117 HR 5977 IH: States Reform Act
U.S. House of Representatives
2021-11-15
text/xml
EN
Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.
I
117th CONGRESS
1st Session
H. R. 5977
IN THE HOUSE OF REPRESENTATIVES
November 15, 2021
Ms. Mace (for herself, Mr. McClintock, Mr. Young, Mr. Mast, and Mr. Meijer) introduced the following bill; which was referred to the Committee on the Judiciary, and in addition to the Committees on Energy and Commerce, Natural Resources, Agriculture, Transportation and Infrastructure, Armed Services, Ways and Means, Small Business, Veterans' Affairs, Oversight and Reform, Education and Labor, and Foreign Affairs, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned
A BILL
To amend the Controlled Substances Act regarding marihuana, and for other purposes.
1.

Short title; table of contents
(a)

Short title
This Act may be cited as the “States Reform Act”.
(b)

Table of contents
The table of contents for this Act is as follows:
Sec. 1. Short title; table of contents.
Title I—DECRIMINALIZATION OF MARIJUANA AND DEFERENCE TO STATE POWERS OF PROHIBITION
Sec. 101. Federal decriminalization of cannabis, and State control deference.
Title II—REGULATION OF MARIJUANA LIKE ALCOHOL
Sec. 201. Food and Drug Administration.
Sec. 202. Department of Agriculture regulation of raw cannabis like barley, hops, and grain.
Sec. 203. Addition of raw cannabis to certain authorities relating to agricultural production.
Subtitle H—Raw Cannabis Production
Sec. 298A. Definitions.
Sec. 298B. State and Tribal plans.
Sec. 298C. Department of Agriculture plan.
Sec. 298D. Authority to issue regulations and guidelines.
Sec. 204. Administration like alcohol under Tax and Trade Bureau.
Sec. 205. Transferring agency functions with regard to marijuana.
Sec. 206. Transition safe harbor and administrative remedies.
Sec. 207. Unfair advertising practices and 21 age limit.
Sec. 208. Federal cannabis administration under the Federal Alcohol Administration Act.
Title III—CANNABIS
Sec. 301. Unlawful business without cannabis permit.
Sec. 302. Procedure for issuance of cannabis permit.
Sec. 304. Definitions.
Title III—DESIGNATED STATE MEDICAL CANNABIS PRODUCT SAFETY ACT
Sec. 301. Grandfathering of State medical cannabis products into interstate commerce.
Part J—Designated State Medical Cannabis Products
Sec. 360ggg. Definitions.
Sec. 360ggg–1. Regulation of medical cannabis products.
Sec. 360ggg–2. Cannabis-infused foods, beverages, and supplements.
Sec. 360ggg–3. Cannabis cosmetics.
Sec. 360ggg–4. Liability and method of payment.
Sec. 360ggg–5. Private right of action and administrative remedy.
Title IV—SMALL BUSINESS ADMINISTRATION PROVISIONS
Sec. 401. Fair Small Business Administration access.
Sec. 402. Disaster loan nondiscrimination.
Sec. 403. Microloan nondiscrimination.
Sec. 404. Small business investment company debenture nondiscrimination.
Sec. 321. Debentures to finance cannabis-related businesses and service providers.
Sec. 405. State or local development loan non-discrimination.
Sec. 511. Loans to cannabis-related legitimate businesses and service providers.
Sec. 406. Rulemaking and disbursement.
Sec. 407. Administrative Procedure Act and mandamus remedies.
Title V—IMPOSITION OF CANNABIS EXCISE TAX
Sec. 501. Law Enforcement Retraining and Successful Second Chances Fund.
Sec. 9512. Law Enforcement Retraining and Second Chances Fund.
Sec. 502. Cannabis Revenue and Regulation Act.
Chapter 56—Cannabis Products
Subchapter A—IMPOSITION OF TAX
Sec. 5901. Imposition of tax.
Sec. 5902. Definitions.
Sec. 5903. Liability and method of payment.
Sec. 5904. Exemption from tax.
Sec. 5905. Credit, refund, or drawback of tax.
Subchapter B—OPERATIONS
Sec. 5911. Inventories, reports, and records.
Sec. 5912. Packaging and labeling.
Sec. 5913. Purchase, receipt, possession, or sale of cannabis products after removal.
Sec. 5914. Restrictions relating to marks, labels, notices, and packages.
Sec. 5915. Restriction on importation of previously exported cannabis products.
Subchapter C—PENALTIES
Sec. 5921. Civil penalties.
Sec. 503. Reports and conforming amendments.
Title VI—VETERANS’ CARE AND ACCESS
Sec. 601. Nondiscrimination in Federal hiring for veteran medical cannabis users.
Sec. 602. Authorized provision of information on State-approved marijuana programs to veterans.
Title VII—MISCELLANEOUS UPDATES AND TECHNICAL AMENDMENTS
Sec. 701. United States international cannabis commerce policy.
Sec. 702. Continued Federal employee drug testing.
Sec. 703. Demographic data on new industry of cannabis business owners and employees.
Sec. 704. Conforming amendment to create uniformity of references in existing law to cannabis, marijuana, or marihuana.
Sec. 705. Effective upon enactment.
I

DECRIMINALIZATION OF MARIJUANA AND DEFERENCE TO STATE POWERS OF PROHIBITION
101.

Federal decriminalization of cannabis, and State control deference
(a)

Preemption of cannabis removed from schedule of controlled substances
(1)

Removal of federal controlled substances act preemption
Subsection (c) of schedule I of section 202(c) of the Controlled Substances Act (21 U.S.C. 812) is amended—
(A)
by striking “(10) Marihuana.”; and
(B)
by striking “(17) Tetrahydrocannabinols, except for tetrahydrocannabinols in hemp (as defined in section 297A of the Agricultural Marketing Act of 1946).”.
(2)

Treatment like alcohol in controlled substances act
The Controlled Substances Act (21 U.S.C. 802(6)) is amended—by inserting “Marihuana,” after “malt beverages,”.
(3)

Residual rulemaking
Not later than 30 days after the date of the enactment of this Act, the Attorney General shall administratively revise the current regulations at 21 CFR 1308.11 and related provisions to clarify that for the purposes of the Controlled Substances Act and related statutes, in light of the States Reform Act, marihuana and tetrahydrocannabinols are each deemed by Congress to be a drug or other substance that does not meet the requirements for inclusion in any schedule. Such administrative rulemaking amendments shall not be subject to the requirements of the Administrative Procedure Act other than notice of changes in the Federal Register. Any regulations inconsistent with this Act shall be deemed invalid on the date of enactment of this Act for all purposes including but not limited to any offense committed, case pending, conviction entered, and, in the case of a juvenile, any offense committed, case pending, and adjudication of juvenile delinquency entered before, on, or after the date of enactment of this Act.
(b)

Conforming amendments to controlled substances act and controlled substances import and export act
(1)
The Controlled Substances Act (21 U.S.C. 801 et seq.) is amended—
(A)
in section 102(44) (21 U.S.C. 802(44)), by striking “marihuana,”;
(B)
in section 401(b) (21 U.S.C. 841(b))—
(i)
in paragraph (1)—
(I)
in subparagraph (A)—
- (aa)
in clause (vi), by inserting “or” after the semicolon;
- (bb)
by striking clause (vii); and
- (cc)
by redesignating clause (viii) as clause (vii);
(II)
in subparagraph (B)—
- (aa)
in clause (vi), by inserting “or” after the semicolon;
- (bb)
by striking clause (vii); and
- (cc)
by redesignating clause (viii) as clause (vii);
(III)
in subparagraph (C), in the first sentence, by striking “subparagraphs (A), (B), and (D)” and inserting “subparagraphs (A) and (B)”;
(IV)
by striking subparagraph (D);
(V)
by redesignating subparagraph (E) as subparagraph (D); and
(VI)
in subparagraph (D)(i), as so redesignated, by striking “subparagraphs (C) and (D)” and inserting “subparagraph (C)”;
(ii)
by striking paragraph (4); and
(iii)
by redesignating paragraphs (5), (6), and (7) as paragraphs (4), (5), and (6), respectively;
(C)
in section 402(c)(2)(B) (21 U.S.C. 842(c)(2)(B)), by striking “, marihuana,”;
(D)
in section 403(d)(1) (21 U.S.C. 843(d)(1)), by striking “, marihuana,”;
(E)
in section 418(a) (21 U.S.C. 859(a)), by striking the last sentence;
(F)
in section 419(a) (21 U.S.C. 860(a)), by striking the last sentence;
(G)
in section 422(d) (21 U.S.C. 863(d))—
(i)
in the matter preceding paragraph (1), by striking “marijuana,”; and
(ii)
in paragraph (5), by striking “, such as a marihuana cigarette,”; and
(H)
in section 516(d) (21 U.S.C. 886(d)), by striking “section 401(b)(6)” each place the term appears and inserting “section 401(b)(5)”.
(2)
Section 1010(b) of the Controlled Substances Import and Export Act (21 U.S.C. 960) is amended—
(A)
in paragraph (1)—
(i)
in subparagraph (F), by inserting “or” after the semicolon;
(ii)
by striking subparagraph (G); and
(iii)
by redesignating subparagraph (H) as subparagraph (G);
(B)
in paragraph (2)—
(i)
in subparagraph (F), by inserting “or” after the semicolon;
(ii)
by striking subparagraph (G); and
(iii)
by redesignating subparagraph (H) as subparagraph (G);
(C)
in paragraph (3), by striking “paragraphs (1), (2), and (4)” and inserting “paragraphs (1) and (2)”;
(D)
by striking paragraph (4); and
(E)
by redesignating paragraphs (5), (6), and (7) as paragraphs (4), (5), and (6), respectively.
(c)

Other conforming amendments
(1)

National forest system drug control act of 1986
The National Forest System Drug Control Act of 1986 (16 U.S.C. 559b et seq.) is amended—
(A)
in section 15002(a) (16 U.S.C. 559b(a)) by striking “marijuana and other”;
(B)
in section 15003(2) (16 U.S.C. 559c(2)) by striking “marijuana and other”; and
(C)
in section 15004(2) (16 U.S.C. 559d(2)) by striking “marijuana and other”.
(2)

Interception of communications
Section 2516 of title 18, United States Code, is amended—
(A)
in subsection (1)(e), by striking “marihuana,”; and
(B)
in subsection (2) by striking “marihuana”.
(3)

FMCSA provisions
(A)

Conforming amendment
Section 31301(5) of title 49, United States Code, is amended by striking “section 31306,” and inserting “sections 31306, 31306a, and subsections (b) and (c) of section 31310,”.
(B)

Definition
Section 31306(a) of title 49, United States Code, is amended—
(i)
by striking “means any substance” and inserting the following:
“means—
(A)
any substance”; and
(ii)
by striking the period at the end and inserting:
“(B)
any substance not covered under subparagraph (A) that was a substance under such section as of December 1, 2018, and specified by the Secretary of Transportation.”.
(C)

Disqualifications
Section 31310(b) of title 49, United States Code, is amended by adding at the end the following:
“(3)
In this subsection and subsection (c), the term “controlled substance” has the meaning given such term in section 31306(a).”.
(4)

FAA provisions
Section 45101 of title 49, United States Code, is amended—
(A)
by striking “means any substance” and inserting the following:
“means—
(A)
any substance”; and
(B)
by striking the period at the end and inserting:
“(B)
any substance not covered under subparagraph (A) that was a substance under such section as of December 1, 2018, and specified by the Secretary of Transportation.”.
(5)

FRA provisions
Section 20140(a) of title 49, United States Code, is amended—
(A)
by striking “means any substance” and inserting the following:
“means—
(A)
any substance”; and
(B)
by striking the period at the end and inserting:
“(B)
any substance not covered under subparagraph (A) that was a substance under such section as of December 1, 2018, and specified by the Secretary of Transportation.”.
(6)

FTA provisions
Section 5331(a)(1) of title 49, United States Code, is amended—
(A)
by striking “means any substance” and inserting the following:
“means—
(A)
any substance”; and
(B)
by striking the period at the end and inserting:
“(B)
any substance not covered under subparagraph (A) that was a substance under such section as of December 1, 2018, and whose use the Secretary of Transportation decides has a risk to transportation safety.”.
(7)

GCA provisions
Section 921(a) of title 18, United States Code, is amended by adding at the end the following:
“(36)
The term “unlawful user of or addicted to any controlled substance” shall not include a person by reason of unlawful use of or addiction to marihuana (as defined in section 102(16) of the Controlled Substances Act, 21 U.S.C. 802(16)).”.
(d)

Second chances for nonviolent cannabis offenders
(1)

Retroactive application to marihuana offenses
The amendments made by this section to the Controlled Substances Act (21 U.S.C. 801 et seq.) are retroactive and shall apply to any offense committed, case pending, conviction entered, and, in the case of a juvenile, any offense committed, case pending, or adjudication of juvenile delinquency entered before, on, or after the date of enactment of this Act—
(A)

Limitation of retroactive application to nonviolent and related nonviolent marihuana offenses
Such application and retroactivity described in this subsection (d) shall extend to any nonviolent offense or offenses covered under paragraph (1) and any related nonviolent offenses that would not have satisfied all elements of the charged offense or offenses but for the involvement of marijuana, marihuana as defined in 21 U.S.C. 802(16), or tetrahydrocannabinols, related nonviolent cases pending, related nonviolent convictions entered, and, in the case of a juvenile, any related nonviolent offense committed, related nonviolent case pending, or related nonviolent adjudication of juvenile delinquency entered before, on, or after the date of enactment of this Act. This provision is meant to be extended to nonviolent offenses charged, pending, or otherwise, previously found to be crimes of violence subsequently found to be unconstitutionally vague or restricted, e.g., United States v. Davis, 139 S. Ct. 2319 (2019) (holding 18 U.S.C. 924(c) residual clause unconstitutionally vague); Sessions v. Dimaya, 138 S. Ct. 1204 (2018) (finding 18 U.S.C. 16(b) to be unconstitutionally void for vagueness as incorporated into other statutes).
(B)

Limitation to only cannabis
This provision applies solely to persons who traded exclusively in marijuana, marihuana as defined in 21 U.S.C. 802(16), or tetrahydrocannabinols rather than other substances controlled under the Controlled Substances Act.
(C)

Scope
This provision applies to each and every organ of the Federal Government.
(D)

Post-passage limitation
This provision does not apply to acts or transactions occurring after the passage of this Act that are not in compliance with this Act and other applicable laws.
(E)

Foreign drug cartel members specifically excluded
This provision does not apply to persons that are or were merely the instrumentality of a foreign agent, “drug cartel”, or power.
(F)

DUI exclusion
This provision does not apply specifically to convictions or sentences of an offense of operating a motor vehicle under the influence of a drug or alcohol within the meaning of title 18 of the United States Code, section 13(b), an offense of operating or being in actual physical control of a motor vehicle within the meaning of title 36, section 4.23 of the Code of Federal Regulations, or drunken or reckless operation of vehicle, aircraft or vessel within the meaning of article 111 of the Uniform Code of Military Justice, title 10 of the United States Code, section 911.
(G)

Judicial review
Questions of non-violence are reviewable in any proceeding initiated under this subsection (d) or the following subsection (e). For an example of a person considered under this law to be a nonviolent cannabis offender based on the totality of facts in the case, please refer to the case of United States v. Angelos, 345 F. Supp. 2d 1227 (D. Utah 2004).
(2)

Application to pending actions
For all pending criminal charges or cases and convictions awaiting sentencing impacted by amendments made by this subsection to the Controlled Substances Act (21 U.S.C. 801 et seq.), the attorney for the Government shall drop the relevant charges or seek dismissal of all pending charges within 14 days after the date of enactment of this Act. Any person held in pretrial detention and entitled to dismissal of relevant charges under this provision, and not detained for any other reason, shall be entitled to issuance of a writ under 28 U.S.C. 2241 or 28 U.S.C. 1361, to effectuate immediate release.
(3)

Application to defendants previously sentenced
In the case of a defendant who, before the date of enactment of this Act, was convicted or sentenced for any Federal offense involving marijuana, marihuana as defined in 21 U.S.C. 802(16), or tetrahydrocannabinols and not serving a sentence for any conduct not covered by this Act or serving multiple sentences as provided in 18 U.S.C. 3584, the Director of the Bureau of Prisons, United States Marshals Service, or U.S. Parole Commission shall release such individual from its control within 14 days after the date of enactment of this Act. Any person not so timely released and entitled to such under this provision shall be entitled to issuance of a writ under 28 U.S.C. 2241 or 28 U.S.C. 1361, to effectuate immediate release.
(4)

Cumulative sentencing reconsideration
In the case of a defendant who, before the date of enactment of this Act, was convicted or sentenced for any Federal offense involving marijuana, marihuana, or tetrahydrocannabinols but is also serving a sentence for any other crime not covered by this Act, the sentencing court may, on motion of the defendant, the Director of the Bureau of Prisons, the attorney for the Government, or on its own motion, impose a reduced sentence after considering the factors set forth in section 3553(a) of title 18, United States Code.
(5)

Cessation of all marihuana administrative actions and repatriation of property
Notwithstanding any other provision of law, the Federal Government shall not pursue, and shall immediately desist any present administrative or enforcement action, or criminal or civil asset forfeiture proceeding, against any U.S. person where the cause of controversy is rooted in the illicit marihuana, as defined in 21 U.S.C. 802(16), or tetrahydrocannabinols trade for nonviolent acts having occurred between the passage of the Marijuana Tax Act of 1937 (Public Law 75–238, 50 Stat. 551) and this Act, nor shall the proceeds of such trade or acts be considered the proceeds of illegal drug trade or any kind of criminal or illicit activity under sections 981, 1956 or 1957 of title 18, United States Code, or any other provision of law, even if such activity occurred before the date of enactment of this Act.
(A)

Limitation to only cannabis
This provision applies solely to persons who traded exclusively in marijuana, marihuana as defined in 21 U.S.C. 802(16), or tetrahydrocannabinols rather than other substances controlled under the Controlled Substances Act.
(B)

Scope
This provision applies to each and every organ of the Federal Government.
(C)

Post-passage limitation
This provision does not apply to acts or transaction occurring after the passage of this Act that are not in compliance with this Act and other applicable laws.
(D)

Foreign drug cartel members specifically excluded
This provision does not apply to persons that are or were merely the instrumentality of a foreign agent, “drug cartel”, or power.
(E)

DUI exclusion
This provision does not apply specifically to convictions or sentences of an offense of operating a motor vehicle under the influence of a drug or alcohol within the meaning of title 18 of the United States Code, section 13(b), an offense of operating or being in actual physical control of a motor vehicle within the meaning of title 36, section 4.23 of the Code of Federal Regulations, or drunken or reckless operation of a vehicle, aircraft or vessel within the meaning of article 111 of the Uniform Code of Military Justice, title 10 of the United States Code, section 911.
(6)

Application to military law
Notwithstanding any other provision of law, the provisions of this subsection (d) shall apply to proceedings involving military courts, tribunals, courts-martial, and offenses under the Uniform Code of Military Justice.
(A)
Former servicemembers and veterans that received other than honorable, bad conduct, or dishonorable discharges premised solely on nonviolent cannabis offenses covered under this subsection (d) shall be entitled to petition and receive from a service branch discharge review board or the Board of Correction for Military Records, as jurisdictionally appropriate, an upgrade to a general discharge.
(e)

Expungement of nonviolent federal cannabis offenses
Subsection (c) of 18 U.S.C. 3607 is amended—
(1)
by adding (1) before “If”;
(2)
by adding the following after “thereof”:
“(2)
Not later than 1 year after the date of the enactment of this Act, each Federal district shall conduct a comprehensive review and issue an order expunging, without financial commitment from the offender, each conviction or adjudication for any Federal offense involving marijuana, marihuana as defined in 21 U.S.C. 802(16), or tetrahydrocannabinols, including related nonviolent marihuana offenses, entered by each Federal court in the district before the date of enactment of this Act. Each Federal court shall also issue an order expunging any arrests associated with each expunged conviction or adjudication. The expungement order shall direct that there be expunged from all official records all references to his or her arrest for the offense, the institution of criminal proceedings against him, and the results thereof.”; and
(3)
by adding (3) before “The.”.
II

REGULATION OF MARIJUANA LIKE ALCOHOL
201.

Food and Drug Administration
(a)
The Food and Drug Administration shall have the same authorities with respect to cannabis products that it has with respect to alcohol and no more.
(b)
This clause shall not be construed to limit the Food and Drug Administration’s role in regulating designated State medical cannabis products, drugs or botanical drugs containing cannabis or its derivatives, cannabis cosmetics, or dietary supplements containing cannabis or its derivatives under part J of subchapter V of chapter 9 of title 21 of the United States Code (the Federal Food, Drug, and Cosmetic Act).
202.

Department of Agriculture regulation of raw cannabis like barley, hops, and grain
(a)

USDA To regulate raw cannabis farming
The United States Department of Agriculture shall regulate the farming and production of raw cannabis, including, but not limited to, the seeds, mature stalks, and cultivation of raw cannabis as a traditional agricultural commodity, such as grain, hops, and barley, and as a specialty crop.
(b)

Rulemaking authority
Not later than 90 days after the date of enactment of this Act, the Secretary of Agriculture or his or her designee shall—
(1)
issue guidance and enter formal rulemaking as necessary to carry out this Act and to bring raw cannabis into line with the treatment of other traditional agricultural commodities, such as grain, hops, and barley;
(2)
issue guidance dually designating raw cannabis as a specialty crop in addition to an agricultural commodity; and
(3)
without regard to the notice and comment provisions of section 553 of title 5, United States Code, the Secretary of Agriculture shall revise part 990 of title 7, Code of Federal Regulations, make any conforming changes that are necessary as a result of this section and the amendments made by this section.
(c)

Raw cannabis defined; not finished cannabis products
Raw cannabis refers to marihuana within the meaning of section 801(16) of the Controlled Substances Act (21 U.S.C. 801 et seq.) including, but not limited to, all parts of the plant Cannabis sativa L., whether growing or not; the seeds thereof, and the mature stalks of the plant. Raw cannabis does not include finished products meant for commercial sale as cannabis products regulated under title III of the Federal Alcohol Administration Act or designated State medical cannabis products regulated under part J of subchapter V of chapter 9 of title 21 of the United States Code (the Federal Food, Drug, and Cosmetic Act), such as the resin extracted from any part of such plant; and every compound, manufacture, salt, derivative, mixture, or preparation of such plant or its resin (or industrial hemp).
(d)

Right of action
An adversely affected person or business shall have private right of action under the Administrative Procedure Act (5 U.S.C. 500 et seq.) and the Mandamus Act (28 U.S.C. 1361) to compel the Secretary or the designated officer, employee or agent of the Department of Agriculture to promulgate regulations or undertake and finalize rulemaking required under this Act that are not promulgated or published within the time frames set forth herein, or to act on applications for the permits or licenses herein required, within the time frames set forth herein, or to enjoin agency action. The exclusive venue for bringing any such action shall be the District Court for the District of Columbia. Upon demonstration of undue delay or failure to adhere strictly to statutory deadlines, or other violations of law and equity, equitable relief in the form of a writ of mandamus compelling action shall issue, among such other relief as the court may see fit.
203.

Addition of raw cannabis to certain authorities relating to agricultural production
(a)

Agricultural marketing act of 1946
The Agricultural Marketing Act of 1946 (7 U.S.C. 1621 et seq.) is amended by adding at the end the following:
“H

Raw Cannabis Production
298A.

Definitions
In this subtitle:
(1)

Raw cannabis
The term “raw cannabis” has the same meaning as it is given in section 202(3) of the States Reform Act.
(2)

Indian tribe
The term “Indian tribe” has the meaning given the term in section 4 of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 5304).
(3)

Secretary
The term “Secretary” means the Secretary of Agriculture.
(4)

State
The term “State” means—
(A)
a State;
(B)
the District of Columbia;
(C)
the Commonwealth of Puerto Rico; and
(D)
any other territory or possession of the United States.
(5)

State department of agriculture
The term “State department of agriculture” means the agency, commission, or department of a State government responsible for agriculture in the State.
(6)

Tribal government
The term “Tribal government” means the governing body of an Indian tribe.
298B.

State and Tribal plans
(a)

Submission
(1)

In general
A State or Indian tribe desiring to have primary regulatory authority over the production of the raw cannabis in the State or territory of the Indian tribe shall submit to the Secretary, through the State department of agriculture (in consultation with the Governor and chief law enforcement officer of the State) or the Tribal government, as applicable, a plan under which the State or Indian tribe monitors and regulates that production as described in paragraph (2).
(2)

Contents
A State or Tribal plan referred to in paragraph (1)—
(A)
shall only be required to include—
(i)
a practice to maintain relevant information regarding land on which raw cannabis is produced in the State or territory of the Indian tribe, including a legal description of the land, for a period of not less than 3 calendar years;
(ii)
a procedure for the effective disposal of products that are produced in violation of this subtitle; and
(iii)
a procedure to comply with the enforcement procedures under subsection (d); and
(B)
may include any other practice or procedure established by a State or Indian tribe, as applicable, to the extent that the practice or procedure is consistent with this subtitle.
(3)

Relation to state and tribal law
(A)

No preemption
Nothing in this subsection preempts or limits any law of a State or Indian tribe regulating the production of raw cannabis, to the extent that law is consistent with this subtitle.
(B)

References in plans
A State or Tribal plan referred to in paragraph (1) may include a reference to a law of the State or Indian tribe regulating the production of raw cannabis, to the extent that law is consistent with this subtitle.
(b)

Approval
(1)

In general
Not later than 60 days after receipt of a State or Tribal plan under subsection (a), the Secretary shall—
(A)
approve the State or Tribal plan if the State or Tribal plan complies with subsection (a); or
(B)
disapprove the State or Tribal plan only if the State or Tribal plan does not comply with subsection (a).
(2)

Amended plans
If the Secretary disapproves a State or Tribal plan under paragraph (1)(B), the State, through the State department of agriculture (in consultation with the Governor and chief law enforcement officer of the State) or the Tribal government, as applicable, may submit to the Secretary an amended State or Tribal plan that complies with subsection (a).
(c)

Technical assistance
The Secretary may provide technical assistance to a State or Indian tribe in the development of a State or Tribal plan under subsection (a).
(d)

Violations
(1)

In general
A violation of a State or Tribal plan approved under subsection (b) shall be subject to enforcement solely in accordance with this subsection.
(2)

Negligent violations
(A)

In general
A raw cannabis producer in a State or the territory of an Indian tribe for which a State or Tribal plan is approved under subsection (b) shall be subject to subparagraph (B) of this paragraph if the State department of agriculture or Tribal government, as applicable, determines that the raw cannabis producer has negligently violated the State or Tribal plan, including by negligently—
(i)
failing to provide a legal description of land on which the producer produces raw cannabis; or
(ii)
failing to obtain a license or other required authorization from the State department of agriculture or Tribal government, as applicable.
(B)

Corrective action plan
A raw cannabis producer described in subparagraph (A) shall comply with a plan established by the State department of agriculture or Tribal government, as applicable, to correct the negligent violation, including—
(i)
a reasonable date by which the raw cannabis producer shall correct the negligent violation; and
(ii)
a requirement that the raw cannabis producer shall periodically report to the State department of agriculture or Tribal government, as applicable, on the compliance of the raw cannabis producer with the State or Tribal plan for a period of not less than the next 2 calendar years.
(C)

Result of negligent violation
Except as provided in subparagraph (D), a raw cannabis producer that negligently violates a State or Tribal plan under subparagraph (A) shall not be subject to any criminal or civil enforcement action by the Federal Government or any State government, Tribal government, or local government other than the enforcement action authorized under subparagraph (B).
(D)

Repeat violations
A raw cannabis producer that negligently violates a State or Tribal plan under subparagraph (A) 3 times in a 5-year period shall be ineligible to produce raw cannabis for a period of 5 years beginning on the date of the third violation.
(3)

Other violations
If the State department of agriculture or Tribal government in a State or the territory of an Indian tribe for which a State or Tribal plan is approved under subsection (b), as applicable, determines that a raw cannabis producer in the State or territory has violated the State or Tribal plan with a culpable mental state greater than negligence—
(A)
the State department of agriculture or Tribal government, as applicable, shall immediately report the raw cannabis producer to—
(i)
the Secretary of Agriculture; and
(ii)
in the case of a State department of agriculture, the chief agricultural official of the State; and
(B)
paragraph (1) of this subsection shall not apply to the violation.
(e)

Authorization of appropriations
There are authorized to be appropriated such sums as are necessary to carry out this section.
(f)

Effect
Nothing in this section prohibits the production of raw cannabis in a State or the territory of an Indian tribe for which a State or Tribal plan is not approved under this section in accordance with other Federal laws (including regulations).
298C.

Department of agriculture plan
(a)

Department of agriculture plan
(1)

In general
In the case of a State or Indian tribe for which a State or Tribal plan is not approved under section 298B, the production of raw cannabis in that State or the territory of that Indian tribe shall be subject to a plan established by the Secretary to monitor and regulate that production in accordance with paragraph (2).
(2)

Content
A plan established by the Secretary under paragraph (1) shall include—
(A)
a practice to maintain relevant information regarding land on which raw cannabis is produced in the State or territory of the Indian tribe, including a legal description of the land, for a period of not less than 3 calendar years;
(B)
a procedure for the effective disposal of—
(i)
plants, whether growing or not, that are produced in violation of this subtitle; and
(ii)
products derived from those plants;
(C)
a procedure to comply with the enforcement procedures under subsection (c)(2);
(D)
a procedure for conducting annual inspections of, at a minimum, a random sample of raw cannabis producers to verify that raw cannabis is not produced in violation of this subtitle; and
(E)
such other practices or procedures as the Secretary considers to be appropriate, to the extent that the practice or procedure is consistent with this subtitle.
(b)

Licensing
The Secretary shall establish a procedure to issue licenses to raw cannabis producers in accordance with a plan established under subsection (a).
(c)

Violations
(1)

In general
In the case of a State or Indian tribe for which a State or Tribal plan is not approved under section 298B, it shall be unlawful to produce raw cannabis in that State or the territory of that Indian tribe without a license issued by the Secretary under subsection (b).
(2)

Negligent and other violations
A violation of a plan established under subsection (a) shall be subject to enforcement in accordance with paragraphs (2) and (3) of section 298B(d), except that the Secretary shall carry out that enforcement instead of a State department of agriculture or Tribal government.
298D.

Authority to issue regulations and guidelines
(a)
The Secretary shall have sole authority to issue Federal regulations and guidelines that relate to the production of raw cannabis, including Federal regulations and guidelines that relate to the implementation of section 298B.
(b)
No later than 90 days after enactment, the Secretary of Agriculture shall propose regulations implementing this Act.
(c)

Right of action
An adversely affected person or business shall have private right of action under the Administrative Procedure Act (5 U.S.C. 500 et seq.) and the Mandamus Act (28 U.S.C. 1361) to compel the Secretary or the designated officer, employee or agent of the Department of Agriculture to promulgate regulations or undertake and finalize rulemaking required under this Act that are not promulgated or published within the time frames set forth herein, or to act on applications for the permits or licenses herein required, within the time frames set forth herein, or to enjoin agency action. The exclusive venue for bringing any such action shall be the District Court for the District of Columbia. Upon demonstration of undue delay or failure to adhere strictly to statutory deadlines, or other violations of law and equity, equitable relief in the form of a writ of mandamus compelling action shall issue, among such other relief as the court may see fit.”.
(b)

Funding for raw cannabis research
(1)

Supplemental and alternative crops
Section 1473D(c)(3)(E) of the National Agricultural Research, Extension, and Teaching Policy Act of 1977 (7 U.S.C. 3319d(c)(3)(E)) is amended by striking “(including hemp (as defined in section 297A of the Agricultural Marketing Act of 1946))” and by inserting “(including hemp and raw cannabis (as defined in sections 297A and 298A of the Agricultural Marketing Act of 1946, respectively))” after “material”.
(2)

Critical agricultural materials
Section 5(b)(9) of the Critical Agricultural Materials Act (7 U.S.C. 178c(b)(9)) is amended by striking “(including hemp (as defined in section 297A of the Agricultural Marketing Act of 1946))” and by inserting “(including hemp and raw cannabis (as defined in sections 297A and 298A of the Agricultural Marketing Act of 1946, respectively))” after “hydrocarbon-containing plants”.
(c)

Legitimacy of raw cannabis research
(1)

In general
Section 7606 of the Agricultural Act of 2014 (7 U.S.C. 5940) is amended—
(A)
in subsection (b), by inserting “or raw cannabis” after each appearance of “hemp” in subsection (b); and
(B)
by adding at the end the following:
“(d)

Raw cannabis study and report
(1)

In general
The Secretary shall conduct a study of agricultural pilot programs to determine the economic viability of the domestic production and sale of raw cannabis.
(2)

Report
Not later than 120 days after the date of enactment of this subsection, the Secretary shall submit to Congress a report describing the results of the study conducted under paragraph (1).”.
(d)

Federal crop insurance
(1)

Definition of raw cannabis
Section 502(b) of the Federal Crop Insurance Act (7 U.S.C. 1502(b)) is amended—
(A)
by redesignating paragraphs (10) through (14) as paragraphs (11) through (15), respectively; and
(B)
by inserting after paragraph (9) the following:
“(9)

Raw cannabis
The term “raw cannabis” has the meaning given the term in section 298A of the Agricultural Marketing Act of 1946.”.
(2)

Insurance period
Section 508(a)(2) of the Federal Crop Insurance Act (7 U.S.C. 1508(a)(2)) is amended by striking “sweet potatoes, and hemp” and inserting “sweet potatoes, hemp, and raw cannabis”.
(3)

Submission of policies and materials to board
Section 508(h) of the Federal Crop Insurance Act (7 U.S.C. 1508(h)) is amended—
(A)
in paragraph (1)(B)—
(i)
by adding at the end the following:
“(iii)

Waiver for raw cannabis
The Corporation may waive the viability and marketability requirement under clause (i)(I) in the case of a policy or pilot program relating to the production of raw cannabis.”; and
(B)
in paragraph (3)(C)—
(i)
by adding at the end the following:
“(v)
in the case of reviewing policies and other materials relating to the production of raw cannabis, may waive the viability and marketability requirement under subparagraph (A)(ii)(I).”.
(4)

Agricultural commodity
Section 518 of the Federal Crop Insurance Act (7 U.S.C. 1518) is amended by inserting “raw cannabis,” before “aquacultural species”.
(5)

Research and development authority
Section 522(b) of the Federal Crop Insurance Act (7 U.S.C. 1522(b)) is amended—
(A)
in paragraph (2), by adding at the end the following:
“(L)

Waiver for raw cannabis
The Board may waive the viability and marketability requirements under this paragraph in the case of research and development relating to a policy to insure the production of raw cannabis.”; and
(B)
in paragraph (3)—
(i)
by adding at the end the following:
“(C)

Waiver for raw cannabis
The Corporation may waive the marketability requirement under subparagraph (A) in the case of research and development relating to a policy to insure the production of raw cannabis.”.
(e)

Specialty crop block grants
Section 3 of the Specialty Crops Competitiveness Act of 2004 (7 U.S.C. 1621 note; Public Law 108–465) is amended in paragraph (1), by inserting “hemp and raw cannabis (as defined in sections 297A and 298A of the Agricultural Marketing Act of 1946, respectively)” after “horticulture” and before “and”.
204.

Administration like alcohol under Tax and Trade Bureau
(a)

Addition of cannabis to certain legal authorities relating to intoxicating liquors
(1)

Wilson act
The Act of August 8, 1890 (commonly known as the Wilson Act or the Original Packages Act; 27 U.S.C. 121), is amended—
(A)
by inserting “, or cannabis,” after “intoxicating liquors or liquids”; and
(B)
by striking “such liquids or liquors” and inserting “such liquids, liquors, or cannabis”.
(2)

Webb-kenyon act
The Act of March 1, 1913 (commonly known as the Webb-Kenyon Act; 27 U.S.C. 122), is amended—
(A)
by inserting “cannabis or any” after “whatsoever, of any”;
(B)
by inserting “cannabis or” after “which said”; and
(C)
by adding at the end of section 122b the following new subsection:
“(c)

Cannabis regulation
The Secretary of the Treasury, acting through the Alcohol and Tobacco Tax and Trade Bureau of the Department of the Treasury shall have primary authority regarding Federal regulation of the interstate and international trade in, and promotion, sale, and distribution of, cannabis products.
(1)
The Secretary shall, not later than 6 months after the enactment of this Act, publish an interim final rule in accordance with the Administrative Procedure Act (5 U.S.C. 500 et seq.) regarding the promotion, sale, and distribution of cannabis products. No later than 9 months after the enactment of this Act, the Secretary shall finalize and publish, as a final rule, regulations regarding the promotion, sale, and distribution of cannabis products.
(2)
The Secretary shall expeditiously develop and implement a track-and-trace system for cannabis in interstate commerce.
(3)
Not later than 1 year after the date of enactment of this Act the Secretary shall publish an interim final rule, and not later than 2 years after such date of enactment the Secretary shall finalize regulations regarding the promotion, sale, and distribution of cannabis products that occur through means other than a direct, face-to-face exchange between a retailer and a consumer, in order to prevent the sale and distribution of cannabis products to individuals who have not attained the age of 21, including requirements for age verification.
(d)

Rule of Construction
It is the intention of Congress that this Act be read consistently with the jurisprudence interpreting the Acts amended above and not as superseding or changing prior construction of the Acts with respect to the laws of the United States generally or the article I Commerce Clause.”.
(3)

Victims of trafficking and violence protection act of 2000
Section 2 of the Victims of Trafficking and Violence Protection Act of 2000 (27 U.S.C. 122a) is amended—
(A)
in subsection (a)—
(i)
by redesignating paragraphs (3) and (4) as paragraphs (4) and (5), respectively; and
(ii)
by inserting after paragraph (2) the following new paragraph:
“(3)
the term “marijuana” has the meaning given the term “marihuana” in section 102 of the Controlled Substances Act (21 U.S.C. 802);”; and
(B)
in subsections (b) and (c), by inserting “or marijuana” after “intoxicating liquor” each place it appears.
205.

Transferring agency functions with regard to marijuana
(a)

Transfer of jurisdiction from drug enforcement administration to bureau of alcohol, tobacco, firearms and explosives
The functions of the Attorney General, acting through the Administrator of the Drug Enforcement Administration relating to cannabis enforcement, shall hereafter be administered by the Attorney General, acting through the Director of the Bureau of Alcohol, Tobacco, Firearms and Explosives.
(b)

Redesignation of bureau of alcohol, tobacco, firearms and explosives as bureau of alcohol, tobacco, cannabis, firearms and explosives
(1)

Redesignation
The Bureau of Alcohol, Tobacco, Firearms and Explosives is hereby renamed the “Bureau of Alcohol, Tobacco, Cannabis, Firearms and Explosives”.
(2)

References
Any reference to the Bureau of Alcohol, Tobacco, Firearms and Explosives in any law, regulation, map, document, record, or other paper of the United States shall be deemed to be a reference to the Bureau of Alcohol, Tobacco, Cannabis, Firearms and Explosives.
(c)

Redesignation of alcohol and tobacco tax and trade bureau as alcohol, tobacco, and cannabis tax and trade bureau
(1)

Redesignation
Section 1111(d) of the Homeland Security Act of 2002 (6 U.S.C. 531(d)) is amended by striking “Tax and Trade Bureau” each place it appears and inserting “Alcohol, Tobacco, and Cannabis Tax and Trade Bureau”.
(2)

References
Any reference to the Tax and Trade Bureau or the Alcohol and Tobacco Tax and Trade Bureau in any law, regulation, map, document, record, or other paper of the United States shall be deemed to be a reference to the Alcohol, Tobacco, and Cannabis Tax and Trade Bureau.
206.

Transition safe harbor and administrative remedies
(a)

Safe harbor
No person shall be deemed to be in violation of this Act for engaging in interstate commerce in cannabis products or designated State medical cannabis products, possessing cannabis products or designated State medical cannabis products, producing or manufacturing cannabis products or designated State medical cannabis products, or farming raw cannabis, until after the Secretary of the Treasury promulgates final regulations in accordance with this Act. Nothing in this section shall be construed to impact in any respect obligations of any person to comply with otherwise applicable cannabis laws of the State, Territory, or Possession of the United States in which they are doing business before the effective date of this Act.
(b)

Private right of action
Any State-licensed cannabis business or adversely affected person shall have private right of action under the Administrative Procedure Act (5 U.S.C. 500 et seq.) and the Mandamus Act (28 U.S.C. 1361) to compel any officer, employee or agency of the United States to promulgate regulations required under this Act that are not promulgated within the time frames set forth herein or to enjoin agency action. The exclusive venue for bringing any such action shall be the District Court for the District of Columbia. Upon demonstration of undue delay or failure to adhere strictly to statutory deadlines, equitable relief in the form of a writ of mandamus compelling action shall issue, among such other relief as the court may see fit.
(c)
The term “State” as used in this section 206 includes the District of Columbia, Puerto Rico, and any commonwealth, territory, enclave, or Indian tribe of the United States.
207.

Unfair advertising practices and 21 age limit
(a)

In general
It shall be unlawful for any person engaged in the business of importing marijuana into the United States, or cultivating, producing, manufacturing, packaging, or warehousing marijuana, or purchasing marijuana for resale at wholesale, directly or indirectly or through an affiliate, 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 marijuana, 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 of the Treasury, or the Secretary’s delegate (referred to in this section as the “Secretary”), as will—
(1)
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;
(2)
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;
(3)
prohibit statements that are disparaging of a competitor’s products or are false, misleading, obscene, or indecent; and
(4)
prevent statements inconsistent with any statement on the labeling of the products advertised.
(b)

Nonapplication to publishers and broadcasters
The prohibitions of this section and regulations thereunder shall not apply to the publisher of any newspaper, periodical, or other publication, or radio broadcaster, or provider of an interactive computer service within the meaning of the Communications Decency Act (47 U.S.C. 230 et seq.), unless such publisher or radio broadcaster is engaged in the business of importing marijuana into the United States, or cultivating, producing, manufacturing, packaging, or warehousing marijuana, or purchasing marijuana for resale at wholesale, directly or indirectly or through an affiliate.
(c)

Protect kids
Not later than 60 days after the date of enactment of this Act, the Secretary of the Treasury shall promulgate regulations that—
(1)
require restrictions on the advertising and promotion of products related to cannabis, if the Secretary determines that such regulation would be appropriate for the protection of the public health, taking into account—
(A)
the risks and benefits to the population of individuals age 21 and under, including users and nonusers of cannabis products;
(B)
the increased or decreased likelihood that existing users of cannabis products who are age 18 and under will stop using such products; and
(C)
the increased or decreased likelihood that individuals age 21 and under who do not use cannabis products will start using such products; and
(2)
impose restrictions on the advertising and promotion of products related to cannabis consistent with and to the full extent permitted by the First Amendment to the Constitution of the United States.
(d)

National minimum cannabis use age of 21
(1)

Establishment of federal minimum cannabis age
Chapter 1 of title 23 of the United States Code, is amended by adding at the end the following—
“(a)

Withholding of funds for noncompliance
(1)

In general
(A)
The Secretary of Transportation shall withhold 8 per centum of the amount required to be apportioned to any State under each of sections 104(b)(1), 104(b)(3), and 104(b)(4) of title 23 of the United States Code on the first day of each fiscal year after the second fiscal year beginning after September 30, 2019, in which the purchase or public possession in such State of cannabis by a person who is less than twenty-one years of age is lawful.
(B)

Effect of withholding of funds
No funds withheld under this section from apportionment to any State after September 30, 2019, shall be available for apportionment to that State.
(C)

Cannabis defined
As used in this section, the term “cannabis” means the same as “marihuana” as defined in 21 U.S.C. 802(16).
(D)

Medical exception
The Secretary shall not apply any withholding under this section to States that lawfully permit the use of designated State medical cannabis products, within the meaning of part J of subchapter V of chapter 9 of title 21 of the United States Code (the Federal Food, Drug, and Cosmetic Act), by persons under the age of 21 on the recommendation or prescription of a qualified medical professional consistent with State law.”.
208.

Federal cannabis administration under the Federal Alcohol Administration Act
The Federal Alcohol Administration Act (27 U.S.C. 201 et seq.) is amended by adding at the end the following:
“III

CANNABIS
Sec. 301. Unlawful business without cannabis permit.
Sec. 302. Procedure for issuance of cannabis permit.
Sec. 304. Definitions.
301.

Unlawful business without cannabis permit
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:
(a)

In general
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.
(b)

Import
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”)—
(1)
to engage in the business of importing cannabis into the United States; or
(2)
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.
(c)

Manufacture and sale
It shall be unlawful, except pursuant to a permit issued under this title by the Secretary—
(1)
to engage in the business of producing, manufacturing, packaging, or warehousing cannabis; or
(2)
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.
(d)

Resale
It shall be unlawful, except pursuant to a permit issued under this title by the Secretary—
(1)
to engage in the business of purchasing cannabis for resale at wholesale; or
(2)
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.
(e)

Remedies for violations
(1)

Civil fine
(A)

Generally
Whoever violates this section shall be fined not more than $1,000.
(B)

Settlement in compromise
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.
(2)

Civil action for relief
The Attorney General may, in a civil action, obtain appropriate relief to prevent and restrain a violation of this title.
302.

Procedure for issuance of cannabis permit
(a)

Who entitled to permit
(1)

Generally
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—
(A)
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;
(B)
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;
(C)
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
(D)
the applicant has failed to disclose any material information required or made any material false statement in the application therefor.
(2)

Disqualifying offenses
For the purposes of paragraph (1)—
(A)

Generally
Except as provided for in subparagraph (B), a disqualifying offense is an offense related to the production, consumption, or sale of marijuana that is—
(i)
a felony under Federal or State law, if the conviction occurred not later than 3 years before the date of application; or
(ii)
a misdemeanor under Federal or State law, if the conviction occurred not later than 1 year before the application.
(B)

Excluded offenses
A disqualifying offense does not include a Federal or State offense based on conduct that—
(i)
was legal under State law in the State when and where the conduct took place;
(ii)
is as of the date of the application, no longer an offense in that State; or
(iii)

State second chances practices safe harbor
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.
(3)

Grandfathering and prospective comity for state licensure
(A)

Grandfathering
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.
(B)

Prospective federal-state permit comity
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.
(C)

Rule of construction
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.
(b)

Refusal of permit; hearing
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.
(c)

Form of application
(1)

Generally
The Secretary shall—
(A)
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);
(B)
prescribe the form of all permits; and
(C)
specify in any permit the authority conferred by the permit and the conditions of that permit in accordance with this title.
(2)

Separate types of applications and permits
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.
(3)

Disclaimer
The issuance of a permit under this title does not deprive the United States of any remedy for a violation of law.
(d)

Conditions
A permit under this title shall be conditioned upon the following:
(1)

Compliance
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.
(2)

User fee
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.
(A)

SBA fee waiver
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.
(e)

Revocation, suspension, and annulment
(1)

Generally
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—
(A)
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;
(B)
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
(C)
be annulled if the Secretary finds that the permit was procured through fraud, or misrepresentation, or concealment of material fact.
(2)

Order to state basis for order
The order shall state the findings that are the basis for the order.
(f)

Service of orders
Each order of the Secretary with respect to any denial of application, suspension, revocation, annulment, or other proceedings, shall be served—
(1)
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
(2)
by mailing the order by registered mail, addressed to the applicant or respondent at his or her last known address in the records of the Secretary.
(g)

Proceedings
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.
(h)

Duration
(1)

General rule
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.
(2)

Effect of transfer
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.
(3)

Definition of transfer
For the purposes of this section, the term “transfer” means any change of ownership or control, whether voluntary or by operation of law.
(i)

Appeal and judicial review
(1)

In general
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 his or her principal place of business, or in the United States Court of Appeals for the District of Columbia, within sixty 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 his or her findings as to the facts by reason of the additional evidence so taken, and he or she shall file with the court such modified or new findings, which, if supported by substantial evidence, shall be conclusive, and his or her 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.
(2)

Additional applicant mandamus remedy
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 28 U.S.C. 1361 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.
(j)

Statute of limitations
(1)

In general
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.
(2)

Compromise
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.
(k)

Permit application
(1)

In general
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.
(2)

Confidentiality
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.
(3)

Incomplete or incorrectly executed applications
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 ten days of the discovery of the defect after the first 30 days following the filing of the application.
(4)

Change in ownership, management, or control of the applicant
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.
(5)

Individual plant or premises
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.
(6)

Deadline
Within 90 days of receipt of an application, the Secretary or his or her 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 his or her 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 his or her designee within the time periods set forth in this paragraph, the applicant may file a mandamus action as provided for in this section.
304.

Definitions
In this title—
(1)
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
(2)
the term “State” includes the District of Columbia, Puerto Rico, and any commonwealth, territory, enclave, Indian tribe, or possession of the United States.”.
III

DESIGNATED STATE MEDICAL CANNABIS PRODUCT SAFETY ACT
301.

Grandfathering of State medical cannabis products into interstate commerce
Subchapter V of chapter 9 of title 21 of the United States Code (the Federal Food, Drug, and Cosmetic Act) is amended by adding at the end the following new part:
“J

DESIGNATED STATE MEDICAL CANNABIS PRODUCTS
Sec. 360ggg. Definitions.
Sec. 360ggg–1. Regulation of medical cannabis products.
Sec. 360ggg–2. Cannabis-infused foods, beverages, and supplements.
Sec. 360ggg–3. Cannabis cosmetics.
Sec. 360ggg–4. Liability and method of payment.
Sec. 360ggg–5. Private right of action and administrative remedy.
360ggg.

Definitions
In this part:
(1)
The term “designated State medical cannabis product”—
(A)
means an article that is produced by a State and federally licensed or permitted medical cannabis business, pursuant to a State medical cannabis program and contains “marihuana”, as defined in section 102(16) of the Controlled Substances Act;
(B)
means any other article that contains either “marihuana”, as defined in section 102 of the Controlled Substances Act, 21 U.S.C. 802, deemed appropriate by the Secretary, after taking into account any investigational new drug application or investigational new animal drug application for the same medical cannabis product submitted in accordance with regulations applicable to such applications in title 21 of the Code of Federal Regulations, unless any period of exclusivity for a new drug under section 355(c)(3)(E)(ii) of this title or section 355(j)(5)(F)(ii) of this title, or the extension of any such period under section 355a of this title, or any period of exclusivity for a new animal drug under section 360b(c)(2)(F) of this title, applicable to such medical cannabis product has not expired;
(C)
means any article that contains either “marihuana”, as defined in section 102(16) of the Controlled Substances Act, 21 U.S.C. 802(16) that also meets the standards set forth in an official compendium; and
(D)
does not mean articles or cannabis products produced and intended for nonmedical use, such as those regulated under title III of the Federal Alcohol Administration Act (27 U.S.C. 201 et seq.).
(2)
The term “State” includes the District of Columbia, Puerto Rico, and any commonwealth, territory, enclave, Indian tribe, or possession of the United States.
360ggg–1.

Regulation of medical cannabis products
(a)

Medical cannabis regulation and authority
The Food and Drug Administration shall have jurisdiction over the regulation of designated State medical cannabis products described herein.
(b)

Certification of designated state medical cannabis products
(1)

Submission
Beginning 30 days after the effective date of this Act, any person who seeks to initially introduce or deliver for introduction a designated State medical cannabis product into interstate commerce may file with the Secretary a request for certification as a designated State medical cannabis product. Any such request shall contain the following information:
(A)
A description of the designated State medical cannabis product.
(B)
The name and address of the sponsor.
(C)
The name and address of the facility or facilities where the designated State medical cannabis product is or will be cultivated and manufactured.
(D)
Any other information deemed appropriate by the Secretary to determine whether the designated State medical cannabis product is in fact a designated State medical cannabis product.
(2)

Grant of certification
The certification requested under paragraph (1) is deemed to be granted unless, within 30 days of the filing of such request, the Secretary finds that—
(A)
the designated State medical cannabis product subject to the certification is not in fact a designated State medical cannabis product;
(B)
the request does not contain the information required under paragraph (1) or otherwise lacks sufficient information to permit the Secretary to determine that the designated State medical cannabis product is in fact a designated State medical cannabis product; or
(C)
denying the request is necessary to protect the public health.
(3)

Effect of certification
(A)

In general
(i)

Approved uses
A designated State medical cannabis product for which a certification is granted under paragraph (2) is deemed, alone or in combination, as medically appropriate, with another designated State medical cannabis product or products for which a certification or certifications have been granted, to be sold in interstate commerce as a non-drug designated State medical cannabis product, for the following indications for use:
(I)
The treatment of arthritis.
(II)
The treatment of chemotherapy-induced and non-chemotherapy-induced nausea and vomiting.
(III)
The stimulation of appetite.
(IV)
The treatment of the symptoms of patients with HIV/AIDS or for anorexia associated with AIDS.
(V)
The treatment of temporary or chronic pain and analgesia.
(VI)
The treatment of muscle spasms.
(VII)
The treatment of insomnia and restlessness.
(VIII)
The treatment of post-traumatic stress disorder.
(IX)
The treatment of chronic pain due to sickle cell disease.
(X)
Any other indication for use consistent with State medical cannabis law and medical cannabis labeling practice in the State in which the product is to be sold to the end consumer.
(XI)
Any other indication for use for a designated State medical cannabis product or combination of designated State medical cannabis products deemed appropriate by the Secretary, unless any period of exclusivity for a new drug under clause (iii) or (iv) of section 355(c)(3)(E) of this title, clause (iii) or (iv) of section 355(j)(5)(F) of this title, or section 360cc of this title, or the extension of any such period under section 355a of this title, applicable to such indication for use for such medical cannabis product or combination of products has not expired.
(ii)

Labeling
The requirements of sections 353(b)(4) and 352(f) of this title are deemed to have been met for a designated State medical cannabis product if the labeling on the final use container for such medical cannabis product bears—
(I)
the information required by section 353(b)(4) of this title;
(II)
a warning statement concerning the use of the medical cannabis products as determined by the Secretary by regulation; and
(III)
appropriate directions and warnings concerning storage and handling.
(B)

Inapplicability of exclusivity provisions
(i)
No exclusivity for a certified medical cannabis product. No designated State medical cannabis product deemed under subparagraph (A)(i) to have in effect an approved application is eligible for any period of exclusivity for a new drug under section 355(c), 355(j), or 360cc of this title, or the extension of any such period under section 355a of this title, on the basis of such deemed approval.
(ii)

Effect on certification
No period of exclusivity under section 355(c), 355(j), or section 360cc of this title, or the extension of any such period under section 355a of this title, with respect to an application for a drug product, shall prohibit, limit, or otherwise affect the submission, grant, or effect of a certification under this section, except as provided in subsection (a)(3)(A)(i)(VIII) and section 360ddd(1)(H) of this title.
(4)

Withdrawal, suspension, or revocation of approval
(A)

Withdrawal, suspension of approval
Nothing in this part limits the Secretary’s authority to withdraw or suspend approval of a drug product, including a designated State medical cannabis product deemed under this section to have in effect an approved application under section 355 of this title or section 360b of this title.
(B)

Revocation of certification
The Secretary may revoke the grant of a certification under paragraph (2) if the Secretary determines that the request for certification contains any material omission or falsification.
(5)

Prescription or recommendation requirement for designated state medical cannabis products
(A)

In general
A designated State medical cannabis product is not approved for use without a prescription by a qualified medical professional or a recommendation by a qualified medical professional as defined by the law of the State in which the qualified medical professional is providing said prescription or recommendation.
(B)

Labeling
For medical cannabis products provided pursuant to subparagraph (A), the Secretary shall issue labeling requirements within 90 days of the passage of this Act.
(6)

No drug preclusion
Notwithstanding any other law, 21 U.S.C. 331(ll), the “drug preclusion” rule, shall not apply to “marihuana”, as defined in 21 U.S.C. 802(16). Notwithstanding any other Federal law or provision of the Federal Food, Drug, and Cosmetic Act, the Food and Drug Administration shall treat cannabis without respect to the doctrine of drug preclusion. Nothing in this provision is meant to diminish or otherwise affect the ability of the Food and Drug Administration to regulate drug products (as defined in 21 U.S.C. 321(g)), including those containing “marihuana”, (as defined in 21 U.S.C. 802(16)) that are intended and marketed for use as a “drug” rather than a “designated State medical cannabis product”.
(7)

Timeline for rulemaking to effectuate provision
Within 30 days of the passage of this Act, the Food and Drug Administration shall promulgate an interim final rule and undertake rulemaking under the Administrative Procedure Act (5 U.S.C. 500 et seq.) for the purposes of effectuating this provision, including any forms that may be required for application for certification. Such final rule shall be promulgated within 90 days of the publication of the interim final rule.
360ggg–2.

Cannabis-infused foods, beverages, and supplements
(a)

No supplement/Additive preclusion
Notwithstanding any other law, 21 U.S.C. 321(s)(6) shall not apply to “marihuana”, as defined in 21 U.S.C. 802(16), nor to “industrial hemp”, as defined in 7 U.S.C. 5490(a)(2). Notwithstanding any other Federal law or provision of the Federal Food, Drug, and Cosmetic Act, the Food and Drug Administration shall treat cannabis without respect to the doctrine of dietary supplement and food additive preclusion.
(b)

Cannabis-Infused dietary supplements; classification as old dietary ingredient
Notwithstanding any other law, “marihuana”, as defined in 21 U.S.C. 802(16), and “industrial hemp”, as defined in 7 U.S.C. 5490(a)(2), shall be deemed to have been marketed in the United States as a dietary ingredient before October 15, 1994 for the purposes of 21 U.S.C. 350b(a), 350b(d).
(1)
Within 30 days of the passage of this Act, the Food and Drug Administration shall promulgate an interim final rule and undertake rulemaking under the Administrative Procedure Act (5 U.S.C. 500 et seq.) for the purposes of establishing a standard serving size and further clarifying intended conditions of use of whole-plant cannabis extracts and individual cannabinoid extracts used as dietary supplements.
(2)
Such final rule shall be promulgated within 90 days of the publication of the interim final rule.
(c)

Cannabis-Infused foods and beverages; classification as generally safe through common experience
Notwithstanding any other law, “marihuana”, as defined in 21 U.S.C. 802(16), or “industrial hemp”, as defined in 7 U.S.C. 5490(a)(2), shall be deemed to be generally recognized as safe through experience based on common use in food prior to January 1, 1958, for the purposes of 21 U.S.C. 321(s) and 21 CFR 170.30(a). Cannabis-infused foods and beverages, unless a designated State medical cannabis product, shall be considered as regulated under title III of the Federal Alcohol Administration Act (27 U.S.C. 201 et seq.).
(1)
Within 30 days of the passage of this Act, the Food and Drug Administration shall promulgate an interim final rule and undertake rulemaking under the Administrative Procedure Act (5 U.S.C. 500 et seq.) for the purposes of establishing a standard serving size and further clarifying conditions of intended use of whole-plant cannabis extracts and individual cannabinoid extracts used as food additives.
(2)
Such final rule shall be promulgated within 90 days of the publication of the interim final rule.
360ggg–3.

Cannabis cosmetics
(a)

Cannabis allowed in cosmetics, “safe”
The use of “marihuana”, as defined in 21 U.S.C. 802(16), and “industrial hemp”, as defined in 7 U.S.C. 5490(a)(2), alone in cosmetic products shall not cause a cosmetic to be adulterated within the meaning of 21 U.S.C. 361(a)–(e) provided that it is properly labeled and branded within the meaning of title 21, chapter 6 of the United States Code generally.
(1)
Within 30 days of the passage of this Act, the Food and Drug Administration shall promulgate an interim final rule and undertake rulemaking under the Administrative Procedure Act (5 U.S.C. 500 et seq.) to effectuate this provision.
(2)
Such final rule shall be promulgated within 90 days of the publication of the interim final rule.
(b)

Rule of construction
Notwithstanding section 360ggg–3(a) of this title, any cosmetic containing “marihuana”, as defined in 21 U.S.C. 802(16), and “industrial hemp”, as defined in 7 U.S.C. 5490(a)(2), including any extract thereof, where the cannabis component actually renders it a poisonous or deleterious substance, injurious to users under the conditions of use prescribed in the labeling thereof, or under such conditions of use as are customary or usual, may be considered adulterated within the meaning of 21 U.S.C. 361 and/or misbranded under 21 U.S.C. 362.
360ggg–4.

Liability and method of payment
A designated State medical cannabis product, alone or in combination with another designated State medical cannabis product or products (as medically appropriate) deemed under section 360ggg–1 of this title to have in effect an approved application shall not be assessed fees under section 379h(a) or 379j–12(a) of this title on the basis of such deemed approval.
360ggg–5.

Private right of action and administrative remedy
(a)

Right of action
An adversely affected person or business shall have private right of action under the Administrative Procedure Act (5 U.S.C. 500 et seq.) and the Mandamus Act (28 U.S.C. 1361) to compel the Administrator or any other officer, employee or agent of the Food and Drug Administration to promulgate regulations or undertake and finalize rulemaking required under this Act that are not promulgated or published within the time frames set forth herein, or to provide the certification of designated State medical cannabis products within the time frames set forth herein, or to enjoin agency action. The exclusive venue for bringing any such action shall be the District Court for the District of Columbia. Upon demonstration of undue delay or failure to adhere strictly to statutory deadlines, or other violations of law and equity, equitable relief in the form of a writ of mandamus compelling action shall issue, among such other relief as the court may see fit.”.
IV

SMALL BUSINESS ADMINISTRATION PROVISIONS
401.

Fair Small Business Administration access
Section 7(a) of the Small Business Act (15 U.S.C. 636(a)) is amended by adding at the end the following new paragraph:
“(36)

Loans to cannabis-related legitimate businesses and service providers
(A)

In general
The Administrator may not decline to provide a guarantee for a loan under this subsection to an otherwise eligible small business concern solely because such concern is a cannabis-related legitimate business or service provider.
(B)

Definitions
In this paragraph:
(i)

Cannabis
The term “cannabis” has the meaning given the term “marihuana” in section 102 of the Controlled Substances Act.
(ii)

Cannabis product
The term “cannabis product” means any article that contains cannabis, including an article that is a designated State medical cannabis product within the meaning of part J of subchapter V of chapter 9 of title 21 of the United States Code (the Federal Food, Drug, and Cosmetic Act).
(iii)

Cannabis-related legitimate business
The term “cannabis-related legitimate business” means a cannabis farmer, cannabis producer, or any person or company that is a small business concern and that—
(I)
engages in any activity described in subclause (II) pursuant to a law established by a State or a political subdivision of a State, as determined by such State or political subdivision; and
(II)
participates in any business or organized activity that involves handling cannabis or cannabis products, including cultivating, producing, manufacturing, selling, transporting, displaying, dispensing, retailing, wholesaling, distributing, or purchasing cannabis or cannabis products.
(iv)

Cannabis producer
The term “cannabis producer” means a person who manufactures, compounds, converts, processes, prepares, or packages cannabis or cannabis products.
(v)

Cannabis farmer
The term “cannabis farmer” means a person who plants, cultivates, harvests, or in any way facilitates the natural growth of cannabis.
(vi)

Service provider
The term “service provider”—
(I)
means a business, organization, or other person that—
- (aa)
sells goods or services to a cannabis-related legitimate business; or
- (bb)
provides any business services, including the sale or lease of real or any other property, legal or other licensed services, or any other ancillary service, relating to cannabis; and
(II)
does not include a business, organization, or other person that participates in any business or organized activity that involves handling cannabis or cannabis products, including cultivating, producing, manufacturing, selling, transporting, displaying, dispensing, retailing, wholesaling, distributing, or purchasing cannabis or cannabis products.
(vii)

State
The term “State” means each of the several States, the District of Columbia, Puerto Rico, and any territory or possession of the United States.”.
402.

Disaster loan nondiscrimination
Section 7(b) of the Small Business Act (15 U.S.C. 636(b)) is amended by inserting after paragraph (15) the following new paragraph:
“(16)

Assistance to cannabis-related legitimate businesses and service providers
The Administrator may not decline to provide assistance under this subsection to an otherwise eligible borrower solely because such borrower is a cannabis-related legitimate business or service provider (as defined in subsection (a)(36)).”.
403.

Microloan nondiscrimination
Section 7(m) of the Small Business Act (15 U.S.C. 636(m)(13)) is amended by adding at the end the following new paragraph:
“(14)

Assistance to cannabis-related legitimate businesses and service providers
An eligible intermediary may not decline to provide assistance under this subsection to an otherwise eligible borrower solely because such borrower is a cannabis-related legitimate business or service provider (as defined in subsection (a)(36)).”.
404.

Small business investment company debenture nondiscrimination
Part A of title III of the Small Business Investment Act of 1958 (15 U.S.C. 695 et seq.) is amended by adding at the end the following new section:
“321.

Debentures to finance cannabis-related businesses and service providers
(a)

Guarantees
The Administrator may not decline to purchase or guarantee a debenture made under this title to an otherwise eligible small business investment company solely because such small business investment company provides financing to an entity that is a cannabis-related legitimate business or service provider (as defined in section 7(a)(38) of the Small Business Act).
(b)

Other assistance
A small business investment company may not decline to provide assistance under this title to an otherwise eligible small business solely because such business is a cannabis-related legitimate business or service provider (as defined in section 7(a)(38) of the Small Business Act).”.
405.

State or local development loan non-discrimination
Title V of the Small Business Investment Act of 1958 (15 U.S.C. 695 et seq.) is amended by adding at the end the following new section:
“511.

Loans to cannabis-related legitimate businesses and service providers
The Administrator may not decline to provide a guarantee for a loan under this title to an otherwise eligible State or local development company solely because such State or local development company provides financing to an entity that is a cannabis-related legitimate business or service provider (as defined in section 7(a)(36) of the Small Business Act).”.
406.

Rulemaking and disbursement
Not later than 30 days after the date of the enactment of this Act, the Administrator of the Small Business Administration shall issue or amend any rules or interim final rules, standard operating procedures, other legal or policy guidance necessary to carry out the requirements of this Act and the amendments made by this Act. The Administrator shall begin incurring obligations and disbursing funds made available to the Administration for the purposes of carrying out this Act within 45 days of the enactment of this Act.
407.

Administrative Procedure Act and mandamus remedies
Should the Administrator fail to issue or amend any rules or interim final rules, standard operating procedures, other legal or policy guidance necessary to carry out the requirements of this Act and the amendments made by this Act within the 30 days described above, or fail to make an application decision within thirty days of submission of a completed application, an applicant shall have the right to compel action under the Administrative Procedure Act (5 U.S.C. 500 et seq.) and the Mandamus Act (28 U.S.C. 1361), 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 issue upon demonstration of failure to meet deadlines described herein.
V

IMPOSITION OF CANNABIS EXCISE TAX
501.

Law enforcement retraining and successful second chances fund
(a)

Establishment of fund
Subchapter A of chapter 98 of the Internal Revenue Code of 1986 is amended by adding at the end the following section:
“9512.

Law enforcement retraining and successful second chances fund
(a)

Creation of law enforcement retraining and successful second chances fund
There is established in the Treasury of the United States a fund to be known as the “Law Enforcement Retraining and Successful Second Chances Fund” (referred to in this section as the “Law Enforcement and Second Chances Fund”), consisting of such amounts as may be appropriated or credited to such a fund as provided in this section or section 9602(b).
(b)

Authorization of appropriations
To carry out this section, there are authorized to be appropriated to the Law Enforcement and Second Chances Fund such sums as may be necessary to carry out the purposes of this subchapter for fiscal year 2022, to remain available until expended.
(c)

Future fiscal years
For the ten (10) fiscal years following fiscal year 2022, there is authorized to be appropriated to the Law Enforcement and Second Chances Fund such sums as may be necessary to carry out the purposes of this subchapter.
(d)

Availability of law enforcement and second chances fund
Amounts in the Law Enforcement and Second Chances Fund shall be available, until expended, as provided under this section.
(e)

Set-Asides
(1)

Crisis stabilization and community reentry grant program
Of the amounts in the Law Enforcement and Second Chances Fund—
(A)
10% shall be set aside for grants made under section 3052(a) of part OO of the Omnibus Crime Control and Safe Streets Act of 1968; and
(B)
10% shall be set aside for grants made under section 3052(b) of part OO of the Omnibus Crime Control and Safe Streets Act of 1968.
(2)

Edward byrne memorial justice assistance grant program
Of the amounts in the Law Enforcement and Second Chances Fund, 10% shall be set aside for grants made under part A of title 34 of the United States Code.
(3)

Community-oriented policing services hiring program
Of the amounts in the Law Enforcement and Second Chances Fund, 10% shall be set aside for activities authorized by the Violent Crime Control and Law Enforcement Act of 1994 (Public Law 103–322); the Omnibus Crime Control and Safe Streets Act of 1968 (“the 1968 Act”); and the Violence Against Women and Department of Justice Reauthorization Act of 2005 (Public Law 109–162) (“the 2005 Act”). No less than 5% of this set-aside shall be directed towards grants made under section 1701 of title I of the 1968 Act (42 U.S.C. 3796dd) for the hiring and rehiring of additional career law enforcement officers under part Q of such title notwithstanding subsection (i) of such section.
(4)

Successful second chances program
Of the amounts in the Law Enforcement and Second Chances Fund, 30% shall be set aside for the Small Business Administrator to carry out the provisions of title IV of the States Reform Act.
(5)

Veterans mental health funding
Of the amounts in the Law Enforcement and Second Chances Fund, 10% shall be set aside for the Secretary of the Veterans Affairs to carry out the provisions of title 38 of the United States Code, section 1720I(a) and 1720I(c).
(6)

State response to opioid addiction funding
Of the amounts in the Law Enforcement and Second Chances Fund, 5% shall be set aside for the Secretary of Health and Human Services to carry out the provisions of title 42 of the United States Code, section 290ee–3.
(7)

Underage youth use prevention funding
Of the amounts in the Law Enforcement and Second Chances Fund, 5% shall be set aside for the Assistant Secretary for Mental Health and Substance Use of the Substance Abuse and Mental Health Services Administration to help prevent underage cannabis use in carrying out the provisions of title 42 of the United States Code.
(f)

Allotment
All funds for carrying out the provisions of this chapter shall be available for allotment to bureaus and offices of the Department of Justice and the Small Business Administration, and for transfer to such other agencies of the Federal Government, and to such State agencies, as the Secretary of the Treasury may request to cooperate or assist in carrying out the provisions of this chapter.”.
502.

Cannabis Revenue and Regulation Act
Subtitle E of title I of the Internal Revenue Code of 1986 is amended by adding at the end the following new chapter:
“56

Cannabis products
Subchapter A—IMPOSITION OF TAX
Sec. 5901. Imposition of tax.
Sec. 5902. Definitions.
Sec. 5903. Liability and method of payment.
Sec. 5904. Exemption from tax.
Sec. 5905. Credit, refund, or drawback of tax.
Subchapter B—OPERATIONS
Sec. 5911. Inventories, reports, and records.
Sec. 5912. Packaging and labeling.
Sec. 5913. Purchase, receipt, possession, or sale of cannabis products after removal.
Sec. 5914. Restrictions relating to marks, labels, notices, and packages.
Sec. 5915. Restriction on importation of previously exported cannabis products.
Subchapter C—PENALTIES
Sec. 5921. Civil penalties.
A

Imposition of tax
5901.

Imposition of tax
(a)

Imposition of excise tax
There is hereby imposed on any cannabis product produced in or imported into the United States a tax equal to 3% percent of the removal price of such a cannabis product sold in the United States during the 12-month period ending one calendar quarter before such calendar year.
(b)

Moratorium on cannabis product excise tax increases
There is hereby imposed, notwithstanding any other law, including, but not limited to the Congressional Budget and Impoundment Control Act of 1974 (Public Law 93–344, 88 Stat. 297, 2 U.S.C. 601–688), for the ten calendar years following the passage of this Act, a moratorium on increasing the excise tax imposed on cannabis products by this section 5901.
(1)
Such moratorium may be waived before the ten-year timeframe by a three-quarters vote to do so by both Houses of Congress.
(c)

Removal price categories
(1)

In general
For the purposes of subsection (a), the Secretary shall impose the tax on the removal price—
(A)
per 454 grams of cannabis flower,
(B)
per 100 grams of cannabis pre-rolls,
(C)
per 20 grams of cannabis extracts,
(D)
per 10 grams of cannabis vaporizer cartridges,
(E)
of 20 units of edible cannabis product, and
(F)
of 20 units of cannabis topical or cosmetic product.
(2)

New removal price categories and basis
For the purposes of subsection (c), the Secretary may, under the processes of the Administrative Procedure Act (5 U.S.C. 500 et seq.), undertake formal rulemaking to establish new removal price categories and bases for cannabis products that are not covered under subsection (c)(1).
(3)

Clarifying rulemaking
The Secretary may, consistent with the Administrative Procedure Act (5 U.S.C. 500 et seq.), further clarify the application of subsection (c)(1).
(d)

Time of attachment on cannabis products
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. Raw cannabis not yet delivered to a producer for processing, manufacturing, or production shall not be considered a product in existence for the purposes of this subsection (d).
5902.

Definitions
(a)

Definitions related to cannabis products
For purposes of this chapter:
(1)

Cannabis product
(A)

In general
Except as provided in subparagraph (B), the term “cannabis product” means any article that contains or consists of cannabis.
(B)

Exceptions
The term “cannabis product” does not include an FDA-approved article, industrial hemp, or the unproduced, raw agricultural commodity of cannabis.
(2)

FDA-approved article
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)
a drug—
(i)
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,
(ii)
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,
(B)
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, or
(C)
a “designated State medical cannabis product” within the meaning of part J of subchapter V of chapter 9 of title 21 of the United States Code (the Federal Food, Drug, and Cosmetic Act).
(3)

Cannabis
The term “cannabis” has the same meaning given to the term “marihuana” under section 102(16) of the Controlled Substances Act, 21 U.S.C. 802(16).
(4)

Industrial hemp
The term “industrial hemp” has the same meaning given to the term “industrial hemp” in section 297A of the Agricultural Marketing Act of 1946 (7 U.S.C. 1621 et seq.) (codified at 7 U.S.C. 5940(b)(2)).
(b)

Definitions related to cannabis businesses and producers
For purposes of this chapter:
(1)

Cannabis business
The term “cannabis business” means a producer, importer, or export warehouse proprietor.
(2)

Producer
(A)

In general
The term “producer” means any person who manufactures, produces, compounds, converts, processes, prepares, or packages any cannabis product.
(B)

Personal use exception
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.
(C)

Cannabis farmers not producers
A producer does not mean a person who plants, cultivates, harvests, grows the raw agricultural commodity of cannabis not yet finished into a produced article for consumption. This provision shall not be constructed as precluding a cannabis farmer from also being a cannabis producer within the same enterprise.
(3)

Importer
The term “importer” means any person who—
(A)
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,
(B)
removes cannabis products for sale or consumption in the United States from a customs warehouse, or
(C)
smuggles or otherwise unlawfully brings any cannabis product into the United States.
(4)

Export warehouse proprietor
(A)

In general
The term “export warehouse proprietor” means any person who operates an export warehouse.
(B)

Export warehouse
The term “export warehouse” means an internal revenue warehouse for the storage of cannabis products, upon which the internal revenue tax has not been paid—
(i)
for subsequent shipment to a foreign country or a possession of the United States, or
(ii)
for consumption beyond the jurisdiction of the internal revenue laws of the United States.
(5)

Cannabis production facility
The term “cannabis production facility” means an establishment that is qualified under subchapter C to perform any operation for which such qualification is required under such subchapter.
(c)

Other definitions
For purposes of this chapter—
(1)

Produce
The term “produce” includes any activity described in subsection (b)(2)(A).
(2)

Removal; remove
The terms “removal” or “remove” mean—
(A)
the transfer of cannabis products from the premises of a producer (or the transfer of such products from the premises of a producer to the premises of such producer),
(B)
release of such products from customs custody, or
(C)
smuggling or other unlawful importation of such products into the United States.
(3)

Removal price
The term “removal price” means—
(A)
except as otherwise provided in this paragraph, the price for which the cannabis product is sold in the sale that occurs in connection with the removal of such product,
(B)
in the case of any such sale that is described in section 5903(c), the price determined under such section, and
(C)
if there is no sale that occurs in connection with such removal, the price that would be determined under section 5903(c) if such product were sold at a price that cannot be determined.
5903.

Liability and method of payment
(a)

Liability for tax
(1)

Original liability
The producer or importer of any cannabis product shall be liable for the taxes imposed thereon by section 5901.
(2)

Transfer of liability
(A)

In general
When cannabis products are transferred, without payment of tax, pursuant to subsection (b) or (c) of section 5904—
(i)
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 there-upon be relieved of their liability for such tax, and
(ii)
in the case of cannabis products that are released from customs custody for transfer to the 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.
(B)

Return
All provisions of this chapter applicable to cannabis products shall be applicable to such articles returned upon withdrawal from the market or returned after previous removal for a tax-exempt purpose.
(b)

Method of payment of tax
(1)

In general
(A)

Taxes paid on basis of return
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.
(B)

Application to transferees
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 premises of the transferee.
(C)

Postponement
Any postponement under this subsection of the payment of taxes determined at the time of removal shall be conditioned 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.
(D)

Administration and penalties
All administrative and penalty provisions of this title, as applicable, shall apply to any tax imposed by section 5901.
(2)

Time for payment of taxes
(A)

In general
Except as otherwise provided in this paragraph, in the case of taxes on cannabis products removed during any sem-imonthly period for deferred payment of tax, the last day for payment of such taxes shall be the 14th day after the last day of such semi-monthly period.
(B)

Imported articles
In the case of cannabis products that are imported into the United States, the following provisions shall apply:
(i)

In general
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.
(ii)

Special rule for entry of warehousing
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.
(iii)

Foreign trade zones
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.
(iv)

Exception for articles destined for export
Clauses (ii) and (iii) shall not apply to any article that is shown to the satisfaction of the Secretary to be destined for export.
(C)

Cannabis products brought into the united states from puerto rico
In the case of cannabis products that 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.
(D)

Special rule where due date falls on Saturday, Sunday, or holiday
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 that is not a Saturday, Sunday, or such a holiday.
(E)

Special rule for unlawfully produced cannabis products
In the case of any cannabis products produced in the United States at any place other than the premises of a producer that has obtained the permit required under this chapter, tax shall be due and payable immediately upon production.
(3)

Payment by electronic fund transfer
Any person who in any 12-month period, ending December 31, was liable for a gross amount equal to or exceeding $1,000,000 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 $1,000,000 amount specified in the preceding sentence.
(c)

Definition of price
(1)

Constructive sale price
(A)

In general
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.
(B)

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,
(II)
the parties are members of a family, as defined in section 267(c)(4), or
(III)
the sale is made pursuant to special arrangements between a producer 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 that 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 one or more of such persons is not a corporation.
(2)

Containers, packing and transportation charges
In determining, for the purposes of this chapter, the price for which an article is sold, there shall not 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. Further, 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 likewise be excluded from the price.
(d)

Partial payments and installment accounts
(1)

Partial payments
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 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.
(2)

Sales of installment accounts
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—
(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 that would be payable if such installment accounts had not been sold or otherwise disposed of (computed as provided in paragraph (1)), 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 that 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.
(3)

Limitation
The sum of the amounts payable under this subsection in respect of the sale of any article shall not exceed the total tax.
5904.

Exemption from tax
(a)

Exemption from 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 premises of any producer in approved containers free of tax and not for resale for use—
(1)
exclusively in scientific research by a laboratory,
(2)
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,
(3)
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, or
(4)
by a qualified State medical cannabis patient or patients, when the cannabis product is 100% donated to the patient or patients, and such a donated article otherwise qualifies for use as a “designated State medical cannabis product” within the meaning of the Federal Food, Drug, and Cosmetic Act, section 360ggg, part J of subchapter V of chapter 9 of title 21 of the United States Code.
(b)

Cannabis products transferred or removed from domestic factories and export warehouses
(1)

In general
Subject to such regulations as the Secretary shall prescribe, a producer or export warehouse proprietor may transfer cannabis products, without payment of tax, to the premises of another producer or export warehouse proprietor, or remove such articles, without payment of tax, for shipment to a foreign country, Puerto Rico, the Virgin Islands, or a possession of the United States, or for consumption beyond the jurisdiction of the internal revenue laws of the United States.
(2)

Labeling
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.
(c)

Cannabis products released from customs custody
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 as the Secretary shall prescribe.
(d)

Cannabis products exported and returned
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 States Reform 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 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.
5905.

Credit, refund, or drawback of tax
(a)

Credit or refund
(1)

In general
Credit or refund of any tax imposed by this chapter or section 7652 shall be allowed or made (without interest) to the producer, importer, or export warehouse proprietor on proof satisfactory to the Secretary that the claimant producer, importer, or export warehouse proprietor has paid the tax on—
(A)
cannabis products withdrawn from the market by the claimant, or
(B)
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.
(2)

Cannabis products lost or destroyed
(A)

Extent of loss allowance
No tax shall be collected in respect of cannabis products lost or destroyed, except that such tax shall be collected—
(i)
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 cannabis production facility, or owner, consignor, consignee, bailee, or carrier, or their employees or agents,
(ii)
in the case of voluntary destruction, unless such destruction is carried out as provided in paragraph (3), and
(iii)
in the case of an unexplained shortage of cannabis products.
(B)

Proof of loss
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, or owner, consignor, consignee, bailee, or carrier, or their employees or agents.
(C)

Refund of tax
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.
(D)

Limitations
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.
(E)

Applicability
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 premises.
(3)

Voluntary destruction
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 may voluntarily destroy such products, but only if such destruction is under such supervision and under such regulations as the Secretary may prescribe.
(4)

Limitation
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.
(b)

Drawback of tax
There shall be an allowance of drawback of tax paid on cannabis products, when shipped from the United States, in accordance with such regulations as the Secretary shall prescribe.
B

Operations
5911.

Inventories, reports, and records
(a)
Every cannabis business shall maintain inventories required by title 26, section 471 of the Internal Revenue Code as the Secretary shall by formal rulemaking prescribe, with such inventories to be subject to verification by any Internal Revenue official during business hours, in such form, at such times, and for such periods as the Secretary shall by formal rulemaking prescribe.
(1)
The formal rulemaking shall take into consideration existing State reporting and inventory tracking mechanisms and be compatible with existing State reporting and inventory tracking mechanisms to the extent possible.
(2)
The formal rulemaking may allow for the creation of Federal processes and systems to supplement, and that are compatible with, existing State tracking and reporting mechanisms.
(3)
Rulemaking with respect to this section 5911 shall take place pursuant to the Administrative Procedure Act (5 U.S.C. 500 et seq.) and encompass Paperwork Reduction Act considerations.
5912.

Packaging and labeling
(a)

Packages
All cannabis products shall, before removal, be put up in such packages as the Secretary shall by regulation prescribe.
(b)

Marks, labels, and notices
Every package of cannabis products shall, before removal, bear the marks, labels, and notices, if any, that the Secretary by regulation prescribes, including, but not limited to, the total amount of THC or tetrahydrocannabinol.
(c)

Lottery features
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 a cannabis product or cannabis products.
(d)

Exceptions
Subject to regulations prescribed by the Secretary, cannabis products may be exempted from subsections (a) and (b) if such products are—
(1)
for experimental purposes, or
(2)
transferred to the premises of another producer or export warehouse proprietor or released from customs custody for delivery to a producer.
5913.

Purchase, receipt, possession, or sale of cannabis products after removal
(a)

Restriction
No person shall—
(1)
with intent to defraud the United States, purchase, receive, possess, offer for sale, or sell or otherwise dispose of, after removal, any cannabis products—
(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)
that, after removal without payment of tax pursuant to section 5904(a), have been diverted from the applicable purpose or use specified in that section,
(2)
with intent to defraud the United States, purchase, receive, possess, offer for sale, or sell or otherwise dispose of, after removal, any cannabis products that are not put up in packages as required under section 5912 or that are put up in packages not bearing the marks, labels, and notices, as required under such section, or
(3)
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 that are not put up in packages as required under section 5912 or that are put up in packages not bearing the marks, labels, and notices, as required under such section.
(b)

Exception
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.
(c)

Liability to tax
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.
5914.

Restrictions relating to marks, labels, notices, and packages
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.
5915.

Restriction on importation of previously exported cannabis products
(a)

Export labeled cannabis products
(1)

In general
Cannabis products produced in the United States and labeled for exportation under this chapter—
(A)
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,
(B)
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
(C)
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.
(2)

Alterations by persons other than original producer
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.
(3)

Exports include shipments to puerto rico
For purposes of this section, section 5904(d), section 5921, 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.
(b)

Export label
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).
C

Penalties
5921.

Civil penalties
(a)

Omitting things required or doing things forbidden
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.
(b)

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 10 percent of the tax due but unpaid.
(c)

Sale of cannabis or cannabis products for export
Every person who—
(1)
sells, relands, or receives within the jurisdiction of the United States any cannabis products that have been labeled or shipped for exportation under this chapter,
(2)
sells or receives such relanded cannabis products, or
(3)
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.
(d)

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).
(e)

Cross references
For penalty for failure to make deposits or for overstatement of deposits, see section 6656.
(f)

Fraudulent offenses
Whoever, with intent to defraud the United States—
(1)
engages in business as a cannabis business without filing the application and obtaining the permit where required by this chapter or regulations thereunder,
(2)
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)
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)
sells or otherwise transfers, contrary to this chapter or regulations thereunder, any cannabis products subject to tax under this chapter, or
(5)
purchases, receives, or possesses, with intent to redistribute or resell, any cannabis 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)
that, 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.
(g)

Liability to tax
Any person who possesses cannabis products in violation of subsection (f) shall be liable for a tax equal to the tax on such articles.”.
503.

Reports and conforming amendments
(a)

Study
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—
(1)
conduct a study concerning the characteristics of the cannabis industry, including the number of persons operating cannabis businesses at each level of such industry, the volume of sales, the amount of tax collected each year, and the areas of evasion, and
(2)
submit to Congress recommendations to improve the regulation of the industry and the administration of the related tax.
(b)

Annual reports regarding determination of applicable rates
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 that the Secretary anticipates using to determine the applicable excise tax rates that will apply for such calendar year under section 5901(c)(2) of such Code.
(c)

Conforming amendments
(1)
Section 6103(o)(1)(A) of the Internal Revenue Code of 1986 is amended by striking “and firearms” and inserting “firearms, and cannabis products”.
(2)
The table of chapters for subtitle E of the Internal Revenue Code of 1986 is amended by adding at the end the following new chapter:
“Chapter 56. Cannabis products”.
(3)
The table of sections for subchapter A of chapter 98 of such Code is amended by adding at the end the following:
“Sec. 9512. Law Enforcement Retraining and Successful Second Chances Fund.”.
(d)

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 of the enactment of this Act.
(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.
(3)

Establishment of law enforcement retraining and successful second chances fund
The amendments made by subsection (a) shall take effect on the date of enactment of this Act.
VI

VETERANS’ CARE AND ACCESS
601.

Nondiscrimination in Federal hiring for veteran medical cannabis users
(a)

In general
It shall be unlawful for a “veteran”, as defined in title 38, section 101(2) of the United States Code, to be excluded from employment in the Federal Government solely because the veteran consumes or has consumed cannabis, as defined in title 21, section 802(16) or the United States Code. For the purposes determining if a person is a veteran under this provision, an other than honorable, bad conduct, or dishonorable release premised solely on nonviolent cannabis charges covered under section 101 of the States Reform Act shall be construed as a general discharge.
602.

Authorized provision of information on State-approved marijuana programs to veterans
(a)

Authorized provision of information
Notwithstanding the provisions of the Controlled Substances Act (21 U.S.C. 801 et seq.) or any other Federal, State, or local law regulating or prohibiting the provision of information on marijuana, the Secretary of Veterans Affairs shall authorize physicians and other health care providers of the Veterans Health Administration of the Department of Veterans Affairs to provide to veterans who are residents of States with State-approved marijuana programs information regarding the participation of such veterans in such programs, recommend their participation in such programs or use of FDA-approved or designated State medical cannabis products (within the meaning of part J of subchapter V of chapter 9 of title 21 of the United States Code (the Federal Food, Drug, and Cosmetic Act)) as part of a course of Veterans Affairs treatment, or prescribe the use of FDA-approved or designated State medical cannabis products (within the meaning of part J of subchapter V of chapter 9 of title 21 of the United States Code (the Federal Food, Drug, and Cosmetic Act)).
(b)

Definitions
In this section:
(1)
The term “information” includes details such as informational materials, internet websites, and relevant contact information for State-approved marijuana programs.
(2)
The term “marijuana” has the meaning given the term “marihuana” in section 102 of the Controlled Substances Act (21 U.S.C. 802).
(3)
The term “State” means each of the several States, the District of Columbia, the Commonwealth of Puerto Rico, any territory, Federal enclave, or possession of the United States, and each federally recognized Indian Tribe.
VII

MISCELLANEOUS UPDATES AND TECHNICAL AMENDMENTS
701.

United States international cannabis commerce policy
(a)

United states foreign policy objectives with respect to cannabis
(1)
The President of the United States and the United States Trade Representative shall send trade missions and engage in treaty-making with foreign jurisdictions that have legalized the import and export of cannabis to provide for the legal trade between the United States and foreign jurisdictions.
(2)
The principal negotiating objectives of the United States with respect to trade shall include the removal of unjustified foreign barriers to trade in cannabis, cannabis derivatives, and cannabis products.
(3)
The United Nations Ambassador is tasked with similarly ensuring updates to international accords to reflect current practices.
(b)

Rule of construction for international treaties respecting drug policy; federal primacy on scheduling decisions
(1)
It is the policy of the United States that the power of the Federal Government to control, alter, heighten, lower, abolish, decontrol, or likewise modify drug control scheduling for any particular substance, including cannabis, is a vested power of the article I constitutional lawmaking power that no treaty, including the 1961 Single Convention on Narcotic Drugs, the 1971 Convention on Psychotropic Substances, 1972 Protocol Amending the Single Convention on Narcotic Drugs, and the 1988 United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances, may infringe upon, oblige or impose a duty on the United States not to undertake at its pleasure, or otherwise modify. This provision shall constitute a rule of construction for all Federal courts to apply in all cases.
702.

Continued Federal employee drug testing
(a)

Special rule for federal employee testing
Section 503 of the Supplemental Appropriations Act, 1987 (5 U.S.C. 7301 note) is amended by adding at the end the following:
“(h)

Cannabis
(1)

Continued testing
Notwithstanding the States Reform Act and the amendments made thereby, the Secretary of Health and Human Services may continue to include cannabis for purposes of drug testing of Federal employees subject to Executive Order 12564, or other applicable Federal laws and orders.
(2)

Definition
The term “cannabis” has the meaning given to the term “marihuana” in section 102 of the Controlled Substances Act (21 U.S.C. 802).”.
(b)

Special rule for certain regulations
(1)

In general
The amendments made by this section may not be construed to abridge the authority of the Secretary of Transportation, or the Secretary of the department in which the Coast Guard is operating, to regulate and screen for the use of cannabis or a controlled substance within the meaning of section 102 of the Controlled Substances Act (21 U.S.C. 802).
703.

Demographic data on new industry of cannabis business owners and employees
(a)

In general
The Bureau of Labor Statistics shall regularly compile, maintain, and make public data on the demographics of—
(1)
individuals who are business owners in the cannabis industry; and
(2)
individuals who are employed in the cannabis industry.
(b)

Demographic data
The data collected under subsection (a) shall include data regarding—
(1)
age;
(2)
certifications and licenses;
(3)
disability status;
(4)
educational attainment;
(5)
family and marital status;
(6)
nativity;
(7)
race and Hispanic ethnicity;
(8)
school enrollment;
(9)
veteran status; and
(10)
sex.
(c)

Confidentiality
The name, address, and other identifying information of individuals employed in the cannabis industry shall be kept confidential by the Bureau and not be made available to the public.
(d)

Definitions
In this section:
(1)

Cannabis
The term “cannabis” means either “marihuana”, as defined in section 102 of the Controlled Substances Act (21 U.S.C. 802), or “cannabis”, as defined under the State law authorizing the sale or use of cannabis in which the individual or entity is located.
(2)

Cannabis industry
The term “cannabis industry” means an individual or entity that is licensed or permitted under a State or local law to engage in commercial cannabis-related activity.
(3)

Owner
The term “owner” means an individual or entity that is defined as an owner under the State or local law where the individual or business is licensed or permitted.
704.

Conforming amendment to create uniformity of references in existing law to cannabis, marijuana, or marihuana
Wherever, in the statutes of the United States or in the rulings, regulations, or interpretations of various administrative bureaus and agencies of the United States—
(1)
there appears or may appear the term “marihuana” or “marijuana”, that term shall be struck and the term “cannabis” shall be inserted; and
(2)
there appears or may appear the term “Marihuana” or “Marijuana”, that term shall be struck and the term “Cannabis” shall be inserted.
705.

Effective upon enactment
Except for the provisions made in section 101(d) of title I of this Act and throughout title V, this Act shall be considered effective as of its date of enactment.