Sec. 208. Federal cannabis administration under the Federal Alcohol Administration Act
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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: Sec. 301. Unlawful business without cannabis permit. Sec. 302. Procedure for issuance of cannabis permit. Sec. 303. Definitions. In order to regulate effectively interstate and foreign commerce in cannabis and to protect the revenue and enforce the postal laws with respect to cannabis: Notwithstanding section 205 of the States Reform Act, every person, before commencing commerce in cannabis, and at such other time as the Secretary shall by regulation prescribe, shall make application for the permit provided for in section 302.
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. It shall be unlawful, except pursuant to a permit issued under this title by the Secretary of the Treasury (hereinafter in this title referred to as 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 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 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.
Whoever violates this section shall be fined not more than $1,000. The Secretary may decide not to refer a violation of this 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. The Secretary shall issue a permit for operations requiring a permit under section 301, and the applicant shall be entitled to such, unless the Secretary finds that— the applicant (or if the applicant is a corporation, any of its officers, directors, or principal stockholders) has, prior to the date of application, been convicted of a disqualifying offense; the applicant is, by reason of business experience, financial standing, or trade connections, not likely to commence operations within a reasonable period or to maintain such operations in conformity with Federal law; that 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 has failed to disclose any material information required or made any material false statement in the application therefor.
For the purposes of paragraph (1): Except as provided for in subparagraph (B), a disqualifying offense is an offense related to the production, consumption, or sale of marijuana that is— a felony under Federal or State law, if the conviction occurred not later than 3 years before the date of application; or a misdemeanor under Federal or State law, if the conviction occurred not later than 1 year before the application. A disqualifying offense does not include a Federal or State offense based on conduct that— was legal under State law in the State when and where the conduct took place; or is as of the date of the application, no longer an offense in that State.
A State has examined the offense or offenses in question, or is in the process of examining, for the issuance of a State license to engage in cannabis commerce, and has awarded the applicant a State license to engage in cannabis commerce. Any person licensed by a State cannabis regulatory authority before the passage of this Act to produce, warehouse, distribute or otherwise transport cannabis products, and in good standing with that regulatory authority, shall be issued necessary Federal permits, licenses, or the like to engage in federally regulated commerce upon application for the same to the Alcohol and Tobacco Tax and Trade Bureau of the Department of the Treasury.
Any person licensed by a State cannabis regulatory authority after the passage of this Act to produce, warehouse, distribute or otherwise transport cannabis products, and in good standing with that regulatory authority shall be issued necessary Federal permits to engage in federally regulated commerce upon application for the same. Nothing in this Act, or the lawful exercise of rights or privileges granted herein, shall be construed to infringe upon or prejudice the ability of a State-licensed cannabis business to apply for a permit to engage in interstate or foreign commerce.
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 within the meaning of the Administrative Procedure Act ( 5 U.S.C. 500 et seq. ). 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 that are the basis for the order.
The provisions of 27 CFR part 200—Rules of Practice in Permit Proceedings, as amended from time to time, shall be applicable to the jurisdiction, powers, and duties of the Secretary of the Treasury under this section. The Secretary shall— prescribe within 60 days of the effective date of this Act, and consistent with the Paperwork Reduction Act, the manner and form of all applications for permits under this title (including the facts to be set forth therein); prescribe the form of all 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 the following: Compliance with all applicable Federal laws relating to production, sale and consumption of cannabis, as well as compliance with all applicable 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 collectively over time to offset the cost of implementing and overseeing all aspects of cannabis regulation by the Federal Government. For the first 3 years following promulgation of regulations by the Secretary under section 204 of the States Reform Act, in order to ensure small business access, such fee may not exceed $10,000 per permit. The Secretary shall waive the user fee for an applicant that is a small business or a socially and economically disadvantaged business that is a business within the meaning of the Small Business Act of 1953 (15 U.S.C. chapter 14A), as interpreted by the Administrator of the Small Business Administration.
After due notice and opportunity for hearing consistent with the Administrative Procedure Act ( 5 U.S.C. 500 et seq. ), 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; be 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 be 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 that are the basis for the order. 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 the Secretary 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 their last known address in the records of the Secretary.
The provisions of 27 CFR part 200—Rules of Practice in Permit Proceedings, as amended from time to time, shall be applicable to the jurisdiction, powers, and duties of the Secretary of the Treasury under this section. 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. An appeal may be taken by the permittee or applicant for a permit from any order of the Secretary of the Treasury denying an application for, or suspending, revoking, or annulling, a basic permit. Such appeal shall be taken by filing, in the court of appeals of the United States within any circuit wherein such person resides or has their principal place of business, or in the United States Court of Appeals for the District of Columbia, within 60 days after the entry of such order, a written petition praying that the order of the Secretary be modified or set aside in whole or in part.
A copy of such petition shall be forthwith transmitted by the clerk of the court to the Secretary, or any officer designated by the Secretary for that purpose, and thereupon the Secretary shall file in the court the record upon which the order complained of was entered, as provided in section 2112 of title 28. Upon the filing of such petition such court shall have exclusive jurisdiction to affirm, modify, or set aside such order, in whole or in part. No objection to the order of the Secretary shall be considered by the court unless such objection shall have been urged before the Secretary or unless there were reasonable grounds for failure so to do.
The finding of the Secretary as to the facts, if supported by substantial evidence, shall be conclusive. If any party shall apply to the court for leave to adduce additional evidence, and shall show to the satisfaction of the court that such additional evidence is material and that there were reasonable grounds for failure to adduce such evidence in the proceeding before the Secretary, the court may order such additional evidence to be taken before the Secretary and to be adduced upon the hearing in such manner and upon such terms and conditions as to the court may seem proper.
The Secretary may modify their findings as to the facts by reason of the additional evidence so taken, and they shall file with the court such modified or new findings, which, if supported by substantial evidence, shall be conclusive, and their recommendation, if any, for the modification or setting aside of the original order. The judgment and decree of the court affirming, modifying, or setting aside, in whole or in part, any such order of the Secretary shall be final, subject to review by the Supreme Court of the United States upon certiorari or certification as provided in section 1254 of title 28.
The commencement of proceedings under this subsection shall, unless specifically ordered by the court to the contrary, operate as a stay of the Secretary’s order. These proceedings shall be subject to the requirements of the Administrative Procedure Act ( 5 U.S.C. 500 et seq. ). Should the permitee substantially prevail, such permitee shall be entitled to attorneys’ fees and costs associated with compelling a decision under this section. Should the Secretary fail to make a permit application decision within ninety days of submission of a completed application, an applicant shall have the right to compel a decision and issuance of a permit pursuant to section 1361 of title 28, United States Code, in any United States district court where the applicant resides or does business or in the United States District Court for the District of Columbia.
Should the applicant substantially prevail, such applicant shall be entitled to attorneys’ fees and costs associated with compelling a decision under this section. Such mandamus remedy shall be in addition to any other remedies available to applicants under the Administrative Procedure Act. 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. Applications for permits to engage in any of the operations set forth in this section must be made on the required form. The application will include all data, written statements, affidavits, documents, or other evidence submitted in support of the application, or upon a hearing.
All financial information submitted by a permit applicant in connection with an application shall be deemed confidential business information and exempt from disclosure under the Freedom of Information Act. Incomplete or incorrectly executed applications will not be acted upon, but the applicant shall be entitled to file a new application without prejudice, or to complete the application already filed. The Secretary shall notify the applicant of such defects in the application within 90 days of application or within 10 days of the discovery of the defect after the first 30 days following the filing of the application.
In the event of any change in the ownership, management, or control of the applicant (in case of a corporation, any change in the officers, directors, or persons holding more than 10 percent of the corporate stock), after the date of filing of any application for a permit and prior to final action on such application, the applicant shall notify the appropriate officer immediately of such change. An application for a basic permit must be filed, and permit issued, to cover each individual plant or premises where any of the businesses specified in this section is engaged in.
Within 90 days of receipt of an application, the Secretary or their designee must notify the applicant whether the application has been approved or denied. This 90-day period may be extended once, by an additional 90 days, if the Secretary or their designee finds that unusual circumstances require additional time to consider the issues presented by an application. If the Secretary or the appropriate designee extends the period, he or she must notify the applicant by letter, along with a brief explanation of the unusual circumstances causing the time period for consideration of the application to be extended.
If the applicant receives no decision from the Secretary or their designee within the time periods set forth in this paragraph, the applicant may file a mandamus action as provided for in this section. In this title— the term marijuana or cannabis has the same meaning given the term marihuana in section 102 of the Controlled Substances Act ( 21 U.S.C. 121 ); and the term State includes the District of Columbia, Puerto Rico, and any commonwealth, territory, enclave, Indian Tribe, or possession of the United States. .
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- 27 CFR 200
- 21 USC 121
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Sec. 208
Federal cannabis administration under the Federal Alcohol Administration Act
Cite27 CFR 200
Cite21 USC 121
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