New legislation makes Arizona algae friendly

New legislation makes Arizona algae friendly

Bills allow the Arizona State Land Department to issue agricultural leases to algaculture operations and grant them the same low property tax rates enjoyed by other farming businesses.

Arizona is just the second state, after Ohio, to classify the algae industry as agriculture. Officials at Algae Biosciences Inc. are thrilled with a recent bipartisan decision in the Arizona state legislature that will see the Grand Canyon State encourage and support the algae industry. Gov. Jan Brewer signed into law a pair of bills recognizing so-called “algaculture” last month.

Dr. Mark Edwards, AlgaeBio’s vice president of corporate development and marketing, is excited about this new legislation that potentially means extra investment capital, well-paying jobs, a larger tax base, and long-term, sustainable use of agricultural lands for Arizona.

“There are those of us who believe Arizona will be the algae state. I’m just delighted,” says Dr. Edwards, also an Arizona State University professor, author and renowned “algaevangelist,” whose work focuses on resolving world hunger and pursuing sustainable energy with green solutions.

Algae Biosciences Inc. will soon begin commercial production of its ultra-pure omega-3 fatty acid oils, sourced from marine algae and grown in abundant Arizona sunlight, at its production facilities in the high desert plains near Holbrook.

One algae-friendly bill, HB 2226, widens the tax definitions of agricultural real property in Arizona to include lands devoted to algaculture, offering the same lower property tax rates enjoyed by other farming businesses.

The other, HB 2225, would add the growth and harvest of algae to the definition of agricultural state trust lands, allowing the Arizona State Land Department to issue agricultural leases for algaculture operations. Both bills were introduced by Rep. Matt Heinz (D-Tucson) back in January.

ASU Polytechnic, based in Mesa, Ariz., has long been a leader in algae research and development. The recent establishment of the Arizona Center for Algae Technology (AzCATI)—a facility with five acres of algae test beds, which counts AlgaeBio as one of its partners—makes ASU Polytechnic the largest university-based algae research facility in the world, and positions Arizona with front-of-the-line algae research and development capabilities.

“It’s great to see such timely legislation that makes so much sense, and fits so well for this state—because of our nonarable land, flat land, the abundance of waste water and brine water, and 360 days of sunshine a year,” says Dr. Edwards. “Arizona has an opportunity to lead globally, because a lot of other jurisdictions and other countries will follow this example.”

AlgaeBio and Global Health Trax of Vista, Calif., have in place a sales and distribution contract that gives GHT exclusive rights to purchase and distribute AlgaeBio’s ultra-pure, omega-3 fatty acid oils to the nutraceutical, food additive and animal feed markets.

AlgaeBio is soon expected to complete a $5 million, first-phase expansion process at its production facilities and begin large-scale commercial production of its highly regarded algal oils. The initial output of AlgaeBio’s algal oils will contain equal parts of the long-chain essential fatty acids EPA (eicosapentaenoic acid) and DHA (docosahexaenoic acid) at a blended ratio of 40 percent.

This new state legislation is expected to allow Arizona to build a more appealing business climate for algaculture companies seeking affordable land to grow and harvest algae. It will also allow the people of Arizona to capitalize on the current business climate in the algae industry, which is seeing more and more ventures—whether they’re focused on biofuels, nutraceuticals, pharmaceuticals or animal feed—move from the lab to the boardroom, backed by serious investment.

“I and others have been lobbying for something like this for almost three years now. Whether the water is running around a raceway, or bubbling in a vertical column, this is in fact agriculture—we’re farming in water,” says Dr. Edwards.

“This legislation, really, is an enabler. It makes algae production in Arizona more business-friendly. It will also help farmers engage in the algae industry, because they’re going to start thinking about using algae to remediate their manure and their waste streams,” he adds.

“And remember, growing is only one part of it. Much of the tax comes from finished products. If we can invest in our future, with more product going into the supply chain, retail sales will make up for the lower taxes many, many times over. The consumers benefit. The taxpayers benefit. It’ll all come back around, big-time. And that was really the argument that got (the legislation) through.”

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