Sec. 5. Creation of Opportunity Trust Fund and imposition of taxes with respect to cannabis products
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Subchapter A of chapter 98 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section: There is established in the Treasury of the United States a trust fund to be known as the Opportunity Trust Fund (referred to in this section as the Trust Fund ), consisting of such amounts as may be appropriated or credited to such fund as provided in this section or section 9602(b). There are hereby appropriated to the Trust Fund amounts equivalent to the net revenues received in the Treasury from the taxes imposed under chapter 56.
Amounts in the Trust Fund shall be available, without further appropriation, only as follows: 50 percent to the Attorney General to carry out section 3052(a) of part OO of the Omnibus Crime Control and Safe Streets Act of 1968. 10 percent to the Attorney General to carry out section 3052(b) of part OO of the Omnibus Crime Control and Safe Streets Act of 1968. 20 percent to the Administrator of the Small Business Administration to carry out section 6(b)(1) of the Marijuana Opportunity Reinvestment and Expungement Act . 20 percent to the Administrator of the Small Business Administration to carry out section 6(b)(2) of the Marijuana Opportunity Reinvestment and Expungement Act . .
Subtitle E of the Internal Revenue Code of 1986 is amended by adding at the end the following new chapter: Subchapter A. Tax on Cannabis Products Subchapter B. Occupational Tax Subchapter C. Bond and Permits Subchapter D. Operations Subchapter E. Penalties Sec. 5901. Imposition of tax. Sec. 5902. Definitions. Sec. 5903. Liability and method of payment. Sec. 5904. Exemption from tax; transfers in bond. Sec. 5905. Credit, refund, or drawback of tax. There is hereby imposed on any cannabis product produced in or imported into the United States a tax equal to— for any such product removed during the first 5 calendar years ending after the date on which this chapter becomes effective, the applicable percentage of such product’s removal price, and for any product removed during any calendar year after the calendar years described in paragraph (1), the applicable equivalent amount.
For purposes of subsection (a)(1), the applicable percentage shall be determined as follows: For any cannabis product removed during the first 2 calendar years ending after the date on which this chapter becomes effective, 5 percent. For any cannabis product removed during the calendar year after the last calendar year to which paragraph
(1)applies, 6 percent. For any cannabis product removed during the calendar year after the calendar year to which paragraph
(2)applies, 7 percent. For any cannabis product removed during the calendar year after the calendar year to which paragraph
(3)applies, 8 percent. For purposes of subsection (a)(2), the term applicable equivalent amount means, with respect to any cannabis product removed during any calendar year, an amount equal to— in the case of any cannabis product not described in subparagraph (B), the product of the applicable rate per ounce multiplied by the number of ounces of such product (and a proportionate tax at the like rate on all fractional parts of an ounce of such product), and in the case of any THC-measurable cannabis product, the product of the applicable rate per gram multiplied by the number of grams of tetrahydrocannabinol in such product (and a proportionate tax at the like rate on all fractional parts of a gram of tetrahydrocannabinol in such product). For purposes of paragraph (1)(A), the term applicable rate per ounce means, with respect to any cannabis product removed during any calendar year, 8 percent of the prevailing sales price of cannabis flowers sold in the United States during the 12-month period ending one calendar quarter before such calendar year, expressed on a per ounce basis, as determined by the Secretary. For purposes of paragraph (1)(B), the term applicable rate per gram means, with respect to any cannabis product removed during any calendar year, 8 percent of the prevailing sales price of tetrahydrocannabinol sold in the United States during the 12-month period ending one calendar quarter before such calendar year, expressed on a per gram basis, as determined by the Secretary. The tax under this section shall attach to any cannabis product as soon as such product is in existence as such, whether it be subsequently separated or transferred into any other substance, either in the process of original production or by any subsequent process. For purposes of this chapter— Except as provided in subparagraph (B), the term cannabis product means any article which contains (or consists of) cannabis. The term cannabis product shall not include an FDA-approved article or industrial hemp. The term FDA-approved article means any article if the producer or importer thereof demonstrates to the satisfaction of the Secretary of Health and Human Services that such article is— a drug— that is approved under section 505 of the Federal Food, Drug, and Cosmetic Act or licensed under section 351 of the Public Health Service Act, or for which an investigational use exemption has been authorized under section 505(i) of the Federal Food, Drug, and Cosmetic Act or under section 351(a) of the Public Health Service Act, or a combination product (as described in section 503(g) of the Federal Food, Drug, and Cosmetic Act), the constituent parts of which were approved or cleared under section 505, 510(k), or 515 of such Act. The term industrial hemp means the plant Cannabis sativa L. and any part of such plant, whether growing or not, with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis. The term THC-measurable cannabis product means any cannabis product— with respect to which the Secretary has made a determination that the amount of tetrahydrocannabinol in such product can be measured with a high degree of accuracy, or which is not cannabis flower and the concentration of tetrahydrocannabinol in which is significantly higher than the average such concentration in cannabis flower. The term cannabis has the meaning given such term under section 102(16) of the Controlled Substances Act ( 21 U.S.C. 802(16) ). For purposes of this chapter— The term cannabis enterprise means a producer, importer, or export warehouse proprietor. The term producer means any person who plants, cultivates, harvests, grows, manufactures, produces, compounds, converts, processes, prepares, or packages any cannabis product. Subject to regulation prescribed by the Secretary, the term producer shall not include any individual otherwise described in subparagraph
(A)if the only cannabis product described in such subparagraph with respect to such individual is for personal or family use and not for sale. The term importer means any person who— is in the United States and to whom non-tax-paid cannabis products, produced in a foreign country or a possession of the United States, are shipped or consigned, removes cannabis products for sale or consumption in the United States from a customs bonded warehouse, or smuggles or otherwise unlawfully brings any cannabis product into the United States. The term export warehouse proprietor means any person who operates an export warehouse. The term export warehouse means a bonded internal revenue warehouse for the storage of cannabis products, upon which the internal revenue tax has not been paid— for subsequent shipment to a foreign country or a possession of the United States, or for consumption beyond the jurisdiction of the internal revenue laws of the United States. The term cannabis production facility means an establishment which is qualified under subchapter C to perform any operation for which such qualification is required under such subchapter. For purposes of this chapter— The term produce includes any activity described in subsection (b)(2)(A). The terms removal or remove means— the transfer of cannabis products from the premises of a producer (or the transfer of such products from the bonded premises of a producer to a non-bonded premises of such producer), release of such products from customs custody, or smuggling or other unlawful importation of such products into the United States. The term removal price means— except as otherwise provided in this paragraph, the price for which the cannabis product is sold in the sale which occurs in connection with the removal of such product, in the case of any such sale which is described in section 5903(c), the price determined under such section, and if there is no sale which occurs in connection with such removal, the price which would be determined under section 5903(c) if such product were sold at a price which cannot be determined. The producer or importer of any cannabis product shall be liable for the taxes imposed thereon by section 5901. When cannabis products are transferred, without payment of tax, pursuant to subsection
(b)or
(c)of section 5904— except as provided in clause (ii), the transferee shall become liable for the tax upon receipt by the transferee of such articles, and the transferor shall thereupon be relieved of their liability for such tax, and in the case of cannabis products which are released in bond from customs custody for transfer to the bonded premises of a producer, the transferee shall become liable for the tax on such articles upon release from customs custody, and the importer shall thereupon be relieved of their liability for such tax. All provisions of this chapter applicable to cannabis products in bond shall be applicable to such articles returned to bond upon withdrawal from the market or returned to bond after previous removal for a tax-exempt purpose. The taxes imposed by section 5901 shall be paid on the basis of return. The Secretary shall, by regulations, prescribe the period or the event to be covered by such return and the information to be furnished on such return. In the case of any transfer to which subsection (a)(2)(A) applies, the tax under section 5901 on the transferee shall (if not otherwise relieved by reason of a subsequent transfer to which such subsection applies) be imposed with respect to the removal of the cannabis product from the bonded premises of the transferee. Any postponement under this subsection of the payment of taxes determined at the time of removal shall be conditioned upon the filing of such additional bonds, and upon compliance with such requirements, as the Secretary may prescribe for the protection of the revenue. The Secretary may, by regulations, require payment of tax on the basis of a return prior to removal of the cannabis products where a person defaults in the postponed payment of tax on the basis of a return under this subsection or regulations prescribed thereunder. All administrative and penalty provisions of this title, insofar as applicable, shall apply to any tax imposed by section 5901. Except as otherwise provided in this paragraph, in the case of taxes on cannabis products removed during any semimonthly period under bond for deferred payment of tax, the last day for payment of such taxes shall be the 14th day after the last day of such semimonthly period. In the case of cannabis products which are imported into the United States, the following provisions shall apply: The last day for payment of tax shall be the 14th day after the last day of the semimonthly period during which the article is entered into the customs territory of the United States. Except as provided in clause (iv), in the case of an entry for warehousing, the last day for payment of tax shall not be later than the 14th day after the last day of the semimonthly period during which the article is removed from the first such warehouse. Except as provided in clause
(iv)and in regulations prescribed by the Secretary, articles brought into a foreign trade zone shall, notwithstanding any other provision of law, be treated for purposes of this subsection as if such zone were a single customs warehouse. Clauses
(ii)and
(iii)shall not apply to any article which is shown to the satisfaction of the Secretary to be destined for export. In the case of cannabis products which are brought into the United States from Puerto Rico and subject to tax under section 7652, the last day for payment of tax shall be the 14th day after the last day of the semimonthly period during which the article is brought into the United States. Notwithstanding section 7503, if, but for this subparagraph, the due date under this paragraph would fall on a Saturday, Sunday, or a legal holiday (as defined in section 7503), such due date shall be the immediately preceding day which is not a Saturday, Sunday, or such a holiday. In the case of any cannabis products produced in the United States at any place other than the premises of a producer that has filed the bond and obtained the permit required under this chapter, tax shall be due and payable immediately upon production. Any person who in any 12-month period, ending December 31, was liable for a gross amount equal to or exceeding $5,000,000 in taxes imposed on cannabis products by section 5901 (or section 7652) shall pay such taxes during the succeeding calendar year by electronic fund transfer (as defined in section 5061(e)(2)) to a Federal Reserve Bank. Rules similar to the rules of section 5061(e)(3) shall apply to the $5,000,000 amount specified in the preceding sentence. If an article is sold directly to consumers, sold on consignment, or sold (otherwise than through an arm’s length transaction) at less than the fair market price, or if the price for which the article sold cannot be determined, the tax under section 5901(a) shall be computed on the price for which such articles are sold, in the ordinary course of trade, by producers thereof, as determined by the Secretary. For purposes of this section, a sale is considered to be made under circumstances otherwise than at arm’s length if— the parties are members of the same controlled group, whether or not such control is actually exercised to influence the sale price, the parties are members of a family, as defined in section 267(c)(4), or the sale is made pursuant to special arrangements between a producer and a purchaser. The term controlled group has the meaning given to such term by subsection
(a)of section 1563, except that more than 50 percent shall be substituted for at least 80 percent each place it appears in such subsection. Under regulations prescribed by the Secretary, principles similar to the principles of subclause
(I)shall apply to a group of persons under common control where one or more of such persons is not a corporation. In determining, for the purposes of this chapter, the price for which an article is sold, there shall be included any charge for coverings and containers of whatever nature, and any charge incident to placing the article in condition packed ready for shipment, but there shall be excluded the amount of tax imposed by this chapter, whether or not stated as a separate charge. A transportation, delivery, insurance, installation, or other charge (not required by the preceding sentence to be included) shall be excluded from the price only if the amount thereof is established to the satisfaction of the Secretary in accordance with regulations. Paragraphs
(1)and
(2)shall apply for purposes of section 5901(c) only to the extent that the Secretary determines appropriate. In the case of— a contract for the sale of an article wherein it is provided that the price shall be paid by installments and title to the article sold does not pass until a future date notwithstanding partial payment by installments, a conditional sale, or a chattel mortgage arrangement wherein it is provided that the sales price shall be paid in installments, there shall be paid upon each payment with respect to the article a percentage of such payment equal to the rate of tax in effect on the date such payment is due. If installment accounts, with respect to payments on which tax is being computed as provided in paragraph (1), are sold or otherwise disposed of, then paragraph
(1)shall not apply with respect to any subsequent payments on such accounts (other than subsequent payments on returned accounts with respect to which credit or refund is allowable by reason of section 6416(b)(5)), but instead— there shall be paid an amount equal to the difference between— the tax previously paid on the payments on such installment accounts, and the total tax which would be payable if such installment accounts had not been sold or otherwise disposed of (computed as provided in paragraph (1)), except that if any such sale is pursuant to the order of, or subject to the approval of, a court of competent jurisdiction in a bankruptcy or insolvency proceeding, the amount computed under subparagraph
(A)shall not exceed the sum of the amounts computed by multiplying— the proportionate share of the amount for which such accounts are sold which is allocable to each unpaid installment payment, by the rate of tax under this chapter in effect on the date such unpaid installment payment is or was due. The sum of the amounts payable under this subsection in respect of the sale of any article shall not exceed the total tax. Cannabis products on which the internal revenue tax has not been paid or determined may, subject to such regulations as the Secretary shall prescribe, be withdrawn from the bonded premises of any producer in approved containers free of tax and not for resale for use— exclusively in scientific research by a laboratory, by a proprietor of a cannabis production facility in research, development, or testing (other than consumer testing or other market analysis) of processes, systems, materials, or equipment, relating to cannabis or cannabis operations, under such limitations and conditions as to quantities, use, and accountability as the Secretary may by regulations require for the protection of the revenue, or by the United States or any governmental agency thereof, any State, any political subdivision of a State, or the District of Columbia, for nonconsumption purposes. Subject to such regulations and under such bonds as the Secretary shall prescribe, a producer or export warehouse proprietor may transfer cannabis products, without payment of tax, to the bonded premises of another producer or export warehouse proprietor, or remove such articles, without payment of tax, for shipment to a foreign country or a possession of the United States, or for consumption beyond the jurisdiction of the internal revenue laws of the United States. Cannabis products may not be transferred or removed under this subsection unless such products bear such marks, labels, or notices as the Secretary shall by regulations prescribe. Cannabis products imported or brought into the United States may be released from customs custody, without payment of tax, for delivery to a producer or export warehouse proprietor if such articles are not put up in packages, in accordance with such regulations and under such bond as the Secretary shall prescribe. Cannabis products classifiable under item 9801.00.10 of the Harmonized Tariff Schedule of the United States (relating to duty on certain articles previously exported and returned), as in effect on the date of the enactment of the Marijuana Opportunity Reinvestment and Expungement Act , may be released from customs custody, without payment of that part of the duty attributable to the internal revenue tax for delivery to the original producer of such cannabis products or to the export warehouse proprietor authorized by such producer to receive such products, in accordance with such regulations and under such bond as the Secretary shall prescribe. Upon such release such products shall be subject to this chapter as if they had not been exported or otherwise removed from internal revenue bond. Credit or refund of any tax imposed by this chapter or section 7652 shall be allowed or made (without interest) to the cannabis enterprise on proof satisfactory to the Secretary that the claimant cannabis enterprise has paid the tax on— cannabis products withdrawn from the market by the claimant, or such products lost (otherwise than by theft) or destroyed, by fire, casualty, or act of God, while in the possession or ownership of the claimant. No tax shall be collected in respect of cannabis products lost or destroyed while in bond, except that such tax shall be collected— in the case of loss by theft, unless the Secretary finds that the theft occurred without connivance, collusion, fraud, or negligence on the part of the proprietor of the cannabis production facility, owner, consignor, consignee, bailee, or carrier, or their employees or agents, in the case of voluntary destruction, unless such destruction is carried out as provided in paragraph (3), and in the case of an unexplained shortage of cannabis products. In any case in which cannabis products are lost or destroyed, whether by theft or otherwise, the Secretary may require the proprietor of a cannabis production facility or other person liable for the tax to file a claim for relief from the tax and submit proof as to the cause of such loss. In every case where it appears that the loss was by theft, the burden shall be upon the proprietor of the cannabis production facility or other person responsible for the tax under section 5901 to establish to the satisfaction of the Secretary that such loss did not occur as the result of connivance, collusion, fraud, or negligence on the part of the proprietor of the cannabis production facility, owner, consignor, consignee, bailee, or carrier, or their employees or agents. In any case where the tax would not be collectible by virtue of subparagraph (A), but such tax has been paid, the Secretary shall refund such tax. Except as provided in subparagraph (E), no tax shall be abated, remitted, credited, or refunded under this paragraph where the loss occurred after the tax was determined. The abatement, remission, credit, or refund of taxes provided for by subparagraphs
(A)and
(C)in the case of loss of cannabis products by theft shall only be allowed to the extent that the claimant is not indemnified against or recompensed in respect of the tax for such loss. The provisions of this paragraph shall extend to and apply in respect of cannabis products lost after the tax was determined and before completion of the physical removal of the cannabis products from the bonded premises. The proprietor of a cannabis production facility or other persons liable for the tax imposed by this chapter or by section 7652 with respect to any cannabis product in bond may voluntarily destroy such products, but only if such destruction is under such supervision and under such regulations as the Secretary may prescribe. Any claim for credit or refund of tax under this subsection shall be filed within 6 months after the date of the withdrawal from the market, loss, or destruction of the products to which the claim relates, and shall be in such form and contain such information as the Secretary shall by regulations prescribe. There shall be an allowance of drawback of tax paid on cannabis products, when shipped from the United States, in accordance with such regulations and upon the filing of such bond as the Secretary shall prescribe. Sec. 5911. Imposition and rate of tax. Sec. 5912. Payment of tax. Sec. 5913. Provisions relating to liability for occupational taxes. Sec. 5914. Application to State laws. Any person engaged in business as a producer or an export warehouse proprietor shall pay a tax of $1,000 per year (referred to in this subchapter as an occupational tax ) in respect of each premises at which such business is carried on. Any person engaged in business as a producer or an export warehouse proprietor who willfully fails to pay the occupation tax shall be fined not more than $5,000, or imprisoned not more than 2 years, or both, for each such offense. No person shall be engaged in or carry on any trade or business subject to the occupational tax until such person has paid such tax. The occupational tax shall be imposed— as of on the first day of July in each year, or on commencing any trade or business on which such tax is imposed. In the case of a tax imposed under subparagraph
(A)of paragraph (1), the occupational tax shall be reckoned for 1 year, and in the case of subparagraph
(B)of such paragraph, it shall be reckoned proportionately, from the first day of the month in which the liability to such tax commenced, to and including the 30th day of June following. The occupational tax shall be paid on the basis of a return under such regulations as the Secretary shall prescribe. After receiving a properly executed return and remittance of any occupational tax, the Secretary shall issue to the taxpayer an appropriate stamp as a receipt denoting payment of the tax. This paragraph shall not apply in the case of a return covering liability for a past period. Any number of persons doing business in partnership at any one place shall be required to pay a single occupational tax. Whenever more than one of the pursuits or occupations described in this subchapter are carried on in the same place by the same person at the same time, except as otherwise provided in this subchapter, the occupational tax shall be paid for each according to the rates severally prescribed. The payment of the occupational tax shall not exempt from an additional occupational tax the person carrying on a trade or business in any other place than that stated in the records of the Internal Revenue Service. Nothing contained in paragraph
(1)shall require imposition of an occupational tax for the storage of cannabis products at a location other than the place where such products are sold or offered for sale. For purposes of this section, the term place means the entire office, plant or area of the business in any one location under the same proprietorship. For purposes of this paragraph, any passageways, streets, highways, rail crossings, waterways, or partitions dividing the premises shall not be deemed sufficient separation to require an additional occupational tax, if the various divisions are otherwise contiguous. In addition to the person who has paid the occupational tax for the carrying on of any business at any place, any person described in paragraph
(2)may secure the right to carry on, without incurring any additional occupational tax, the same business at the same place for the remainder of the taxable period for which the occupational tax was paid. The persons described in this paragraph are the following: The surviving spouse or child, or executor or administrator or other legal representative, of a deceased taxpayer. A husband or wife succeeding to the business of his or her living spouse. A receiver or trustee in bankruptcy, or an assignee for benefit of creditors. The partner or partners remaining after death or withdrawal of a member of a partnership. When any person moves to any place other than the place for which occupational tax was paid for the carrying on of any business, such person may secure the right to carry on, without incurring additional occupational tax, the same business at the new location for the remainder of the taxable period for which the occupational tax was paid. To secure the right to carry on the business without incurring additional occupational tax, the successor, or the person relocating their business, must register the succession or relocation with the Secretary in accordance with regulations prescribed by the Secretary. Any tax imposed by this subchapter shall apply to any agency or instrumentality of the United States unless such agency or instrumentality is granted by statute a specific exemption from such tax. The payment of any tax imposed by this subchapter for carrying on any trade or business shall not be held to— exempt any person from any penalty or punishment provided by the laws of any State for carrying on such trade or business within such State, or in any manner to authorize the commencement or continuance of such trade or business contrary to the laws of such State or in places prohibited by municipal law, or prohibit any State from placing a duty or tax on the same trade or business, for State or other purposes. Sec. 5921. Establishment and bond. Sec. 5922. Application for permit. Sec. 5923. Permit. Except as authorized by the Secretary or on the bonded premises of a cannabis production facility duly authorized to produce cannabis products according to law, no cannabis product may planted, cultivated, harvested, grown, manufactured, produced, compounded, converted, processed, prepared, or packaged in any building or on any premises. No person other than a producer which has filed the bond required under subsection
(b)and received a permit described in section 5923 may produce any cannabis product. This subsection shall not apply with respect the activities of an individual who is not treated as a producer by reason of section 5902(b)(2)(B). Every person, before commencing business as a producer or an export warehouse proprietor, shall file such bond, conditioned upon compliance with this chapter and regulations issued thereunder, in such form, amount, and manner as the Secretary shall by regulation prescribe. A new or additional bond may be required whenever the Secretary considers such action necessary for the protection of the revenue. No person shall engage in such business until he receives notice of approval of such bond. A bond may be disapproved, upon notice to the principal on the bond, if the Secretary determines that the bond is not adequate to protect the revenue. Any bond filed hereunder may be canceled, upon notice to the principal on the bond, whenever the Secretary determines that the bond no longer adequately protects the revenue. Every person, before commencing business as a cannabis enterprise, and at such other time as the Secretary shall by regulation prescribe, shall make application for the permit provided for in section 5923. The application shall be in such form as the Secretary shall prescribe and shall set forth, truthfully and accurately, the information called for on the form. Such application may be rejected and the permit denied if the Secretary, after notice and opportunity for hearing, finds that— the premises on which it is proposed to conduct the cannabis enterprise are not adequate to protect the revenue, or such person (including, in the case of a corporation, any officer, director, or principal stockholder and, in the case of a partnership, a partner) has failed to disclose any material information required or made any material false statement in the application therefor. A person shall not engage in business as a cannabis enterprise without a permit to engage in such business. Such permit, conditioned upon compliance with this chapter and regulations issued thereunder, shall be issued in such form and in such manner as the Secretary shall by regulation prescribe. A new permit may be required at such other time as the Secretary shall by regulation prescribe. If the Secretary has reason to believe that any person holding a permit— has not in good faith complied with this chapter, or with any other provision of this title involving intent to defraud, has violated the conditions of such permit, has failed to disclose any material information required or made any material false statement in the application for such permit, or has failed to maintain their premises in such manner as to protect the revenue, the Secretary shall issue an order, stating the facts charged, citing such person to show cause why their permit should not be suspended or revoked. If, after hearing, the Secretary finds that such person has not shown cause why their permit should not be suspended or revoked, such permit shall be suspended for such period as the Secretary deems proper or shall be revoked. The Secretary may require— information reporting by any person issued a permit under this section, and information reporting by such other persons as the Secretary deems necessary to carry out this chapter. For rules relating to inspection and disclosure of returns and return information, see section 6103(o). Sec. 5931. Inventories, reports, and records. Sec. 5932. Packaging and labeling. Sec. 5933. Purchase, receipt, possession, or sale of cannabis products after removal. Sec. 5934. Restrictions relating to marks, labels, notices, and packages. Sec. 5935. Restriction on importation of previously exported cannabis products. Every cannabis enterprise shall— make a true and accurate inventory at the time of commencing business, at the time of concluding business, and at such other times, in such manner and form, and to include such items, as the Secretary shall by regulation prescribe, with such inventories to be subject to verification by any internal revenue officer, make reports containing such information, in such form, at such times, and for such periods as the Secretary shall by regulation prescribe, and keep such records in such manner as the Secretary shall by regulation prescribe, with such records to be available for inspection by any internal revenue officer during business hours. All cannabis products shall, before removal, be put up in such packages as the Secretary shall by regulation prescribe. Every package of cannabis products shall, before removal, bear the marks, labels, and notices if any, that the Secretary by regulation prescribes. No certificate, coupon, or other device purporting to be or to represent a ticket, chance, share, or an interest in, or dependent on, the event of a lottery shall be contained in, attached to, or stamped, marked, written, or printed on any package of cannabis products. No indecent or immoral picture, print, or representation shall be contained in, attached to, or stamped, marked, written, or printed on any package of cannabis products. Subject to regulations prescribed by the Secretary, cannabis products may be exempted from subsections
(a)and
(b)if such products are— for experimental purposes, or transferred to the bonded premises of another producer or export warehouse proprietor or released in bond from customs custody for delivery to a producer. No person shall— with intent to defraud the United States, purchase, receive, possess, offer for sale, or sell or otherwise dispose of, after removal, any cannabis products— upon which the tax has not been paid or determined in the manner and at the time prescribed by this chapter or regulations thereunder, or which, after removal without payment of tax pursuant to section 5904(a), have been diverted from the applicable purpose or use specified in that section, with intent to defraud the United States, purchase, receive, possess, offer for sale, or sell or otherwise dispose of, after removal, any cannabis products which are not put up in packages as required under section 5932 or which are put up in packages not bearing the marks, labels, and notices, as required under such section, or otherwise than with intent to defraud the United States, purchase, receive, possess, offer for sale, or sell or otherwise dispose of, after removal, any cannabis products which are not put up in packages as required under section 5932 or which are put up in packages not bearing the marks, labels, and notices, as required under such section. Paragraph
(3)of subsection
(a)shall not prevent the sale or delivery of cannabis products directly to consumers from proper packages, nor apply to such articles when so sold or delivered. Any person who possesses cannabis products in violation of paragraph
(1)or
(2)of subsection
(a)shall be liable for a tax equal to the tax on such articles. No person shall, with intent to defraud the United States, destroy, obliterate, or detach any mark, label, or notice prescribed or authorized, by this chapter or regulations thereunder, to appear on, or be affixed to, any package of cannabis products before such package is emptied. Cannabis products produced in the United States and labeled for exportation under this chapter— may be transferred to or removed from the premises of a producer or an export warehouse proprietor only if such articles are being transferred or removed without tax in accordance with section 5904, may be imported or brought into the United States, after their exportation, only if such articles either are eligible to be released from customs custody with the partial duty exemption provided in section 5904(d) or are returned to the original producer of such article as provided in section 5904(c), and may not be sold or held for sale for domestic consumption in the United States unless such articles are removed from their export packaging and repackaged by the original producer into new packaging that does not contain an export label. This section shall apply to articles labeled for export even if the packaging or the appearance of such packaging to the consumer of such articles has been modified or altered by a person other than the original producer so as to remove or conceal or attempt to remove or conceal (including by the placement of a sticker over) any export label. For purposes of this section, section 5904(d), section 5941, and such other provisions as the Secretary may specify by regulations, references to exportation shall be treated as including a reference to shipment to the Commonwealth of Puerto Rico. For purposes of this section, an article is labeled for export or contains an export label if it bears the mark, label, or notice required under section 5904(b). Sec. 5941. Civil penalties. Sec. 5942. Criminal penalties. Whoever willfully omits, neglects, or refuses to comply with any duty imposed upon them by this chapter, or to do, or cause to be done, any of the things required by this chapter, or does anything prohibited by this chapter, shall in addition to any other penalty provided in this title, be liable to a penalty of $10,000, to be recovered, with costs of suit, in a civil action, except where a penalty under subsection
(b)or
(c)or under section 6651 or 6653 or part II of subchapter A of chapter 68 may be collected from such person by assessment. Whoever fails to pay any tax imposed by this chapter at the time prescribed by law or regulations, shall, in addition to any other penalty provided in this title, be liable to a penalty of 10 percent of the tax due but unpaid. Every person who sells, relands, or receives within the jurisdiction of the United States any cannabis products which have been labeled or shipped for exportation under this chapter, every person who sells or receives such relanded cannabis products, and every person who aids or abets in such selling, relanding, or receiving, shall, in addition to the tax and any other penalty provided in this title, be liable for a penalty equal to the greater of $10,000 or 10 times the amount of the tax imposed by this chapter. All cannabis products relanded within the jurisdiction of the United States shall be forfeited to the United States and destroyed. All vessels, vehicles, and aircraft used in such relanding or in removing such cannabis products from the place where relanded, shall be forfeited to the United States. The penalties imposed by subsections
(b)and
(c)shall be assessed, collected, and paid in the same manner as taxes, as provided in section 6665(a). For penalty for failure to make deposits or for overstatement of deposits, see section 6656. Whoever, with intent to defraud the United States— engages in business as a cannabis enterprise without filing the application and obtaining the permit where required by this chapter or regulations thereunder, fails to keep or make any record, return, report, or inventory, or keeps or makes any false or fraudulent record, return, report, or inventory, required by this chapter or regulations thereunder, refuses to pay any tax imposed by this chapter, or attempts in any manner to evade or defeat the tax or the payment thereof, sells or otherwise transfers, contrary to this chapter or regulations thereunder, any cannabis products subject to tax under this chapter, or purchases, receives, or possesses, with intent to redistribute or resell, any cannabis product— upon which the tax has not been paid or determined in the manner and at the time prescribed by this chapter or regulations thereunder, or which, without payment of tax pursuant to section 5904, have been diverted from the applicable purpose or use specified in that section, shall, for each such offense, be fined not more than $10,000, or imprisoned not more than 5 years, or both. Any person who possesses cannabis products in violation of subsection
(a)shall be liable for a tax equal to the tax on such articles. . Not later than 2 years after the date of the enactment of this Act, and every 5 years thereafter, the Secretary of the Treasury, or the Secretary’s delegate, shall— conduct a study concerning the characteristics of the cannabis industry, including the number of persons operating cannabis enterprises at each level of such industry, the volume of sales, the amount of tax collected each year, and the areas of evasion, and submit to Congress recommendations to improve the regulation of the industry and the administration of the related tax. Not later than 6 months before the beginning of each calendar year to which section 5901(a)(2) of the Internal Revenue Code of 1986 (as added by this section) applies, the Secretary of the Treasury, or the Secretary’s delegate, shall make publicly available a detailed description of the methodology which the Secretary anticipates using to determine the applicable rate per ounce and the applicable rate per gram which will apply for such calendar year under section 5901(c)(2) of such Code. Section 6103(o)(1)(A) of the Internal Revenue Code of 1986 is amended by striking and firearms and inserting firearms, and cannabis products . The table of chapters for subtitle E of such Code is amended by adding at the end the following new item: Chapter 56. Cannabis Products . The table of sections for subchapter A of chapter 98 of such Code is amended by adding at the end the following new item: Sec. 9512. Establishment of Opportunity Trust Fund. . Except as otherwise provided in this subsection, the amendments made by this section shall apply to removals, and applications for permits under section 5922 of the Internal Revenue Code of 1986 (as added by subsection (b)), after 180 days after the date of the enactment of this Act. The amendment made by subsection
(a)shall take effect on the date of the enactment of this Act.
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Sec. 5
Creation of Opportunity Trust Fund and imposition of taxes with respect to cannabis products
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