Sec. 511. Federal cannabis administration

4,313 words·~20 min read·/bill/117/s/4591/is/section-511

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The Federal Alcohol Administration Act ( 27 U.S.C. 201 et seq. ) is amended by adding at the end the following: It shall be unlawful, except pursuant to a permit issued under this title by the Secretary— to engage in the business of importing cannabis into the United States; or for any person so engaged to sell, offer or deliver for sale, contract to sell, or ship, in interstate or foreign commerce, directly or indirectly or through an affiliate, cannabis so imported. It shall be unlawful, except pursuant to a permit issued under this title by the Secretary— to engage in the business of cultivating, producing, manufacturing, packaging, or warehousing cannabis; or for any person so engaged to sell, offer or deliver for sale, contract to sell, or ship, in interstate or foreign commerce, directly or indirectly or through an affiliate, cannabis so cultivated, produced, manufactured, packaged, or warehoused.

It shall be unlawful, except pursuant to a permit issued under this title by the Secretary— to engage in the business of purchasing cannabis for resale at wholesale; or for any person so engaged to receive or to sell, offer or deliver for sale, contract to sell, or ship, in interstate or foreign commerce, directly or indirectly or through an affiliate, cannabis so purchased. Subject to section 302(e), in the case of a person who has filed a complete and accurate application for a permit under this section within 90 days of the date on which the Secretary has issued any necessary guidance and forms with respect to such applications, this section shall not apply to such person during the period prior to any determination under section 302 as to the entitlement of such person to such permit, provided that such person is in compliance with— any applicable regulations under this title; and payment of any taxes imposed under chapter 56 of the Internal Revenue Code of 1986.

The Secretary shall issue a permit for operations requiring a permit under section 301 unless the Secretary finds that— the applicant (or if the applicant is a corporation, any of its officers, directors, or principal stockholders) has been convicted of a disqualifying offense; the operations proposed to be conducted by the applicant are in violation of the law of the State in which they are to be conducted; or the applicant is not likely to maintain such operations in conformity with Federal law.

For the purposes of paragraph (1), a disqualifying offense is any felony violation of any provision of Federal or State criminal law relating to cannabis or cannabis products (including the taxation thereof), if the conviction occurred after the date of enactment of the Cannabis Administration and Opportunity Act and not later than 3 years before the date of the application. Notwithstanding subparagraph (A), an offense shall not be considered a disqualifying offense if, pursuant to a submission of waiver request by the applicant to the Secretary, the Secretary finds (following a review and recommendation with respect to such waiver request by the Cannabis Products Advisory Committee established under section 602 of the Cannabis Administration and Opportunity Act ) that the applicant has established sufficient mitigation or rehabilitation and fitness to maintain cannabis operations in compliance with State and Federal law by providing— evidence showing that— the applicant has not been convicted of a crime that occurred after the date on which the offense with respect to which the waiver was requested occurred; and the applicant has complied with all terms and conditions of probation or parole; or any other evidence of mitigation and present fitness, including— the circumstances relating to the offense, including mitigating circumstances or social conditions surrounding the commission of the offense; the age of the applicant when the applicant committed the offense; the period of time that has elapsed since the applicant committed the offense; additional evidence of educational, training, or work activities that the applicant has participated in, including during any period of incarceration; letters of reference by persons who have been in contact with the applicant since the applicant was released from any correctional institution; and completion of, or active participation in, rehabilitative drug or alcohol treatment.

If upon examination of any application for a permit the Secretary has reason to believe that the applicant is not entitled to such permit, the Secretary shall so notify the applicant and, upon request by the applicant, afford the applicant due notice and opportunity for hearing on the application. If the Secretary, after affording such notice and opportunity for hearing, still finds that the applicant is not entitled to a permit hereunder, the Secretary shall by order deny the application stating the findings which are the basis for the order.

The Secretary shall— prescribe the manner and form of applications for permits under this title (including the facts to be set forth in the application); prescribe the form of such permits; and specify in any permit the authority conferred by the permit and the conditions of that permit in accordance with this title. To the extent deemed necessary by the Secretary for the efficient administration of this title, the Secretary may require separate applications and permits with respect to the various classes of cannabis, and with respect to the various classes of persons entitled to permits under this title.

The issuance of a permit under this title does not deprive the United States of any remedy for a violation of law. A permit under this title shall be conditioned upon— compliance with all other Federal laws relating to production and sale of cannabis, as well as compliance with all State laws relating to said activities in the State in which the permit applicant resides and does business; payment to the Secretary of a reasonable permit fee in an amount determined by the Secretary to be sufficient over time to offset the cost of implementing and overseeing all aspects of cannabis regulation by the Federal Government; and compliance with— the labor laws described in paragraph

(1)of subsection (j), as determined in accordance with paragraph

(2)of such subsection; and the reporting requirements of subsection (j)(3). Pursuant to regulations prescribed by the Secretary, the permit fee described in paragraph (1)(B) shall be waived in the case of an individual who— has had an income below 250 percent of the Federal Poverty Level for not fewer than 5 of the 10 years preceding the date on which the individual submits an application for a permit under this title; and is a first-time applicant. After due notice and opportunity for hearing, the Secretary may order a permit under this title— revoked or suspended for such period as the Secretary deems appropriate, if the Secretary finds that the permittee has willfully violated any of the conditions of the permit, but for a first violation of the conditions the permit shall be subject to suspension only; revoked if the Secretary finds that the permittee has not engaged in the operations authorized by the permit for a period of more than 2 years; or annulled if the Secretary finds that the permit was procured through fraud, or misrepresentation, or concealment of material fact. The order shall state the findings which are the basis for the order. The Secretary, in coordination with the Secretary of Labor and the National Labor Relations Board, shall, through regulations, establish criteria for making determinations under paragraph (1). The Secretary of Labor and the National Labor Relations Board shall provide to the Secretary any assistance in carrying out this subsection as determined necessary by the Secretary. A violation of the condition under subsection (d)(1)(C) with respect to compliance with section 8 of the National Labor Relations Act ( 29 U.S.C. 158 ) as described in subsection (j)(1)(C) shall be deemed willful for purposes of paragraph (1)(A) if the National Labor Relations Board finds that the permittee has engaged in— a discharge in violation of subsection

(a)of such section 8; a violation of such section 8 during the period in which a representation election under such Act is pending with respect to the employees of the permittee; or a withdrawal of recognition of the recognized or certified collective-bargaining representative under such Act with respect to the employees of the permittee that is in violation of such section 8. Each order of the Secretary with respect to any denial of application, suspension, revocation, annulment, or other proceedings, shall be served— in person by any officer or employee of the Secretary designated by him or any internal revenue or customs officer authorized by the Secretary for the purpose; or by mailing the order by registered mail, addressed to the applicant or respondent at his last known address in the records of the Secretary. Except as otherwise provided in this subsection, a permit issued under this title shall continue in effect until suspended, revoked, or annulled as provided in this title, or voluntarily surrendered. If operations under a permit issued under this title are transferred, the permit automatically terminates 30 days after the date of that transfer, unless an application is made by the transferee before the end of that period for a permit under this title for those operations. If such an application is made, the outstanding permit shall continue in effect until such application is finally acted on by the Secretary. For the purposes of this section, the term transfer means any change of ownership or control, whether voluntary or by operation of law. A permittee or applicant for a permit under this title may obtain judicial review under chapter 7 of title 5, United States Code, of the denial of the application of that applicant or, in the case of a permittee, the denial of an application by the transferee of that permittee or the suspension, revocation, or annulment of a permit with respect to that permittee. Notwithstanding paragraph (1), with respect to a violation of the condition described in subsection (d)(1)(C), the findings of fact and conclusions of law by the Secretary, or, pursuant to subsection (e)(4), the Secretary of Labor or the National Labor Relations Board, concerning the appropriateness of suspending, revoking, or annulling a permit as provided in this title, if supported by substantial evidence on the whole, shall be conclusive. No proceeding for the suspension or revocation of a permit for violation of any condition thereof relating to compliance with Federal law shall be instituted by the Secretary more than 18 months after conviction of the violation of Federal law, or, if no conviction has been had, more than 3 years after the violation occurred. No permit shall be suspended or revoked for a violation of any such condition thereof if the alleged violation of Federal law has been compromised by any officer of the Government authorized to compromise such violation. A labor law described in this paragraph is any of the following: Any provision under the Fair Labor Standards Act of 1938 ( 29 U.S.C. 201 et seq. ), including any regulations promulgated under such Act. Any provision under the Occupational Safety and Health Act of 1970 ( 29 U.S.C. 651 et seq. ), including any standard promulgated under section 6 of such Act ( 29 U.S.C. 655 ) or any other regulation promulgated under such Act, or any standard or regulation promulgated under an applicable State plan approved by the Secretary of Labor under section 18 of such Act ( 29 U.S.C. 667 ) that is identical or equivalent to a standard promulgated under such section 6. Section 8 of the National Labor Relations Act ( 29 U.S.C. 158 ), including any regulations promulgated under such section. For purposes of subsection (d)(1)(C)(i), a permittee shall be considered in violation of a labor law described in paragraph

(1)if any of the following findings are made with respect to the permittee: With respect to a labor law described in paragraph (1)(A)— a finding through an order or judgment of a Federal or State court that the permittee has violated any provision of the Fair Labor Standards Act of 1938, including any regulation promulgated under such Act; or a finding through a final order of the Secretary of Labor that the permittee has violated any provision of such Act, including such a regulation. With respect to a labor law described in paragraph (1)(B)— a finding through an order or judgment of a Federal or State court that the permittee has violated any provision of the Occupational Safety and Health Act of 1970, including any standard promulgated under section 6 of such Act or any other regulation promulgated under such Act, or any standard or regulation promulgated under an applicable State plan approved by the Secretary of Labor under section 18 of such Act ( 29 U.S.C. 667 ) that is identical or equivalent to a standard promulgated under such section 6; or a finding through a final order issued by the Occupational Safety and Health Review Commission, or an equivalent final decision of any State agency or administrative body, that the permittee has committed a violation described in subclause (I). With respect to a labor law described in paragraph (1)(C), a finding by the National Labor Relations Board that the permittee has violated section 8 of the National Labor Relations Act ( 29 U.S.C. 158 ), including a regulation promulgated under such section, by committing an unfair labor practice under such section. Notwithstanding subparagraph (A), a permittee shall not be considered in violation of a labor law described in paragraph

(1)if a finding described in subparagraph

(A)with respect to the permittee is through an order or judgment that has been reversed, vacated, or rescinded. Not later than 30 days after a finding described in paragraph

(2)has been made with respect to a permittee, the permittee shall notify the Secretary of such finding in such form and manner as the Secretary, in coordination with the Secretary of Labor and the National Labor Relations Board, shall prescribe. The Secretary, in coordination with the Secretary of Agriculture and the Secretary of Health and Human Services, shall issue regulations to establish a process for the lawful delivery of hemp described in subsection

(b)to a cannabis enterprise holding a permit issued under this title and authorized pursuant to section 5911 of the Internal Revenue Code of 1986. Hemp referred to in subsection

(a)is Cannabis sativa L. inadvertently produced with a total tetrahydrocannabinol equivalent concentration of more than the allowable tetrahydrocannabinol equivalent amount as described in paragraph (1)(C) of section 297A of the Agricultural Marketing Act of 1946 ( 7 U.S.C. 1639o )— before September 30, 2021, by an institution of higher education or State department of agriculture that grows or cultivates industrial hemp under section 7606 of the Agricultural Act of 2014 ( 7 U.S.C. 5940 ); or by a producer of hemp under subtitle G of the Agricultural Marketing Act of 1946 ( 7 U.S.C. 1639o et seq. ). It shall be unlawful for any person engaged in the business of importing cannabis into the United States, or cultivating, producing, manufacturing, packaging, or warehousing cannabis, or purchasing cannabis for resale at wholesale, directly or indirectly or through an affiliate, to do any of the following: To require, by agreement or otherwise, that any retailer engaged in the sale of cannabis products, purchase any such products from such person to the exclusion in whole or in part of cannabis sold or offered for sale by other persons in interstate or foreign commerce, if such requirement is made in the course of interstate or foreign commerce, or if such person engages in such practice to such an extent as substantially to restrain or prevent transactions in interstate or foreign commerce in any such products, or if the direct effect of such requirement is to prevent, deter, hinder, or restrict other persons from selling or offering for sale any such products to such retailer in interstate or foreign commerce. To induce through any of the following means, any retailer, engaged in the sale of cannabis products to purchase any such products from such person to the exclusion in whole or in part of cannabis sold or offered for sale by other persons in interstate or foreign commerce, if such inducement is made in the course of interstate or foreign commerce, or if such person engages in the practice of using such means, or any of them, to such an extent as substantially to restrain or prevent transactions in interstate or foreign commerce in any such products, or if the direct effect of such inducement is to prevent, deter, hinder, or restrict other persons from selling or offering for sale any such products to such retailer in interstate or foreign commerce: Acquiring or holding (after the expiration of any existing license) any interest in any license with respect to the premises of the retailer. Acquiring any interest in real or personal property owned, occupied, or used by the retailer in the conduct of his business. Furnishing, giving, renting, lending, or selling to the retailer, any equipment, fixtures, signs, supplies, money, services, or other thing of value, subject to such exceptions as the Secretary shall by regulation prescribe, having due regard for public health, the quantity and value of articles involved, established trade customs not contrary to the public interest and the purposes of this subsection. Paying or crediting the retailer for any advertising, display, or distribution service. Guaranteeing any loan or the repayment of any financial obligation of the retailer. Extending to the retailer credit for a period in excess of the credit period usual and customary to the industry for the particular class of transactions, as ascertained by the Secretary of the Treasury and prescribed by regulations by him. Requiring the retailer to take and dispose of a certain quota of any of such products. To induce through any of the following means, any trade buyer engaged in the sale of cannabis products, to purchase any such products from such person to the exclusion in whole or in part of cannabis products sold or offered for sale by other persons in interstate or foreign commerce, if such inducement is made in the course of interstate or foreign commerce, or if such person engages in the practice of using such means, or any of them, to such an extent as substantially to restrain or prevent transactions in interstate or foreign commerce in any such products, or if the direct effect of such inducement is to prevent, deter, hinder, or restrict other persons from selling or offering for sale any such products to such trade buyer in interstate or foreign commerce: Commercial bribery. Offering or giving any bonus, premium, or compensation to any officer, or employee, or representative of the trade buyer. To sell, offer for sale, or contract to sell to any trade buyer engaged in the sale of cannabis products, or for any such trade buyer to purchase, offer to purchase, or contract to purchase, any such products on consignment or under conditional sale or with the privilege of return or on any basis otherwise than a bona fide sale, or where any part of such transaction involves, directly or indirectly, the acquisition by such person from the trade buyer or his agreement to acquire from the trade buyer other cannabis products, if such sale, purchase, offer, or contract is made in the course of interstate or foreign commerce, or if such person or trade buyer engages in such practice to such an extent as substantially to restrain or prevent transactions in interstate or foreign commerce in any such products or if the direct effect of such sale, purchase, offer, or contract is to prevent, deter, hinder, or restrict other persons from selling or offering for sale any such products to such trade buyer in interstate or foreign commerce. To sell or ship or deliver for sale or shipment, or otherwise introduce in interstate or foreign commerce, or to receive therein, or to remove from customs custody for consumption, any cannabis product in packages, unless such products are packaged, and labeled in conformity with such regulations, to be prescribed by the Secretary, with respect to packaging, marking, branding, and labeling and size of container— as will prohibit deception of the consumer with respect to such products or the quantity thereof and as will prohibit, irrespective of falsity, such statements relating to manufacturing processes, analyses, guarantees, and scientific or irrelevant matters as the Secretary finds to be likely to mislead the consumer; as will provide the consumer with information described in section 1103 of the Federal Food, Drug, and Cosmetic Act; as will require compliance with section 112(b) of the Cannabis Administration and Opportunity Act ; as will prohibit statements on the label that are disparaging of a competitor's products or are false, misleading, obscene, or indecent; and as will prevent deception of the consumer by use of a trade or brand name that is the name of any living individual of public prominence, or existing private or public organization, or is a name that is in simulation or is an abbreviation thereof, and as will prevent the use of a graphic, pictorial, or emblematic representation of any such individual or organization, if the use of such name or representation is likely falsely to lead the consumer to believe that the product has been indorsed, made, or used by, or produced for, or under the supervision of, or in accordance with the specifications of, such individual or organization. To publish or disseminate or cause to be published or disseminated by radio broadcast, or in any newspaper, periodical or other publication or by any sign or outdoor advertisement or any other printed or graphic matter, any advertisement of cannabis, if such advertisement is in, or is calculated to induce sales in, interstate or foreign commerce, or is disseminated by mail, unless such advertisement is in conformity with such regulations, to be prescribed by the Secretary, as will— prevent deception of the consumer with respect to the products advertised and as will prohibit, irrespective of falsity, such statements relating to manufacturing processes, analyses, guaranties, and scientific or irrelevant matters as the Secretary finds to be likely to mislead the consumer; provide the consumer with adequate information as to the identity and quality of the products advertised, the characteristics thereof, and the person responsible for the advertisement; prohibit statements that are disparaging of a competitor's products or are false, misleading, obscene, or indecent; and prevent statements inconsistent with any statement on the labeling of the products advertised. It shall be unlawful for any person to alter, mutilate, destroy, obliterate, or remove any mark, brand, or label upon cannabis products held for sale in interstate or foreign commerce or after shipment therein, except as authorized by Federal law or except pursuant to regulations of the Secretary authorizing relabeling for purposes of compliance with the requirements of this subsection or of State law. Paragraph

(4)of subsection

(a)shall not apply to transactions involving solely the bona fide return of merchandise for ordinary and usual commercial reasons arising after the merchandise has been sold. Paragraph

(5)of such subsection shall not apply to the use of the name of any person engaged in business as a manufacturer of cannabis products, nor to the use by any person of a trade or brand name used by him or his predecessor in interest prior to the date of enactment of the Cannabis Administration and Opportunity Act . Paragraph

(6)of such subsection shall not apply to the publisher of any newspaper, periodical, or other publication, or radio broadcaster, unless such publisher or radio broadcaster is engaged in the business of importing cannabis into the United States, or cultivating, producing, manufacturing, packaging, or warehousing cannabis, or purchasing cannabis for resale at wholesale, directly or indirectly or through an affiliate. With respect to subsection (a)(2), subparagraphs (A), (B), (C), (E), and

(F)of such subsection shall apply to transactions between a retailer or trade buyer in any State and a producer, importer, or wholesaler of cannabis products outside such State only to the extent that the law of such State imposes similar requirements with respect to similar transactions between a retailer or trade buyer in such State and a producer, importer, or wholesaler of cannabis products in such State, as the case may be. Pursuant to regulations or other guidance promulgated by the Secretary, with respect to subparagraphs

(A)and

(B)of subsection (a)(2), rules similar to the rules of sections 6.27 and 6.33 of title 27, Code of Federal Regulations (as in effect on the date of enactment of this title), shall apply. Whoever violates section 301 shall be fined not more than $1,000. The Secretary may decide not to refer a violation of such section to the Attorney General for prosecution but instead to collect a payment from the violator of no more than $500 for that violation. The Attorney General may, in a civil action, obtain appropriate relief to prevent and restrain a violation of this title. In this title— the term cannabis has the meaning given such term in section 3 of the Cannabis Administration and Opportunity Act ; the term Secretary means the Secretary of the Treasury or the Secretary's delegate; and the term State includes the District of Columbia, Puerto Rico, and any territory or possession of the United States. . In addition to amounts otherwise available, there is appropriated, out of any funds in the Treasury not otherwise appropriated, for fiscal year 2023— $15,000,000 to the Secretary of Labor for carrying out the activities of the Secretary of Labor under section 302 of the Federal Alcohol Administration Act, to remain available until September 30, 2027; and $10,000,000 to the National Labor Relations Board for carrying out the activities of the National Labor Relations Board under such section, to remain available until September 30, 2027.

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Sec. 511

Federal cannabis administration

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