I 

116TH CONGRESS 

2D SESSION H. R. 8131 

To amend the Internal Revenue Code of 1986 to establish Hemp Opportunity 

Zones. 

IN THE HOUSE OF REPRESENTATIVES 

AUGUST 28, 2020 

Mr. RIGGLEMAN introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committee on Agriculture, 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 Internal Revenue Code of 1986 to establish 

Hemp Opportunity Zones. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Hemp Opportunity 

5 Zone Act of 2020’’. 

6 SEC. 2. HEMP OPPORTUNITY ZONES. 

7 (a) IN GENERAL.—Chapter 1 of the Internal Rev8 enue Code of 1986 is amended by inserting after sub9 chapter V the following new subchapter: 


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1 ‘‘Subchapter W—Hemp Opportunity Zones 

2 ‘‘SEC. 1400W–1. DESIGNATION. 

3 ‘‘(a) HEMP OPPORTUNITY ZONE DEFINED.—For 

4 purposes of this subchapter, the term ‘hemp opportunity 

5 zone’ means a population census tract that is a low-income 

6 community that is designated as a hemp opportunity zone. 

7 ‘‘(b) DESIGNATION.— 

8 ‘‘(1) IN GENERAL.—For purposes of subsection 

9 (a), a population census tract that is a low-income 

10 community is designated as a hemp opportunity 

11 zone if— 

12 ‘‘(A) not later than the end of the deter13 mination period, the chief executive office of the 

14 State in which the tract is located— 

15 ‘‘(i) nominates the tract for designa16 tion as a hemp opportunity zone, and 

17 ‘‘(ii) notifies the Secretary in writing 

18 of such nomination, and 

19 ‘‘(B) the Secretary certifies such nomina20 tion and designates such tract as a hemp oppor21 tunity zone before the end of the consideration 

22 period. 

23 ‘‘(2) FACTORS FOR CONSIDERATION.—In nomi24 nating tracts (and considering such nominations for 


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1 certification) preference shall be given to areas 

2 which— 

3 ‘‘(A) are facing obstacles to economic de4 velopment due to a lack of resources, 

5 ‘‘(B) are the focus of mutually reinforcing 

6 state, local, or private economic development 

7 initiatives, 

8 ‘‘(C) are poised for economic growth that 

9 requires access to a larger hemp market for 

10 commercial purposes, and 

11 ‘‘(D) represent the areas of a State where 

12 such service would result in the highest return 

13 on investment. 

14 ‘‘(3) EXTENSION OF PERIODS.—A chief execu15 tive officer of a State may request that the Sec16 retary extend either the determination or consider17 ation period, or both (determined without regard to 

18 this subparagraph), for an additional 30 days. 

19 ‘‘(c) OTHER DEFINITIONS.—For purposes of this 

20 subsection— 

21 ‘‘(1) LOW-INCOME COMMUNITIES.—The term 

22 ‘low-income community’ has the same meaning as 

23 when used in section 45D(e). 

24 ‘‘(2) DEFINITION OF PERIODS.— 


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1 ‘‘(A) CONSIDERATION PERIOD.—The term 

2 ‘consideration period’ means the 30-day period 

3 beginning on the date on which the Secretary 

4 receives notice under subsection (b)(1)(A)(ii), 

5 as extended under subsection (b)(3). 

6 ‘‘(B) DETERMINATION PERIOD.—The term 

7 ‘determination period’ means the 90-day period 

8 beginning on the date of the enactment of this 

9 section, as extended under subsection (b)(2). 

10 ‘‘(C) STATE.—For purposes of this sec11 tion, the term ‘State’ includes any possession of 

12 the United States. 

13 ‘‘(d) NUMBER OF DESIGNATIONS.— 

14 ‘‘(1) IN GENERAL.—Except as provided by 

15 paragraph (2), the number of population census 

16 tracts in a State that may be designated as hemp 

17 opportunity zones under this section may not exceed 

18 25 percent of the number of low-income communities 

19 in the State. 

20 ‘‘(2) EXCEPTION.—If the number of low-income 

21 communities in a State is less than 100, then a total 

22 of 25 of such tracts may be designated as qualified 

23 opportunity zones. 

24 ‘‘(e) DESIGNATION OF TRACTS CONTIGUOUS WITH

25 LOW-INCOME COMMUNITIES.— 


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1 ‘‘(1) IN GENERAL.—A population census tract 

2 that is not a low-income community may be des3 ignated as a hemp opportunity zone under this sec4 tion if— 

5 ‘‘(A) the tract is contiguous with the low6 income community that is designated as a hemp 

7 opportunity zone, and 

8 ‘‘(B) the median family income of the tract 

9 does not exceed 125 percent of the median fam10 ily income of the low-income community with 

11 which the tract is contiguous. 

12 ‘‘(2) LIMITATION.—Not more than 5 percent of 

13 the population census tracts designated in a State as 

14 a hemp opportunity zone may be designated under 

15 paragraph (1). 

16 ‘‘(f) PERIOD FOR WHICH DESIGNATION IS IN EF17 FECT.—A designation as a hemp opportunity zone shall 

18 remain in effect for the period beginning on the date of 

19 the designation and ending at the close of the 10th cal20 endar year beginning on or after such date of designation. 

21 ‘‘SEC. 1400W–2. DEFERRAL FOR ELIGIBLE TAXPAYER OF 

22 CAPITAL GAINS INVESTED IN HEMP OPPOR23 TUNITY ZONES. 

24 ‘‘(a) IN GENERAL.— 


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1 ‘‘(1) EXCLUSION OF GAIN INVESTED IN HEMP

2 OPPORTUNITY ZONE PROPERTY.—In the case of gain 

3 from the sale to, or exchange with, an unrelated per4 son of any property held by the taxpayer, at the 

5 election of the taxpayer— 

6 ‘‘(A) gross income for the taxable year 

7 shall not include so much of such gain as does 

8 not exceed the aggregate cost of all qualified 

9 hemp opportunity zone property acquired by the 

10 taxpayer during the 180-day period beginning 

11 on the date of such sale or exchange, and 

12 ‘‘(B) the amount of gain excluded by sub13 paragraph (A) shall be included in gross income 

14 as provided by paragraph (2). 

15 ‘‘(2) DEFERRAL OF GAIN INVESTED IN QUALI16 FIED HEMP OPPORTUNITY ZONE PROPERTY.— 

17 ‘‘(A) YEAR OF INCLUSION.—Except as 

18 provided by subparagraph (C), gain to which 

19 paragraph (1)(B) applies shall be included in 

20 income in the taxable year in which the quali21 fied hemp opportunity zone property related to 

22 such gain is sold or exchanged in the amount 

23 determined under subparagraph (B). 

24 ‘‘(B) AMOUNT INCLUDIBLE.—The amount 

25 of gain determined under this clause shall be— 


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1 ‘‘(i) 100 percent of such gain in the 

2 case of the sale or exchange of the quali3 fied hemp opportunity zone property with 

4 respect to which gain is deferred under 

5 paragraph (1) that is held for less than 5 

6 years, 

7 ‘‘(ii) 90 percent of such gain in the 

8 case of the sale or exchange of the quali9 fied hemp opportunity zone property with 

10 respect to which gain is deferred under 

11 paragraph (1) that is held for at least 5 

12 years but less than 7 years, and 

13 ‘‘(iii) 85 percent of such gain in the 

14 case of the sale or exchange of the quali15 fied hemp opportunity zone property with 

16 respect to which gain is deferred under 

17 paragraph (1) that is held for at least 7 

18 years. 

19 ‘‘(3) EXCLUSION OF GAIN ON QUALIFIED HEMP

20 OPPORTUNITY ZONE PROPERTY HELD FOR AT LEAST

21 10 YEARS.—Except as provided in paragraph (2), in 

22 the case of the sale or exchange of qualified hemp 

23 opportunity zone property, or an investment in a 

24 qualified opportunity fund, held for at least 10 

25 years, gross income for the taxable year shall not inVerDate Sep 11 2014 04:39 Sep 05, 2020 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H8131.IH H8131

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1 clude any gain from the sale or exchange of such 

2 property or investment. 

3 ‘‘(4) ONE ELECTION PER PROPERTY.—No elec4 tion may be made under paragraph (1) with respect 

5 to a sale or exchange if an election previously made 

6 with respect to such sale or exchange is in effect. 

7 ‘‘(b) BASIS RULES RELATING TO QUALIFIED HEMP

8 OPPORTUNITY ZONE PROPERTY.— 

9 ‘‘(1) REDUCED BY GAIN DEFERRED UNDER

10 SUBSECTION (a)(1).—The basis of a qualified hemp 

11 opportunity zone property immediately after its ac12 quisition under subsection (a) shall be reduced by 

13 the amount of gain deferred by reason of subsection 

14 (a)(1)(A) with respect to such property. 

15 ‘‘(2) INCREASE FOR GAIN RECOGNIZED UNDER

16 SUBSECTION (a)(2).—The basis of qualified hemp 

17 opportunity zone property shall be increased by the 

18 amount of gain recognized by reason of subsection 

19 (a)(2) with respect to such property. 

20 ‘‘(3) SUBSEQUENT INCREASE IN BASIS FOR

21 PROPERTY HELD FOR AT LEAST 5 YEARS BUT LESS

22 THAN 10 YEARS.—In the case of qualified hemp op23 portunity zone property held for at least 5 years but 

24 less than 10 years— 


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1 ‘‘(A) PROPERTY HELD FOR 5 YEARS.—For 

2 qualified hemp opportunity zone property held 

3 for at least 5 years, the basis of such property 

4 shall be increased by an amount equal to 10 

5 percent of the amount of gain deferred by rea6 son of subsection (a)(1)(A) with respect to such 

7 property. 

8 ‘‘(B) PROPERTY HELD FOR 7 YEARS.—For 

9 qualified hemp opportunity zone property held 

10 for at least 7 years, the basis of such property 

11 shall be increased by an amount equal to 5 per12 cent of the amount of gain deferred by reason 

13 of subsection (a)(1)(A) with respect to such 

14 property. 

15 ‘‘(c) QUALIFIED HEMP OPPORTUNITY ZONE PROP16 ERTY.—For purposes of this section: 

17 ‘‘(1) IN GENERAL.—The term ‘qualified hemp 

18 opportunity zone property’ means property which 

19 is— 

20 ‘‘(A) qualified hemp opportunity zone 

21 stock, 

22 ‘‘(B) qualified hemp opportunity zone part23 nership interest, 

24 ‘‘(C) qualified hemp opportunity zone busi25 ness property, or 


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1 ‘‘(D) an interest in a qualified investment 

2 fund. 

3 ‘‘(2) QUALIFIED HEMP OPPORTUNITY ZONE

4 STOCK.— 

5 ‘‘(A) IN GENERAL.—Except as provided in 

6 subparagraph (B), the term ‘qualified hemp op7 portunity zone stock’ means any stock in a do8 mestic corporation if— 

9 ‘‘(i) such stock is acquired by the tax10 payer after December 31, 2019, at its 

11 original issue (directly or through an un12 derwriter) from the corporation solely in 

13 exchange for cash, 

14 ‘‘(ii) as of the time such stock was 

15 issued, such corporation was a qualified 

16 hemp opportunity zone business (or, in the 

17 case of a new corporation, such corporation 

18 was being organized for purposes of being 

19 a qualified hemp opportunity zone busi20 ness), and 

21 ‘‘(iii) during substantially all of the 

22 taxpayer’s holding period for such stock, 

23 such corporation qualified as a qualified 

24 hemp opportunity zone business. 


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1 ‘‘(B) REDEMPTIONS.—A rule similar to 

2 the rule of section 1202(c)(3) shall apply for 

3 purposes of this paragraph. 

4 ‘‘(3) QUALIFIED HEMP OPPORTUNITY ZONE

5 PARTNERSHIP INTEREST.—The term ‘qualified hemp 

6 opportunity zone partnership interest’ means any 

7 capital or profits interest in a domestic partnership 

8 if— 

9 ‘‘(A) such interest is acquired by the tax10 payer after December 31, 2019, from the part11 nership solely in exchange for cash, 

12 ‘‘(B) as of the time such interest was ac13 quired, such partnership was a qualified hemp 

14 opportunity zone business (or, in the case of a 

15 new partnership, such partnership was being 

16 organized for purposes of being a qualified 

17 hemp opportunity zone business), and 

18 ‘‘(C) during substantially all of the tax19 payer’s holding period for such interest, such 

20 partnership qualified as a qualified hemp oppor21 tunity zone business. 

22 ‘‘(4) QUALIFIED HEMP OPPORTUNITY ZONE

23 BUSINESS PROPERTY.— 

24 ‘‘(A) IN GENERAL.—The term ‘qualified 

25 hemp opportunity zone business property’ 


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1 means tangible property used in a trade or 

2 business of the taxpayer if— 

3 ‘‘(i) such property is used primarily in 

4 the trade or business of producing hemp— 

5 ‘‘(ii) such property was acquired by 

6 the taxpayer by purchase (as defined in 

7 section 179(d)(2)) after December 31, 

8 2019, 

9 ‘‘(iii) the original use of such property 

10 in the qualified hemp opportunity zone 

11 commences with the taxpayer or the tax12 payer substantially improves the property, 

13 and 

14 ‘‘(iv) during substantially all of the 

15 taxpayer’s holding period for such prop16 erty, substantially all of the use of such 

17 property was in a qualified hemp oppor18 tunity zone. 

19 ‘‘(B) SUBSTANTIAL IMPROVEMENT.—For 

20 purposes of subparagraph (A)(iii), property 

21 shall be treated as substantially improved by 

22 the taxpayer only if, during any 30-month pe23 riod beginning after the date of acquisition of 

24 such property, additions to basis with respect to 

25 such property in the hands of the taxpayer exVerDate Sep 11 2014 04:39 Sep 05, 2020 Jkt 099200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\H8131.IH H8131

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1 ceed an amount equal to the adjusted basis of 

2 such property at the beginning of such 30- 

3 month period in the hands of the taxpayer. 

4 ‘‘(C) TREATMENT OF RELATED PAR5 TIES.—For purposes of subparagraph (A)(ii), 

6 the rules of subparagraph (A) of section 

7 179(d)(2) shall be applied using the relation8 ship described in subsection (e)(2) in lieu of the 

9 relationship described in such subparagraph. 

10 ‘‘(5) QUALIFIED HEMP OPPORTUNITY FUND.— 

11 The term ‘qualified hemp opportunity fund’ means 

12 any investment vehicle organized as a corporation or 

13 a partnership for the purpose of investing in quali14 fied hemp opportunity zone property (other than an15 other qualified hemp opportunity fund) that holds at 

16 least 90 percent of its assets in qualified hemp op17 portunity zone property, determined— 

18 ‘‘(A) on the last day of the first 6-month 

19 period of the taxable year of the fund, and 

20 ‘‘(B) on the last day of the taxable year of 

21 the fund. 

22 ‘‘(6) QUALIFIED HEMP OPPORTUNITY ZONE

23 BUSINESS.— 


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1 ‘‘(A) IN GENERAL.—The term ‘qualified 

2 hemp opportunity zone business’ means a trade 

3 or business— 

4 ‘‘(i) in which substantially all of the 

5 tangible property owned or leased by the 

6 taxpayer is qualified hemp opportunity 

7 zone business property, 

8 ‘‘(ii) which satisfies the requirements 

9 of paragraphs (2), (4), and (8) of section 

10 1397C(b), and 

11 ‘‘(iii) which is not described in section 

12 144(c)(6)(B). 

13 ‘‘(B) SPECIAL RULE.—For purposes of 

14 subparagraph (A), tangible property that ceases 

15 to be a qualified hemp opportunity zone busi16 ness property shall continue to be treated as a 

17 qualified hemp opportunity zone business prop18 erty for the lesser of— 

19 ‘‘(i) 5 years after the date on which 

20 such tangible property ceases to be so 

21 qualified, or 

22 ‘‘(ii) the date on which such tangible 

23 property is no longer held by the qualified 

24 hemp opportunity zone business. 

25 ‘‘(d) APPLICABLE RULES.— 


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1 ‘‘(1) IN GENERAL.—For purposes of this sec2 tion and except as otherwise provided in this section, 

3 rules similar to the rules applicable to deferred like 

4 kind exchanges under section 1031 shall apply ex5 cept that reinvestment in qualified hemp opportunity 

6 zone property need not require an intermediary 

7 party. 

8 ‘‘(2) RELATED PERSONS.—For purposes of this 

9 subsection, persons are related to each other if such 

10 persons are described in section 267(b) or 707(b)(1), 

11 determined by substituting ‘20 percent’ for ‘50 per12 cent’ each place it occurs in such sections. 

13 ‘‘(3) DECEDENTS.—In the case of a decedent, 

14 amounts recognized under this section shall, if not 

15 properly includible in the gross income of the dece16 dent, be includible in gross income as provided by 

17 section 691. 

18 ‘‘(4) REGULATIONS.—The Secretary shall pre19 scribe such regulations as may be necessary or ap20 propriate to carry out the purposes of this section, 

21 including— 

22 ‘‘(A) rules providing for proportionate in23 clusion in income and increases in basis for 

24 purposes of subsections (a) and (b) in cases in 

25 which a sale or exchange of any qualified hemp 


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1 opportunity zone property with respect to which 

2 gain is deferred under subsection (a)(1)(A) is 

3 less than all of such property, 

4 ‘‘(B) rules requiring taxpayers to provide 

5 such information as the Secretary determines to 

6 be necessary or appropriate for the identifica7 tion of both the assets sold (including basis and 

8 sale price) and the assets acquired and invest9 ments made, and 

10 ‘‘(C) rules to prevent abuse. 

11 ‘‘SEC. 1400W–3. IMMEDIATE EXPENSING OF QUALIFIED 

12 HEMP OPPORTUNITY ZONE BUSINESS PROP13 ERTY. 

14 ‘‘(a) IN GENERAL.—A taxpayer engaged in the trade 

15 or business of hemp production may elect to treat the cost 

16 of any qualified hemp opportunity zone business property 

17 (as defined in section 1400W–2) as an expense which is 

18 not chargeable to capital account. Any cost so treated shall 

19 be allowed as a deduction for the taxable year in which 

20 the qualified hemp opportunity zone business property is 

21 placed in service. 

22 ‘‘(b) EXCEPTION FOR CERTAIN PROPERTY.—For 

23 purposes of this section, the term ‘qualified hemp oppor24 tunity zone business property’ shall not include any prop25 erty to which section 168(g) applies. 


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1 ‘‘(c) ELECTION.—An election under this section shall 

2 be made under rules similar to the rules of section 179(c). 

3 ‘‘(d) COORDINATION WITH SECTION 179.—For pur4 poses of section 179, qualified hemp opportunity zone 

5 business property shall not be treated as section 179 prop6 erty. 

7 ‘‘(e) APPLICATION OF OTHER RULES.—Rules similar 

8 to the rules of paragraphs (3), (4), (5), (7), (9), and (10) 

9 of section 179(d) shall apply for purposes of this section. 

10 ‘‘(f) TAXPAYER REPORTING.—This section shall not 

11 apply with respect to any taxpayer for any taxable year 

12 unless such taxpayer provides the Secretary with such in13 formation as the Secretary may require to allow the Sec14 retary to evaluate the effectiveness of the program estab15 lished under this part.’’. 

16 (b) BASIS ADJUSTMENTS.—Section 1016(a) of such 

17 Code is amended by striking ‘‘and’’ at the end of para18 graph (37), by striking the period at the end of paragraph 

19 (38) and inserting ‘‘, and’’, and by inserting after para20 graph (38) the following new paragraph: 

21 ‘‘(39) to the extent provided in section 1400W– 

22 2(b).’’. 

23 (c) CLERICAL AMENDMENT.—The table of sub24 chapters for chapter 1 of such Code is amended by insertVerDate Sep 11 2014 04:39 Sep 05, 2020 Jkt 099200 PO 00000 Frm 00017 Fmt 6652 Sfmt 6201 E:\BILLS\H8131.IH H8131

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1 ing after the item relating to subchapter V the following 

2 new item: 

‘‘SUBCHAPTER W. HEMP OPPORTUNITY ZONES’’. 

3 (d) EFFECTIVE DATE.—The amendments made by 

4 this section shall apply to taxable years beginning after 

5 the date of the enactment of this Act. 

6 SEC. 3. INCREASED QUALIFIED BUSINESS INCOME DEDUC7 TION FOR HEMP PRODUCERS. 

8 (a) IN GENERAL.—Section 199A(b) of the Internal 

9 Revenue Code of 1986 is amended by adding at the end 

10 the following new paragraph: 

11 ‘‘(8) SPECIAL RULE WITH RESPECT TO QUALI12 FIED BUSINESS INCOME FROM HEMP PRODUC13 TION.— 

14 ‘‘(A) IN GENERAL.—In the case of any 

15 qualified trade or business which is engaged in 

16 hemp production and the gross receipts for the 

17 preceding taxable year of which do not exceed 

18 $25,000,000, the amount determined under 

19 paragraph (2) with respect to such trade or 

20 business shall be increased by an amount equal 

21 to 15 percent of so much of the qualified busi22 ness income with respect to such trade or busi23 ness as is properly allocable to hemp produc24 tion. 


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1 ‘‘(B) COMMON CONTROL.—Any trades or 

2 business which are under common control and 

3 treated as a single employer under section 52 

4 shall be treated as a single trade or business for 

5 purposes of applying the $25,000,000 gross re6 ceipts test under subparagraph (A).’’. 

7 (b) EFFECTIVE DATE.—The amendment made by 

8 this section shall apply to taxable years beginning the date 

9 of the enactment of this Act. 

10 SEC. 4. HEMP FARMER START-UP TAX CREDIT. 

11 (a) IN GENERAL.—Subpart D of part IV of sub12 chapter A of chapter 1 of the Internal Revenue Code of 

13 1986 is amended by adding at the end the following new 

14 section: 

15 ‘‘SEC. 45U. HEMP FARMER START-UP CREDIT. 

16 ‘‘(a) IN GENERAL.—For purposes of section 38, in 

17 the case of an eligible hemp farmer, the hemp farmer 

18 start-up credit determined under this section for any tax19 able year is an amount equal to— 

20 ‘‘(1) 10 percent of the cash rent paid by the 

21 taxpayer for land in connection with the trade or 

22 business of producing hemp, or 

23 ‘‘(2) 15 percent of the crop share rent so paid 

24 by the taxpayer. 


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1 ‘‘(b) DEFINITIONS AND SPECIAL RULES.—For pur2 poses of this section— 

3 ‘‘(1) ELIGIBLE HEMP FARMER.—The term ‘eli4 gible hemp farmer’ means any person who— 

5 ‘‘(A) engaged in the trade or business of 

6 hemp farming, and 

7 ‘‘(B) has gross receipts for the preceding 

8 taxable year of not more than $25,000,000. 

9 ‘‘(2) CASH RENT.—The term ‘cash rent’ means 

10 any rent paid for the use of land in cash or as a 

11 crop share that is guaranteed as to the dollar 

12 amount of the commodity paid in rent. 

13 ‘‘(3) CROP SHARE RENT.—The term ‘crop share 

14 rent’ means any rent paid for the use of land as a 

15 crop share and that is not described in paragraph 

16 (2). 

17 ‘‘(4) YEARS OF ELECTION.—The taxpayer may 

18 elect the application of this section only for 3 taxable 

19 years of the first 5 taxable years for which ordinary 

20 and necessary expenses paid or incurred in carrying 

21 on such trade or business are allowable as a deduc22 tion by the taxpayer under section 162. 

23 ‘‘(5) CONTROLLED GROUPS AND COMMON CON24 TROL.—All persons treated as a single employer 


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1 under subsections (a) and (b) of section 52 shall be 

2 treated as 1 person.’’. 

3 (b) PART OF GENERAL BUSINESS CREDIT.—Section 

4 38(b) of such Code is amended by striking ‘‘plus’’ at the 

5 end of paragraph (32), by striking the period at the end 

6 of paragraph (33) and inserting ‘‘, plus’’, and by adding 

7 at the end the following new paragraph: 

8 ‘‘(34) the hemp farmer start-up credit deter9 mined under section 45U(a).’’. 

10 (c) CLERICAL AMENDMENT.—The table of sections 

11 for subpart D of part IV of subchapter A of chapter 1 

12 is amended by adding at the end the following new item: 

‘‘Sec. 45U. Hemp farmer start-up credit.’’. 

13 (d) EFFECTIVE DATE.—The amendments made by 

14 this section shall apply to taxable years beginning after 

15 December 31, 2020. 

16 SEC. 5. SMALL HEMP FARMER INVESTMENT CREDIT. 

17 (a) IN GENERAL.—Subpart E of part IV of sub18 chapter A of chapter 1 of the Internal Revenue Code of 

19 1986 is amended by inserting after section 48C the fol20 lowing new section: 

21 ‘‘SEC. 48D. SMALL HEMP FARMER CREDIT. 

22 ‘‘(a) IN GENERAL.—For purposes of section 46, in 

23 the case of an eligible hemp farmer, the small hemp farm24 er credit for any taxable year is an amount equal to 30 


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1 percent of the basis of hemp farming property placed in 

2 service during the taxable year. 

3 ‘‘(b) ELIGIBLE HEMP FARMER.—For purposes of 

4 this section, the term ‘eligible hemp farmer’ means any 

5 person who— 

6 ‘‘(1) engaged in the trade or business of hemp 

7 farming, and 

8 ‘‘(2) has gross receipts for the preceding tax9 able year of not more than $250,000. 

10 ‘‘(c) HEMP FARMING PROPERTY.—For purposes of 

11 this section, the term ‘hemp farming property’ means any 

12 property (of a character subject to the allowance for de13 preciation) which placed in service by the taxpayer for use 

14 in the trade or business of hemp farming. 

15 ‘‘(d) CONTROLLED GROUPS AND COMMON CON16 TROL.—All persons treated as a single employer under 

17 subsections (a) and (b) of section 52 shall be treated as 

18 1 person for purposes of subsection (b)(2).’’. 

19 (b) PART OF INVESTMENT CREDIT.—Section 46 of 

20 such Code is amended by striking ‘‘and’’ at the end of 

21 paragraph (5), by striking the period at the end of para22 graph (6) and inserting ‘‘, and’’, and by adding at the 

23 end the following new paragraph: 

24 ‘‘(7) the small hemp farmer credit.’’. 


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1 (c) 50-PERCENT BASIS REDUCTION.—Section 

2 50(c)(3) of such Code is amended by inserting ‘‘or small 

3 hemp farmer credit’’ after ‘‘energy credit’’. 

4 (d) CLERICAL AMENDMENT.—The table of sections 

5 for subpart E of part IV of subchapter A of chapter 1 

6 of such Code is amended by inserting after the item relat7 ing to section 48C the following new item: 

‘‘Sec. 48D. Small hemp farmer credit.’’. 

8 (e) EFFECTIVE DATE.—The amendments made by 

9 this section shall apply to property placed in service in 

10 taxable years beginning after December 31, 2020. 

11 SEC. 6. MARKETABILITY STUDY AND REPORT. 

12 (a) IN GENERAL.—The Secretary of the Treasury, in 

13 consultation with the Secretary of Agriculture, shall study 

14 the issues described in subsection (b) with respect to the 

15 production of hemp and, not later than 1 year after the 

16 date of the enactment of this Act, submit to Congress a 

17 report of the findings of such study. 

18 (b) ISSUES.—The issues described in this subsection, 

19 with respect to the production of hemp, are as follows: 

20 (1) The potential opportunities for hemp seed 

21 to be used as an animal feed and any obstacles to 

22 approval for such use. 

23 (2) The potential opportunities for hemp to be 

24 used to create personal protective equipment for 

25 healthcare workers and first responders. 


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1 (3) The feasibility and financial impact of hemp 

2 producer compliance with applicable Department of 

3 Agriculture sampling timetables. 

4 (4) The feasibility of hemp producer compliance 

5 with Department of Agriculture reporting require6 ments. 

7 (5) The feasibility of hemp producer compliance 

8 with a legal maximum 0.3 percent tetrahydrocannab9 inol limitation, including compliance and losses due 

10 to non-compliance, and a comparison to the feasi11 bility of a legal maximum 1.0 percent tetrahydrocan12 nabinol limitation. 

13 (6) The maximum tetrahydrocannabinol level 

14 for the crop to have no psychotropic effect or intoxi15 cating potential. 

16 (7) The ability for United States hemp pro17 ducers to compete globally with other countries that 

18 have a maximum 1.0 percent tetrahydrocannabinol 

19 limitation. 

20 (8) Identifying market challenges and opportu21 nities for a craft and small hemp producers to re22 main competitive in the United States and global 

23 hemp marketplace. 

24 (9) The nutritional value and benefits of foods, 

25 drinks, and supplements produced from hemp-based 


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25 

•HR 8131 IH

1 products, and the potential benefits of including 

2 hemp-based food, drink, supplements, and protein to 

3 certain public school meal programs. 

4 (10) Which items procured by the Federal Gov5 ernment, or items used by contractors or subcontrac6 tors of the Federal Government at any tier, can be 

7 substituted by a hemp-based product. 

8 (11) Identify potential opportunities for hemp 

9 to be used as a renewable energy source. 

Æ 


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