[Congressional Bills 114th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1014 Introduced in House (IH)]

114th CONGRESS
  1st Session
                                H. R. 1014

To amend the Internal Revenue Code of 1986 to provide for the taxation 
                 of marijuana, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           February 20, 2015

Mr. Blumenauer (for himself, Mr. Polis, Mr. Swalwell of California, Ms. 
Lee, Mr. Pocan, Mr. Cohen, Ms. Norton, and Ms. Pingree) introduced the 
 following bill; which was referred to the Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
To amend the Internal Revenue Code of 1986 to provide for the taxation 
                 of marijuana, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Marijuana Tax Revenue Act of 2015''.

SEC. 2. TAXATION RELATING TO MARIJUANA.

    (a) In General.--Subtitle E of title I of the Internal Revenue Code 
of 1986 is amended by adding at the end the following new chapter:

                        ``CHAPTER 56--MARIJUANA

                     ``subchapter a. producer tax.

 ``subchapter b. special provisions relating to marijuana enterprises.

                       ``subchapter c. penalties.

                      ``Subchapter A--Producer Tax

``Sec. 5901. Imposition of tax.
``Sec. 5902. Exemption from tax.
``Sec. 5903. Special rules.
``Sec. 5904. Definitions.

``SEC. 5901. IMPOSITION OF TAX.

    ``(a) Imposition of Tax.--There is hereby imposed a tax on the sale 
of marijuana by the producer or importer thereof.
    ``(b) Amount of Tax.--
            ``(1) In general.--The amount of the tax imposed by 
        subsection (a) shall be the applicable percentage of the price 
        for which so sold.
            ``(2) Applicable percentage.--For purposes of paragraph 
        (1), the applicable percentage is--
                    ``(A) for the first two calendar years in which 
                this chapter becomes effective, 10 percent,
                    ``(B) for the calendar year following the calendar 
                years described in subparagraph (A), 15 percent,
                    ``(C) for the calendar year following the calendar 
                year described in subparagraph (B), 20 percent, and
                    ``(D) for any calendar year following the calendar 
                year described in subparagraph (C), 25 percent.

``SEC. 5902. EXEMPTION FROM TAX.

    ``(a) General Rule.--No tax shall be imposed under this 
subchapter--
            ``(1) on the distribution or sale of marijuana for medical 
        use in accordance with State law, or
            ``(2) under regulations prescribed by the Secretary, on the 
        sale by the producer or importer of an article--
                    ``(A) for use by the purchaser for further 
                production, or for resale by the purchaser to a second 
                purchaser for use by such second purchaser in further 
                production, or
                    ``(B) for export, or for resale by the purchaser to 
                a second purchaser for export.
    ``(b) Proof of Resale for Further Production; Proof of Export.--
Where an article has been sold free of tax under subsection (a)--
            ``(1) for resale by the purchaser to a second purchaser for 
        use by such second purchaser in further production, or
            ``(2) for export, or for resale by the purchaser to a 
        second purchaser for export,
subsection (a) shall cease to apply in respect of such sale of such 
article unless, within the 6-month period which begins on the date of 
the sale by the producer or importer (or, if earlier, on the date of 
shipment by the producer or importer), the producer or importer 
receives proof that the article has been exported or resold for use in 
further production.
    ``(c) Producer or Importer Relieved From Liability in Certain 
Cases.--In the case of any article sold free of tax under this section 
(other than a sale to which subsection (b) applies), if the producer or 
importer in good faith accepts a certification by the purchaser that 
the article will be used in accordance with the applicable provisions 
of law, no tax shall thereafter be imposed under this chapter in 
respect of such sale by such producer or importer.
    ``(d) Export.--For purposes of this section, the term `export' 
includes shipment to a possession of the United States; and the term 
`exported' includes shipped to a possession of the United States.
    ``(e) Use in Further Production.--An article shall be treated as 
sold for use in further production if such article is sold for use by 
the purchaser for further planting, cultivating, or harvesting.
    ``(f) Further Producer Liable for Tax.--For purposes of this 
chapter, a producer to whom an article is sold or resold free of tax 
under subsection (a)(1) for use by him in further production shall be 
treated as the producer of such article.

``SEC. 5903. SPECIAL RULES.

    ``(a) Definition of Price.--For purposes of this chapter--
            ``(1) Containers, packing and transportation charges.--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 foregoing 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.
            ``(2) Constructive sale price.--
                    ``(A) In general.--If an article is sold at retail, 
                sold on consignment, or sold (otherwise than through an 
                arm's length transaction) at less than the fair market 
                price, the tax under section 5901 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. In the case of an article 
                sold at retail, the computation under the preceding 
                sentence shall be on whichever of the following prices 
                is the lower:
                            ``(i) the price for which such article is 
                        sold, or
                            ``(ii) the highest price for which such 
                        articles are sold to manufacturers, in the 
                        ordinary course of trade, by producers thereof, 
                        as determined by the Secretary. This paragraph 
                        shall not apply if subparagraph (B) applies.
                    ``(B) Special rule.--If an article is sold at 
                retail or to a retailer, and if--
                            ``(i) the producer or importer of such 
                        article regularly sells such articles at retail 
                        or to retailers, as the case may be,
                            ``(ii) the producer or importer of such 
                        article regularly sells such articles to one or 
                        more manufacturers in arm's length transactions 
                        and he establishes that his prices in such 
                        cases are determined without regard to any tax 
                        benefit under this paragraph, and
                            ``(iii) the transaction is an arm's length 
                        transaction,
                the tax under this chapter shall (if based on the price 
                for which the article is sold) be computed under 
                subparagraph (C).
                    ``(C) Price for purposes of special rule.--The 
                price computed under this subparagraph is whichever of 
                the following prices is the lower--
                            ``(i) the price for which such article is 
                        sold, or
                            ``(ii) the highest price for which such 
                        articles are sold by such producer, or importer 
                        to manufacturers.
                    ``(D) Definition of lowest price.--For purposes of 
                subparagraphs (A) and (C), the lowest price shall be 
                determined--
                            ``(i) without requiring that any given 
                        percentage of sales be made at that price, and
                            ``(ii) without including any fixed amount 
                        to which the purchaser has a right as a result 
                        of contractual arrangements existing at the 
                        time of the sale.
                    ``(E) Arm's length.--
                            ``(i) In general.--For purposes of this 
                        section, a sale is considered to be made under 
                        circumstances otherwise than at arm's length 
                        if--
                                    ``(I) the parties are members of 
                                the same controlled group, whether or 
                                not such control is actually exercised 
                                to influence the sale price, or
                                    ``(II) the sale is made pursuant to 
                                special arrangements between a 
                                manufacturer and a purchaser.
                            ``(ii) Controlled groups.--
                                    ``(I) In general.--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.
                                    ``(II) Controlled groups which 
                                include nonincorporated persons.--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 1 or more of such persons 
                                is not a corporation.
            ``(3) Partial payments.--In the case of--
                    ``(A) 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,
                    ``(B) a conditional sale, or
                    ``(C) 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.
            ``(4) Sales of installment accounts.--If installment 
        accounts, with respect to payments on which tax is being 
        computed as provided in paragraph (3), are sold or otherwise 
        disposed of, then paragraph (3) 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--
                    ``(A) there shall be paid an amount equal to the 
                difference between--
                            ``(i) the tax previously paid on the 
                        payments on such installment accounts, and
                            ``(ii) the total tax which would be payable 
                        if such installment accounts had not been sold 
                        or otherwise disposed of (computed as provided 
                        in paragraph (3)); except that
                    ``(B) 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--
                            ``(i) the proportionate share of the amount 
                        for which such accounts are sold which is 
                        allocable to each unpaid installment payment by
                            ``(ii) 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 
                and subsection (c) in respect of the sale of any 
                article shall not exceed the total tax.
    ``(b) Certain Uses Treated as Sales.--Any producer of marijuana 
which uses such marijuana before it is sold shall be liable for the tax 
imposed by section 5901 in the same manner as if such marijuana were 
sold by such producer.
    ``(c) Application of Tax in Case of Sales by Other Than Producer.--
In case any person acquires from the producer of marijuana, by 
operation of law or as a result of any transaction not taxable under 
section 5901, the right to sell such marijuana, the sale of such 
marijuana by such person shall be taxable under this chapter as if made 
by the producer, and such person shall be liable for the tax.

``SEC. 5904. DEFINITIONS.

    ``For purposes of this chapter--
            ``(1) Marijuana.--The term `marijuana' has the meaning 
        given such term by section 102(16) of the Controlled Substances 
        Act (21 U.S.C. 802).
            ``(2) Marijuana product.--The term `marijuana product' 
        means any article which contains marijuana, including an 
        article which is a concentrate, an edible, a tincture, a 
        marijuana-infused product, or a topical.
            ``(3) Producer.--The term `producer' means any person who 
        plants, cultivates, harvests, or in any way facilitates the 
        natural growth of, marijuana.
            ``(4) Manufacturer.--The term `manufacturer' means a person 
        who manufactures, compounds, converts, processes, prepares, or 
        packages marijuana or marijuana products.
            ``(5) Importer.--The term `importer' means--
                    ``(A) any person in the United States to whom 
                nontaxpaid marijuana products, or any processed 
                marijuana, manufactured in a foreign country, Puerto 
                Rico, the Virgin Islands, or a possession of the United 
                States are shipped or consigned; and
                    ``(B) any person who smuggles or otherwise 
                unlawfully brings marijuana or marijuana products into 
                the United States.
            ``(6) Distributor.--The term `distributor' means a person 
        who distributes marijuana or marijuana products.
            ``(7) Retailer.--The term `retailer' means a person who 
        sells marijuana or marijuana products to consumers.
            ``(8) Marijuana enterprise.--The term `marijuana 
        enterprise' means a producer, importer, manufacturer, 
        distributor, retailer or any person who transports, stores, 
        displays, or otherwise participates in any business activity 
        that handles marijuana or marijuana products.

  ``Subchapter B--Special Provisions Relating to Marijuana Enterprises

``Sec. 5911. Occupational tax.
``Sec. 5912. Application for permit.
``Sec. 5913. Permit.
``Sec. 5914. Inspection of books.

``SEC. 5911. OCCUPATIONAL TAX.

    ``(a) Imposition of Tax.--There is hereby imposed a special tax to 
be paid by each person who is engaged in a marijuana enterprise.
    ``(b) Amount of Tax.--The amount of the tax imposed under 
subsection (a) shall be--
            ``(1) $1,000 per year in the case of a producer, importer, 
        or manufacturer, and
            ``(2) $500 per year in the case of any person engaged in a 
        marijuana enterprise who is not described in paragraph (1).

``SEC. 5912. APPLICATION FOR PERMIT.

    ``Every person, before commencing business as a marijuana 
enterprise, and at such other time as the Secretary shall by regulation 
prescribe, shall make application for the permit provided for in 
section 5913. 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--
            ``(1) the premises on which it is proposed to conduct the 
        business are not adequate to protect the revenue,
            ``(2) the activity proposed to be carried out at such 
        premises does not meet such minimum capacity or activity 
        requirements as the Secretary may prescribe, or
            ``(3) such person (including, in the case of a corporation, 
        any officer, director, or principal stockholder and, in the 
        case of a partnership, a partner)--
                    ``(A) is, by reason of his business experience, 
                financial standing, or trade connections or by reason 
                of previous or current legal proceedings involving a 
                felony violation of any other provision of Federal 
                criminal law relating to marijuana or marijuana 
                products, not likely to maintain operations in 
                compliance with this chapter,
                    ``(B) has been convicted of a felony violation of 
                any provision of Federal or State criminal law relating 
                to marijuana or marijuana products, or
                    ``(C) has failed to disclose any material 
                information required or made any material false 
                statement in the application therefor.

``SEC. 5913. PERMIT.

    ``(a) Issuance.--A person shall not engage in business as a 
marijuana 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.
    ``(b) Suspension or Revocation.--
            ``(1) Show cause hearing.--If the Secretary has reason to 
        believe that any person holding a permit--
                    ``(A) has not in good faith complied with this 
                chapter, or with any other provision of this title 
                involving intent to defraud,
                    ``(B) has violated the conditions of such permit,
                    ``(C) has failed to disclose any material 
                information required or made any material false 
                statement in the application for such permit,
                    ``(D) has failed to maintain his premises in such 
                manner as to protect the revenue,
                    ``(E) is, by reason of previous or current legal 
                proceedings involving a felony violation of any other 
                provision of Federal criminal law relating to 
                marijuana, not likely to maintain operations in 
                compliance with this chapter, or
                    ``(F) has been convicted of a felony violation of 
                any provision of Federal or State criminal law relating 
                to marijuana or marijuana products,
        the Secretary shall issue an order, stating the facts charged, 
        citing such person to show cause why his permit should not be 
        suspended or revoked.
            ``(2) Action following hearing.--If, after hearing, the 
        Secretary finds that such person has not shown cause why his 
        permit should not be suspended or revoked, such permit shall be 
        suspended for such period as the Secretary deems proper or 
        shall be revoked.
    ``(c) Information Reporting.--The Secretary may require--
            ``(1) information reporting by any person issued a permit 
        under this section, and
            ``(2) information reporting by such other persons as the 
        Secretary deems necessary to carry out this chapter.
    ``(d) Inspection or Disclosure of Information.--For rules relating 
to inspection and disclosure of returns and return information, see 
section 6103(o).

``SEC. 5914. REGULATIONS.

    ``The Secretary may issue such regulations or other guidance as the 
Secretary determines necessary or appropriate to carry out this 
chapter, including the filing of returns under this chapter in 
electronic format.

                       ``Subchapter C--Penalties

``Sec. 5921. Civil penalties.
``Sec. 5922. Criminal penalties.

``SEC. 5921. CIVIL PENALTIES.

    ``(a) Omitting Things Required or Doing Things Forbidden.--Whoever 
omits, neglects, or refuses to comply with any duty imposed upon him 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 the greater of--
            ``(1) $1,000, or
            ``(2) in the case of an omission, neglect, or refusal with 
        respect to a sale, $100 per ounce of marijuana sold,
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.
    ``(b) Exception.--No penalty shall be imposed under subsection (a) 
if it is shown that there was a reasonable cause and that the taxpayer 
acted in good faith.
    ``(c) Failure To Pay Tax.--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 5 percent of the tax due but unpaid.
    ``(d) Sale of Marijuana or Marijuana Products for Export.--
            ``(1) Every person who sells, relands, or receives within 
        the jurisdiction of the United States any marijuana or 
        marijuana products which have been labeled or shipped for 
        exportation under this chapter,
            ``(2) every person who sells or receives such relanded 
        marijuana or marijuana products, and
            ``(3) 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 $1,000 or 5 
times the amount of the tax imposed by this chapter. All marijuana and 
marijuana 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 marijuana or marijuana products from the place where relanded, 
shall be forfeited to the United States.
    ``(e) Applicability of Section 6665.--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).
    ``(f) Cross References.--For penalty for failure to make deposits 
or for overstatement of deposits, see section 6656.

``SEC. 5922. CRIMINAL PENALTIES.

    ``(a) Fraudulent Offenses.--Whoever, with intent to defraud the 
United States--
            ``(1) Engaging in business unlawfully.--Engages in business 
        as a marijuana enterprise without filing the application and 
        obtaining the permit where required by this chapter or 
        regulations thereunder,
            ``(2) Failing to furnish information or furnishing false 
        information.--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,
            ``(3) Refusing to pay or evading tax.--Refuses to pay any 
        tax imposed by this chapter, or attempts in any manner to evade 
        or defeat the tax or the payment thereof,
            ``(4) Sales and transfers of marijuana or marijuana 
        products unlawfully.--Sells or otherwise transfers, contrary to 
        this chapter or regulations thereunder, any marijuana or 
        marijuana products subject to tax under this chapter, or
            ``(5) Taxable event after tax exemption.--With intent to 
        defraud the United States, purchases, receives, possesses, 
        offers for sale, or sells or otherwise disposes of, any 
        marijuana or marijuana product--
                    ``(A) 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
                    ``(B) which, without payment of tax pursuant to 
                section 5902, 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.
    ``(b) Other Offenses.--Whoever, otherwise than as provided in 
subsection (a), violates any provision of this chapter, or of 
regulations prescribed thereunder, shall, for each such offense, be 
fined not more than $1,000, or imprisoned not more than 1 year, or 
both.
    ``(c) Liability to Tax.--Any person who possesses marijuana or 
marijuana products in violation of subsection (a) shall be liable for a 
tax equal to the tax on such articles.''.
    (b) Study.--Not later than two years after the date of the 
enactment of this Act, and every five years thereafter, the Secretary 
of the Treasury shall--
            (1) conduct a study concerning the characteristics of the 
        marijuana industry, including the number of persons operating 
        marijuana enterprises at each level (e.g., producers, 
        distributors, manufacturers), the volume of sales, the amount 
        of tax collected each year, the areas of evasion, and
            (2) submit to Congress recommendations to improve the 
        regulation of the industry and the administration of the 
        related tax.
    (c) Conforming Amendment.--Section 6103(o)(1)(A) of such Code is 
amended by striking ``and firearms'' and inserting ``firearms, and 
marijuana''.
    (d) Clerical Amendment.--The table of chapters for subtitle E of 
title I of such Code is amended by adding at the end the following new 
chapter:

                      ``Chapter 56. Marijuana.''.

    (e) Effective Date.--
            (1) In general.--The amendments made by this section shall 
        apply to sales, and applications for permits under section 5912 
        of the Internal Revenue Code of 1986 (as added by subsection 
        (a)), after 180 days after the date on which marijuana (as 
        defined in section 5904 of such Code (as so added)) in any form 
        is removed from all schedules under the Controlled Substances 
        Act (21 U.S.C 812(c)).
            (2) Special rules for existing businesses.--In the case of 
        any producer operating under a permit issued on or before the 
        date of the enactment of this Act under State law, the 
        requirements under section 5912 of such Code (as so added) 
        shall apply beginning on the date that is 6 months after the 
        date of the enactment of this Act.
                                 <all>