  The development of industrial
hemp as an alternative crop presents one such opportunity and has
the potential to generate millions of dollars in revenue for the

     Industrial hemp is used in numerous products, including
clothing, building supplies, and food and nutritional products.
However, American manufacturers of hemp products currently must
import industrial hemp from other countries, such as Canada, in
order to meet their fiber and seed oil needs.  The development of
hemp agriculture in Hawaii would serve the needs of the domestic
hemp industries while providing jobs and revenue for the State.
The passage of this measure would allow the State to move forward
towards exploring the possibility of industrial hemp as an
alternative crop without the use of State funds. 

     Your Committee is aware that the issue of hemp production
raises certain social policy and public safety concerns.
Accordingly, your Committee has amended this measure to require,
rather than allow, the Department of Public Safety to monitor all
phases of the research. 

     As affirmed by the record of votes of the members of your
Committee on Economic Development that is attached to this
report, your Committee is in accord with the intent and purpose
of H.B. No. 32, H.D. 2, as amended herein, and recommends that it
pass Second Reading in the form attached hereto as H.B. No. 32,
H.D. 2, S.D. 1, and be referred to the Committee on Judiciary.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Economic

                                   LORRAINE R. INOUYE, Chair

a                                                     HB32 SD1