I 

115TH CONGRESS 

1ST SESSION H. R. 1823 

To amend the Internal Revenue Code of 1986 to provide for the taxation 

and regulation of marijuana products, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 30, 2017 

Mr. BLUMENAUER introduced the following bill; which was referred to the 

Committee on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to provide 

for the taxation and regulation of marijuana products, 

and for other purposes. 

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; TABLE OF CONTENTS. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Marijuana Revenue and Regulation Act’’. 

6 (b) TABLE OF CONTENTS.—The table of contents of 

7 this Act is as follows: 

Sec. 1. Short title; table of contents. 

TITLE I—TAXATION 

Sec. 101. Establishment of taxes relating to marijuana products. 

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1 TITLE I—TAXATION 

2 SEC. 101. ESTABLISHMENT OF TAXES RELATING TO MARI3 JUANA PRODUCTS. 

4 (a) IN GENERAL.—Subtitle E of title I of the Inter5 nal Revenue Code of 1986 is amended by adding at the 

6 end the following new chapter: 

7 ‘‘CHAPTER 56—MARIJUANA PRODUCTS 

‘‘SUBCHAPTER A. TAX ON MARIJUANA PRODUCTS

‘‘SUBCHAPTER B. OCCUPATIONAL TAX

‘‘SUBCHAPTER C. BOND AND PERMITS

‘‘SUBCHAPTER D. OPERATIONS

‘‘SUBCHAPTER E. PENALTIES

8 ‘‘Subchapter A—Tax on Marijuana Products 

‘‘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. 

9 ‘‘SEC. 5901. IMPOSITION OF TAX. 

10 ‘‘(a) IMPOSITION OF TAX.—There is hereby imposed 

11 on any marijuana product produced in or imported into 

12 the United States a tax equal to— 

13 ‘‘(1) for any such product sold during the first 

14 5 calendar years in which this chapter becomes ef15 fective, the applicable percentage of the price for 

16 which such product is sold, and 

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1 ‘‘(2) for any product sold during any calendar 

2 year after the period described in paragraph (1), the 

3 applicable equivalent rate. 

4 ‘‘(b) APPLICABLE PERCENTAGE.—For purposes of 

5 subsection (a)(1), the applicable percentage shall be deter6 mined as follows: 

7 ‘‘(1) For any marijuana product sold during the 

8 first 2 calendar years in which this chapter becomes 

9 effective, 10 percent. 

10 ‘‘(2) For any marijuana product sold during the 

11 calendar year after the period described in para12 graph (1), 15 percent. 

13 ‘‘(3) For any marijuana product sold during the 

14 calendar year after the period described in para15 graph (2), 20 percent. 

16 ‘‘(4) For any marijuana product sold during the 

17 calendar year after the period described in para18 graph (3), 25 percent. 

19 ‘‘(c) APPLICABLE EQUIVALENT RATE.— 

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

21 (a)(2), the applicable equivalent rate for each cal22 endar year shall be equal to— 

23 ‘‘(A) in the case of any marijuana product 

24 not described in subparagraph (B) which is sold 

25 during such year, the applicable rate per ounce 

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1 of such product (and a proportionate tax at the 

2 like rate on all fractional parts of an ounce of 

3 such product), and 

4 ‘‘(B) in the case of any marijuana product 

5 containing a marijuana derivative which is sold 

6 during such year, the applicable rate per gram 

7 of tetrahydrocannabinol in such product (and a 

8 proportionate tax at the like rate on all frac9 tional parts of a gram of tetrahydrocannabinol 

10 in such product). 

11 ‘‘(2) APPLICABLE RATE.— 

12 ‘‘(A) IN GENERAL.—For purposes of para13 graph (1)(A), the applicable rate per ounce for 

14 any calendar year shall be equal to 25 percent 

15 of the prevailing sales price of marijuana sold 

16 in the United States during the 12-month pe17 riod ending one calendar quarter before such 

18 calendar year, expressed on a per ounce basis, 

19 as determined by the Secretary. 

20 ‘‘(B) MARIJUANA DERIVATIVES.—For pur21 poses of paragraph (1)(B), the applicable rate 

22 per gram of tetrahydrocannabinol shall be equal 

23 to the quotient obtained by dividing— 

24 ‘‘(i) the applicable rate per ounce (as 

25 determined under subparagraph (A)), by 

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1 ‘‘(ii) 2.83495. 

2 ‘‘(d) TIME OF ATTACHMENT ON MARIJUANA PROD3 UCTS.—The tax under this section shall attach to any 

4 marijuana product as soon as such product is in existence 

5 as such, whether it be subsequently separated or trans6 ferred into any other substance, either in the process of 

7 original production or by any subsequent process. 

8 ‘‘SEC. 5902. DEFINITIONS. 

9 ‘‘For purposes of this chapter: 

10 ‘‘(1) EXPORT WAREHOUSE.—The term ‘export 

11 warehouse’ means a bonded internal revenue ware12 house for the storage of marijuana products, upon 

13 which the internal revenue tax has not been paid— 

14 ‘‘(A) for subsequent shipment to a foreign 

15 country, Puerto Rico, the Virgin Islands, or a 

16 possession of the United States, or 

17 ‘‘(B) for consumption beyond the jurisdic18 tion of the internal revenue laws of the United 

19 States. 

20 ‘‘(2) EXPORT WAREHOUSE PROPRIETOR.—The 

21 term ‘export warehouse proprietor’ means any per22 son who operates an export warehouse. 

23 ‘‘(3) IMPORTER.—The term ‘importer’ means 

24 any person who— 

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1 ‘‘(A) is in the United States and to whom 

2 nontaxpaid marijuana products, produced in a 

3 foreign country, Puerto Rico, the Virgin Is4 lands, or a possession of the United States, are 

5 shipped or consigned, 

6 ‘‘(B) removes marijuana products for sale 

7 or consumption in the United States from a 

8 customs bonded warehouse, or 

9 ‘‘(C) smuggles or otherwise unlawfully 

10 brings marijuana or marijuana products into 

11 the United States. 

12 ‘‘(4) MARIJUANA.—The term ‘marijuana’ has 

13 the meaning given the term ‘marihuana’ under sec14 tion 102(16) of the Controlled Substances Act (21 

15 U.S.C. 802(16)). 

16 ‘‘(5) MARIJUANA DERIVATIVE.—The term 

17 ‘marijuana derivative’ means any article containing 

18 marijuana, or any derivative thereof, which is not a 

19 naturally grown and unadulterated marijuana flow20 er. 

21 ‘‘(6) MARIJUANA ENTERPRISE.—The term 

22 ‘marijuana enterprise’ means a producer, export 

23 warehouse proprietor, or importer. 

24 ‘‘(7) MARIJUANA PRODUCT.— 

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

2 subparagraph (B), the term ‘marijuana prod3 uct’ means any article which contains mari4 juana or any marijuana derivative. 

5 ‘‘(B) EXCEPTIONS.— 

6 ‘‘(i) IN GENERAL.—The term ‘mari7 juana product’ shall not include— 

8 ‘‘(I) any article containing mari9 juana which has been approved by the 

10 Food and Drug Administration for 

11 sale for therapeutic purposes and is 

12 marketed and sold solely for such pur13 pose, or 

14 ‘‘(II) industrial hemp. 

15 ‘‘(ii) INDUSTRIAL HEMP.—For pur16 poses of clause (i)(II), the term ‘industrial 

17 hemp’ means the plant Cannabis sativa L. 

18 and any part of such plant, whether grow19 ing or not, with a delta-9 

20 tetrahydrocannabinol concentration of not 

21 more than 0.3 percent on a dry weight 

22 basis. 

23 ‘‘(8) MARIJUANA PRODUCTION FACILITY.—The 

24 term ‘marijuana production facility’ means an estab25 lishment which is qualified under subchapter C to 

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1 perform any operation for which such qualification is 

2 required under such subchapter. 

3 ‘‘(9) PRODUCER.—The term ‘producer’ means 

4 any person who— 

5 ‘‘(A) plants, cultivates, harvests, or other6 wise produces marijuana or marijuana prod7 ucts, or 

8 ‘‘(B) manufactures, compounds, converts, 

9 processes, prepares, or packages marijuana 

10 products. 

11 ‘‘(10) REMOVAL; REMOVE.—The terms ‘re12 moval’ or ‘remove’ mean— 

13 ‘‘(A) the removal of marijuana products 

14 from the premises of a producer, or from inter15 nal revenue bond under section 5904, as the 

16 Secretary shall by regulation prescribe, 

17 ‘‘(B) release of such products from cus18 toms custody, or 

19 ‘‘(C) smuggling or other unlawful importa20 tion of such products into the United States. 

21 ‘‘(11) RETAILER.—The term ‘retailer’ means a 

22 person who sells marijuana products to consumers. 

23 ‘‘SEC. 5903. LIABILITY AND METHOD OF PAYMENT. 

24 ‘‘(a) LIABILITY FOR TAX.— 

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1 ‘‘(1) ORIGINAL LIABILITY.—The producer or 

2 importer of any marijuana product shall be liable for 

3 the taxes imposed thereon by section 5901. 

4 ‘‘(2) TRANSFER OF LIABILITY.— 

5 ‘‘(A) IN GENERAL.—When marijuana 

6 products are transferred, without payment of 

7 tax, pursuant to section 5904, the liability for 

8 tax shall be transferred in accordance with the 

9 provisions of this paragraph. 

10 ‘‘(B) TRANSFER BETWEEN PRODUCER AND

11 EXPORT WAREHOUSE PROPRIETOR.—In the 

12 case of marijuana products which are trans13 ferred between the bonded premises of pro14 ducers and export warehouse proprietors, the 

15 transferee shall become liable for the tax upon 

16 receipt by the transferee of such articles, and 

17 the transferor shall thereupon be relieved of 

18 their liability for such tax. 

19 ‘‘(C) TRANSFER FROM CUSTOMS CUSTODY

20 TO PRODUCER.—In the case of marijuana prod21 ucts which are released in bond from customs 

22 custody for transfer to the bonded premises of 

23 a producer, the transferee shall become liable 

24 for the tax on such articles upon release from 

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1 customs custody, and the importer shall there2 upon be relieved of their liability for such tax. 

3 ‘‘(D) RETURNED TO BOND.—All provisions 

4 of this chapter applicable to marijuana products 

5 in bond shall be applicable to such articles re6 turned to bond upon withdrawal from the mar7 ket or returned to bond after previous removal 

8 for a tax-exempt purpose. 

9 ‘‘(b) METHOD OF PAYMENT OF TAX.— 

10 ‘‘(1) IN GENERAL.— 

11 ‘‘(A) DETERMINATION AND PAYMENT OF

12 TAX.—The taxes imposed by section 5901 shall 

13 be determined at the time of removal of the 

14 marijuana products. Such taxes shall be paid on 

15 the basis of return. The Secretary shall, by reg16 ulations, prescribe the period or the event for 

17 which such return shall be made and the infor18 mation to be furnished on such return. 

19 ‘‘(B) POSTPONEMENT.—Any postponement 

20 under this subsection of the payment of taxes 

21 determined at the time of removal shall be con22 ditioned upon the filing of such additional 

23 bonds, and upon compliance with such require24 ments, as the Secretary may prescribe for the 

25 protection of the revenue. The Secretary may, 

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1 by regulations, require payment of tax on the 

2 basis of a return prior to removal of the mari3 juana products where a person defaults in the 

4 postponed payment of tax on the basis of a re5 turn under this subsection or regulations pre6 scribed thereunder. 

7 ‘‘(C) ADMINISTRATION AND PENALTIES.— 

8 All administrative and penalty provisions of this 

9 title, insofar as applicable, shall apply to any 

10 tax imposed by section 5901. 

11 ‘‘(2) TIME FOR PAYMENT OF TAXES.— 

12 ‘‘(A) IN GENERAL.—Except as otherwise 

13 provided in this paragraph, in the case of taxes 

14 on marijuana products removed during any 

15 semimonthly period under bond for deferred 

16 payment of tax, the last day for payment of 

17 such taxes shall be the 14th day after the last 

18 day of such semimonthly period. 

19 ‘‘(B) IMPORTED ARTICLES.—In the case of 

20 marijuana products which are imported into the 

21 United States, the following provisions shall 

22 apply: 

23 ‘‘(i) IN GENERAL.—The last day for 

24 payment of tax shall be the 14th day after 

25 the last day of the semimonthly period 

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1 during which the article is entered into the 

2 customs territory of the United States. 

3 ‘‘(ii) SPECIAL RULE FOR ENTRY OF

4 WAREHOUSING.—Except as provided in 

5 clause (iv), in the case of an entry for 

6 warehousing, the last day for payment of 

7 tax shall not be later than the 14th day 

8 after the last day of the semimonthly pe9 riod during which the article is removed 

10 from the first such warehouse. 

11 ‘‘(iii) FOREIGN TRADE ZONES.—Ex12 cept as provided in clause (iv) and in regu13 lations prescribed by the Secretary, articles 

14 brought into a foreign trade zone shall, 

15 notwithstanding any other provision of law, 

16 be treated for purposes of this subsection 

17 as if such zone were a single customs 

18 warehouse. 

19 ‘‘(iv) EXCEPTION FOR ARTICLES DES20 TINED FOR EXPORT.—Clauses (ii) and (iii) 

21 shall not apply to any article which is 

22 shown to the satisfaction of the Secretary 

23 to be destined for export. 

24 ‘‘(C) MARIJUANA PRODUCTS BROUGHT

25 INTO THE UNITED STATES FROM PUERTO

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1 RICO.—In the case of marijuana products which 

2 are brought into the United States from Puerto 

3 Rico, the last day for payment of tax shall be 

4 the 14th day after the last day of the semi5 monthly period during which the article is 

6 brought into the United States. 

7 ‘‘(D) SPECIAL RULE WHERE DUE DATE

8 FALLS ON SATURDAY, SUNDAY, OR HOLIDAY.— 

9 Notwithstanding section 7503, if, but for this 

10 subparagraph, the due date under this para11 graph would fall on a Saturday, Sunday, or a 

12 legal holiday (as defined in section 7503), such 

13 due date shall be the immediately preceding day 

14 which is not a Saturday, Sunday, or such a hol15 iday. 

16 ‘‘(E) SPECIAL RULE FOR UNLAWFULLY

17 PRODUCED MARIJUANA PRODUCTS.—In the 

18 case of any marijuana products produced in the 

19 United States at any place other than the 

20 premises of a producer that has filed the bond 

21 and obtained the permit required under this 

22 chapter, tax shall be due and payable imme23 diately upon production. 

24 ‘‘(3) PAYMENT BY ELECTRONIC FUND TRANS25 FER.—Any person who in any 12-month period, endmstockstill on DSK3G9T082PROD with BILLS

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1 ing December 31, was liable for a gross amount 

2 equal to or exceeding $5,000,000 in taxes imposed 

3 on marijuana products by section 5901 (or section 

4 7652) shall pay such taxes during the succeeding 

5 calendar year by electronic fund transfer (as defined 

6 in section 5061(e)(2)) to a Federal Reserve Bank. 

7 Rules similar to the rules of section 5061(e)(3) shall 

8 apply to the $5,000,000 amount specified in the pre9 ceding sentence. 

10 ‘‘(c) DEFINITION OF PRICE.— 

11 ‘‘(1) CONTAINERS, PACKING AND TRANSPOR12 TATION CHARGES.—In determining, for the purposes 

13 of this chapter, the price for which an article is sold, 

14 there shall be included any charge for coverings and 

15 containers of whatever nature, and any charge inci16 dent to placing the article in condition packed ready 

17 for shipment, but there shall be excluded the amount 

18 of tax imposed by this chapter, whether or not stat19 ed as a separate charge. A transportation, delivery, 

20 insurance, installation, or other charge (not required 

21 by the preceding sentence to be included) shall be 

22 excluded from the price only if the amount thereof 

23 is established to the satisfaction of the Secretary in 

24 accordance with regulations. 

25 ‘‘(2) CONSTRUCTIVE SALE PRICE.— 

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1 ‘‘(A) IN GENERAL.—If an article is sold di2 rectly to consumers, sold on consignment, or 

3 sold (otherwise than through an arm’s length 

4 transaction) at less than the fair market price, 

5 or if the price for which the article sold cannot 

6 be determined, the tax under section 5901(a) 

7 shall be computed on the price for which such 

8 articles are sold, in the ordinary course of 

9 trade, by producers thereof, as determined by 

10 the Secretary. 

11 ‘‘(B) ARM’S LENGTH.— 

12 ‘‘(i) IN GENERAL.—For purposes of 

13 this section, a sale is considered to be 

14 made under circumstances otherwise than 

15 at arm’s length if— 

16 ‘‘(I) the parties are members of 

17 the same controlled group, whether or 

18 not such control is actually exercised 

19 to influence the sale price, or 

20 ‘‘(II) the sale is made pursuant 

21 to special arrangements between a 

22 producer and a purchaser. 

23 ‘‘(ii) CONTROLLED GROUPS.— 

24 ‘‘(I) IN GENERAL.—The term 

25 ‘controlled group’ has the meaning 

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1 given to such term by subsection (a) 

2 of section 1563, except that ‘more 

3 than 50 percent’ shall be substituted 

4 for ‘at least 80 percent’ each place it 

5 appears in such subsection. 

6 ‘‘(II) CONTROLLED GROUPS

7 WHICH INCLUDE NONINCORPORATED

8 PERSONS.—Under regulations pre9 scribed by the Secretary, principles 

10 similar to the principles of subclause 

11 (I) shall apply to a group of persons 

12 under common control where one or 

13 more of such persons is not a corpora14 tion. 

15 ‘‘(d) PARTIAL PAYMENTS AND INSTALLMENT AC16 COUNTS.— 

17 ‘‘(1) PARTIAL PAYMENTS.—In the case of— 

18 ‘‘(A) a contract for the sale of an article 

19 wherein it is provided that the price shall be 

20 paid by installments and title to the article sold 

21 does not pass until a future date notwith22 standing partial payment by installments, 

23 ‘‘(B) a conditional sale, or 

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1 ‘‘(C) a chattel mortgage arrangement 

2 wherein it is provided that the sales price shall 

3 be paid in installments, 

4 there shall be paid upon each payment with respect 

5 to the article a percentage of such payment equal to 

6 the rate of tax in effect on the date such payment 

7 is due. 

8 ‘‘(2) SALES OF INSTALLMENT ACCOUNTS.—If 

9 installment accounts, with respect to payments on 

10 which tax is being computed as provided in para11 graph (1), are sold or otherwise disposed of, then 

12 paragraph (1) shall not apply with respect to any 

13 subsequent payments on such accounts (other than 

14 subsequent payments on returned accounts with re15 spect to which credit or refund is allowable by rea16 son of section 6416(b)(5)), but instead— 

17 ‘‘(A) there shall be paid an amount equal 

18 to the difference between— 

19 ‘‘(i) the tax previously paid on the 

20 payments on such installment accounts, 

21 and 

22 ‘‘(ii) the total tax which would be pay23 able if such installment accounts had not 

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1 puted as provided in paragraph (1)), ex2 cept that 

3 ‘‘(B) if any such sale is pursuant to the 

4 order of, or subject to the approval of, a court 

5 of competent jurisdiction in a bankruptcy or in6 solvency proceeding, the amount computed 

7 under subparagraph (A) shall not exceed the 

8 sum of the amounts computed by multiplying— 

9 ‘‘(i) the proportionate share of the 

10 amount for which such accounts are sold 

11 which is allocable to each unpaid install12 ment payment, by 

13 ‘‘(ii) the rate of tax under this chap14 ter in effect on the date such unpaid in15 stallment payment is or was due. 

16 The sum of the amounts payable under this 

17 subsection in respect of the sale of any article 

18 shall not exceed the total tax. 

19 ‘‘SEC. 5904. EXEMPTION FROM TAX. 

20 ‘‘(a) IN GENERAL.—Marijuana products on which 

21 the internal revenue tax has not been paid or determined 

22 may, subject to such regulations as the Secretary shall 

23 prescribe, be withdrawn from the bonded premises of any 

24 producer in approved containers free of tax and not for 

25 resale for use— 

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1 ‘‘(1) exclusively in scientific research by a lab2 oratory, 

3 ‘‘(2) by a proprietor of a marijuana production 

4 facility in research, development, or testing (other 

5 than consumer testing or other market analysis) of 

6 processes, systems, materials, or equipment, relating 

7 to marijuana or marijuana operations, under such 

8 limitations and conditions as to quantities, use, and 

9 accountability as the Secretary may by regulations 

10 require for the protection of the revenue, or 

11 ‘‘(3) by the United States or any governmental 

12 agency thereof, any State, any political subdivision 

13 of a State, or the District of Columbia, for non14 consumption purposes. 

15 ‘‘(b) MARIJUANA PRODUCTS TRANSFERRED OR RE16 MOVED IN BOND FROM DOMESTIC FACTORIES AND EX17 PORT WAREHOUSES.— 

18 ‘‘(1) IN GENERAL.—Subject to such regulations 

19 and under such bonds as the Secretary shall pre20 scribe, a producer or export warehouse proprietor 

21 may transfer marijuana products, without payment 

22 of tax, to the bonded premises of another producer 

23 or export warehouse proprietor, or remove such arti24 cles, without payment of tax, for shipment to a for25 eign country, Puerto Rico, the Virgin Islands, or a 

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1 possession of the United States, or for consumption 

2 beyond the jurisdiction of the internal revenue laws 

3 of the United States. 

4 ‘‘(2) LABELING.—Marijuana products may not 

5 be transferred or removed under this subsection un6 less such products bear such marks, labels, or no7 tices as the Secretary shall by regulations prescribe. 

8 ‘‘(c) MARIJUANA PRODUCTS RELEASED IN BOND

9 FROM CUSTOMS CUSTODY.—Marijuana products im10 ported or brought into the United States may be released 

11 from customs custody, without payment of tax, for deliv12 ery to a producer or export warehouse proprietor if such 

13 articles are not put up in packages, in accordance with 

14 such regulations and under such bond as the Secretary 

15 shall prescribe. 

16 ‘‘(d) MARIJUANA PRODUCTS EXPORTED AND RE17 TURNED.—Marijuana products classifiable under item 

18 9801.00.10 of the Harmonized Tariff Schedule of the 

19 United States (relating to duty on certain articles pre20 viously exported and returned), as in effect on the date 

21 of the enactment of the Marijuana Revenue and Regula22 tion Act, may be released from customs custody, without 

23 payment of that part of the duty attributable to the inter24 nal revenue tax for delivery to the original producer of 

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1 prietor authorized by such producer to receive such prod2 ucts, in accordance with such regulations and under such 

3 bond as the Secretary shall prescribe. Upon such release 

4 such products shall be subject to this chapter as if they 

5 had not been exported or otherwise removed from internal 

6 revenue bond. 

7 ‘‘SEC. 5905. CREDIT, REFUND, OR DRAWBACK OF TAX. 

8 ‘‘(a) CREDIT OR REFUND.— 

9 ‘‘(1) IN GENERAL.—Credit or refund of any tax 

10 imposed by this chapter or section 7652 shall be al11 lowed or made (without interest) to the producer, 

12 importer, or export warehouse proprietor on proof 

13 satisfactory to the Secretary that the claimant pro14 ducer, importer, or export warehouse proprietor has 

15 paid the tax on— 

16 ‘‘(A) marijuana products withdrawn from 

17 the market by the claimant, or 

18 ‘‘(B) such products lost (otherwise than by 

19 theft) or destroyed, by fire, casualty, or act of 

20 God, while in the possession or ownership of the 

21 claimant. 

22 ‘‘(2) MARIJUANA PRODUCTS LOST OR DE23 STROYED IN BOND.— 

24 ‘‘(A) EXTENT OF LOSS ALLOWANCE.—No 

25 tax shall be collected in respect of marijuana 

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1 products lost or destroyed while in bond, except 

2 that such tax shall be collected— 

3 ‘‘(i) in the case of loss by theft, unless 

4 the Secretary finds that the theft occurred 

5 without connivance, collusion, fraud, or 

6 negligence on the part of the proprietor of 

7 marijuana production facility, owner, con8 signor, consignee, bailee, or carrier, or 

9 their employees or agents, 

10 ‘‘(ii) in the case of voluntary destruc11 tion, unless such destruction is carried out 

12 as provided in paragraph (3), and 

13 ‘‘(iii) in the case of an unexplained 

14 shortage of marijuana products. 

15 ‘‘(B) PROOF OF LOSS.—In any case in 

16 which marijuana products are lost or destroyed, 

17 whether by theft or otherwise, the Secretary 

18 may require the proprietor of a marijuana pro19 duction facility or other person liable for the 

20 tax to file a claim for relief from the tax and 

21 submit proof as to the cause of such loss. In 

22 every case where it appears that the loss was by 

23 theft, the burden shall be upon the proprietor 

24 of the marijuana production facility or other 

25 person responsible for the tax under section 

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1 5901 to establish to the satisfaction of the Sec2 retary that such loss did not occur as the result 

3 of connivance, collusion, fraud, or negligence on 

4 the part of the proprietor of the marijuana pro5 duction facility, owner, consignor, consignee, 

6 bailee, or carrier, or their employees or agents. 

7 ‘‘(C) REFUND OF TAX.—In any case where 

8 the tax would not be collectible by virtue of sub9 paragraph (A), but such tax has been paid, the 

10 Secretary shall refund such tax. 

11 ‘‘(D) LIMITATIONS.—Except as provided in 

12 subparagraph (E), no tax shall be abated, re13 mitted, credited, or refunded under this para14 graph where the loss occurred after the tax was 

15 determined. The abatement, remission, credit, 

16 or refund of taxes provided for by subpara17 graphs (A) and (C) in the case of loss of mari18 juana products by theft shall only be allowed to 

19 the extent that the claimant is not indemnified 

20 against or recompensed in respect of the tax for 

21 such loss. 

22 ‘‘(E) APPLICABILITY.—The provisions of 

23 this paragraph shall extend to and apply in re24 spect of marijuana products lost after the tax 

25 was determined and before completion of the 

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1 physical removal of the marijuana products 

2 from the bonded premises. 

3 ‘‘(3) VOLUNTARY DESTRUCTION.—The propri4 etor of a marijuana production facility or other per5 sons liable for the tax imposed by this chapter or by 

6 section 7652 with respect to any marijuana product 

7 in bond may voluntarily destroy such products, but 

8 only if such destruction is under such supervision 

9 and under such regulations as the Secretary may 

10 prescribe. 

11 ‘‘(4) LIMITATION.—Any claim for credit or re12 fund of tax under this subsection shall be filed with13 in 6 months after the date of the withdrawal from 

14 the market, loss, or destruction of the products to 

15 which the claim relates, and shall be in such form 

16 and contain such information as the Secretary shall 

17 by regulations prescribe. 

18 ‘‘(b) DRAWBACK OF TAX.—There shall be an allow19 ance of drawback of tax paid on marijuana products, when 

20 shipped from the United States, in accordance with such 

21 regulations and upon the filing of such bond as the Sec22 retary shall prescribe. 

23 ‘‘Subchapter B—Occupational Tax 

‘‘Sec. 5911. Imposition and rate of tax. 

‘‘Sec. 5912. Payment of tax. 

‘‘Sec. 5913. Provisions relating to liability for occupational taxes. 

‘‘Sec. 5914. Application to State laws. 

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1 ‘‘SEC. 5911. IMPOSITION AND RATE OF TAX. 

2 ‘‘(a) IN GENERAL.—Any person engaged in business 

3 as a producer or an export warehouse proprietor shall pay 

4 a tax of $1,000 per year (referred to in this subchapter 

5 as an ‘occupational tax’) in respect of each premises at 

6 which such business is carried on. 

7 ‘‘(b) PENALTY FOR FAILURE TO REGISTER.—Any 

8 person engaged in business as a producer or an export 

9 warehouse proprietor who willfully fails to pay the occupa10 tion tax shall be fined not more than $5,000, or impris11 oned not more than 2 years, or both, for each such offense. 

12 ‘‘SEC. 5912. PAYMENT OF TAX. 

13 ‘‘(a) CONDITION PRECEDENT TO CARRYING ON

14 BUSINESS.—No person shall be engaged in or carry on 

15 any trade or business subject to the occupational tax until 

16 such person has paid such tax. 

17 ‘‘(b) COMPUTATION.— 

18 ‘‘(1) IN GENERAL.—The occupational tax shall 

19 be imposed— 

20 ‘‘(A) as of on the first day of July in each 

21 year, or 

22 ‘‘(B) on commencing any trade or business 

23 on which such tax is imposed. 

24 ‘‘(2) PERIOD.—In the case of a tax imposed 

25 under subparagraph (A) of paragraph (1), the occu26 pational tax shall be reckoned for 1 year, and in the 

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1 case of subparagraph (B) of such paragraph, it shall 

2 be reckoned proportionately, from the first day of 

3 the month in which the liability to such tax com4 menced, to and including the 30th day of June fol5 lowing. 

6 ‘‘(c) METHOD OF PAYMENT.— 

7 ‘‘(1) PAYMENT BY RETURN.—The occupational 

8 tax shall be paid on the basis of a return under such 

9 regulations as the Secretary shall prescribe. 

10 ‘‘(2) STAMP DENOTING PAYMENT OF TAX.— 

11 After receiving a properly executed return and re12 mittance of any occupational tax, the Secretary shall 

13 issue to the taxpayer an appropriate stamp as a re14 ceipt denoting payment of the tax. This paragraph 

15 shall not apply in the case of a return covering li16 ability for a past period. 

17 ‘‘SEC. 5913. PROVISIONS RELATING TO LIABILITY FOR OC18 CUPATIONAL TAXES. 

19 ‘‘(a) PARTNERS.—Any number of persons doing busi20 ness in partnership at any one place shall be required to 

21 pay a single occupational tax. 

22 ‘‘(b) DIFFERENT BUSINESSES OF SAME OWNERSHIP

23 AND LOCATION.—Whenever more than one of the pursuits 

24 or occupations described in this subchapter are carried on 

25 in the same place by the same person at the same time, 

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1 except as otherwise provided in this subchapter, the occu2 pational tax shall be paid for each according to the rates 

3 severally prescribed. 

4 ‘‘(c) BUSINESSES IN MORE THAN ONE LOCATION.— 

5 ‘‘(1) LIABILITY FOR TAX.—The payment of the 

6 occupational tax shall not exempt from an additional 

7 occupational tax the person carrying on a trade or 

8 business in any other place than that stated in the 

9 register kept in the office of the official in charge of 

10 the internal revenue district. 

11 ‘‘(2) STORAGE.—Nothing contained in para12 graph (1) shall require imposition of an occupational 

13 tax for the storage of marijuana products at a loca14 tion other than the place where such products are 

15 sold or offered for sale. 

16 ‘‘(3) PLACE.— 

17 ‘‘(A) IN GENERAL.—For purposes of this 

18 section, the term ‘place’ means the entire office, 

19 plant or area of the business in any one loca20 tion under the same proprietorship. 

21 ‘‘(B) DIVISIONS.—For purposes of this 

22 paragraph, any passageways, streets, highways, 

23 rail crossings, waterways, or partitions dividing 

24 the premises shall not be deemed sufficient sep25 aration to require an additional occupational 

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1 tax, if the various divisions are otherwise con2 tiguous. 

3 ‘‘(d) DEATH OR CHANGE OF LOCATION.— 

4 ‘‘(1) IN GENERAL.—In addition to the person 

5 who has paid the occupational tax for the carrying 

6 on of any business at any place, any person de7 scribed in paragraph (2) may secure the right to 

8 carry on, without incurring any additional occupa9 tional tax, the same business at the same place for 

10 the remainder of the taxable period for which the oc11 cupational tax was paid. 

12 ‘‘(2) ELIGIBLE PERSONS.—The persons de13 scribed in this paragraph are the following: 

14 ‘‘(A) The surviving spouse or child, or ex15 ecutor or administrator or other legal represent16 ative, of a deceased taxpayer. 

17 ‘‘(B) A husband or wife succeeding to the 

18 business of his or her living spouse. 

19 ‘‘(C) A receiver or trustee in bankruptcy, 

20 or an assignee for benefit of creditors. 

21 ‘‘(D) The partner or partners remaining 

22 after death or withdrawal of a member of a 

23 partnership. 

24 ‘‘(3) CHANGE OF LOCATION.—When any person 

25 moves to any place other than the place for which 

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1 occupational tax was paid for the carrying on of any 

2 business, such person may secure the right to carry 

3 on, without incurring additional occupational tax, 

4 the same business at the new location for the re5 mainder of the taxable period for which the occupa6 tional tax was paid. To secure the right to carry on 

7 the business without incurring additional occupa8 tional tax, the successor, or the person relocating 

9 their business, must register the succession or relo10 cation with the Secretary in accordance with regula11 tions prescribed by the Secretary. 

12 ‘‘(e) FEDERAL AGENCIES OR INSTRUMENTAL13 ITIES.—Any tax imposed by this subchapter shall apply 

14 to any agency or instrumentality of the United States un15 less such agency or instrumentality is granted by statute 

16 a specific exemption from such tax. 

17 ‘‘SEC. 5914. APPLICATION TO STATE LAWS. 

18 ‘‘The payment of any tax imposed by this subchapter 

19 for carrying on any trade or business shall not be held 

20 to— 

21 ‘‘(1) exempt any person from any penalty or 

22 punishment provided by the laws of any State for 

23 carrying on such trade or business within such 

24 State, or in any manner to authorize the commence25 ment or continuance of such trade or business conmstockstill on DSK3G9T082PROD with BILLS

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1 trary to the laws of such State or in places prohib2 ited by municipal law, or 

3 ‘‘(2) prohibit any State from placing a duty or 

4 tax on the same trade or business, for State or other 

5 purposes. 

6 ‘‘Subchapter C—Bond and Permits 

‘‘Sec. 5921. Establishment and bond. 

‘‘Sec. 5922. Application for permit. 

‘‘Sec. 5923. Permit. 

7 ‘‘SEC. 5921. ESTABLISHMENT AND BOND. 

8 ‘‘(a) PROHIBITION ON PRODUCTION OUTSIDE OF

9 BONDED MARIJUANA PRODUCTION FACILITY.— 

10 ‘‘(1) IN GENERAL.—Except as authorized by 

11 the Secretary or on the bonded premises of a mari12 juana production facility duly authorized to produce 

13 marijuana products according to law— 

14 ‘‘(A) no marijuana may be planted, cul15 tivated, harvested, or grown in any building or 

16 on any premises, and 

17 ‘‘(B) no marijuana product may be manu18 factured, compounded, converted, processed, 

19 prepared, or packaged in any building or on 

20 any premises. 

21 ‘‘(2) AUTHORIZED PRODUCERS ONLY.—No per22 son other than a producer which has filed the bond 

23 required under subsection (b) and received a permit 

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1 described in section 5923 may produce any mari2 juana product. 

3 ‘‘(b) BOND.— 

4 ‘‘(1) WHEN REQUIRED.—Every person, before 

5 commencing business as a producer or an export 

6 warehouse proprietor, shall file such bond, condi7 tioned upon compliance with this chapter and regu8 lations issued thereunder, in such form, amount, and 

9 manner as the Secretary shall by regulation pre10 scribe. A new or additional bond may be required 

11 whenever the Secretary considers such action nec12 essary for the protection of the revenue. 

13 ‘‘(2) APPROVAL OR DISAPPROVAL.—No person 

14 shall engage in such business until he receives notice 

15 of approval of such bond. A bond may be dis16 approved, upon notice to the principal on the bond, 

17 if the Secretary determines that the bond is not ade18 quate to protect the revenue. 

19 ‘‘(3) CANCELLATION.—Any bond filed here20 under may be canceled, upon notice to the principal 

21 on the bond, whenever the Secretary determines that 

22 the bond no longer adequately protects the revenue. 

23 ‘‘SEC. 5922. APPLICATION FOR PERMIT. 

24 ‘‘(a) IN GENERAL.—Every person, before com25 mencing business as a marijuana enterprise, and at such 

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1 other time as the Secretary shall by regulation prescribe, 

2 shall make application for the permit provided for in sec3 tion 5923. The application shall be in such form as the 

4 Secretary shall prescribe and shall set forth, truthfully and 

5 accurately, the information called for on the form. Such 

6 application may be rejected and the permit denied if the 

7 Secretary, after notice and opportunity for hearing, finds 

8 that— 

9 ‘‘(1) the premises on which it is proposed to 

10 conduct the marijuana enterprise are not adequate 

11 to protect the revenue, 

12 ‘‘(2) the activity proposed to be carried out at 

13 such premises does not meet such minimum capacity 

14 or activity requirements as the Secretary may pre15 scribe, or 

16 ‘‘(3) such person (including, in the case of a 

17 corporation, any officer, director, or principal stock18 holder and, in the case of a partnership, a part19 ner)— 

20 ‘‘(A) is, by reason of their business experi21 ence, financial standing, or trade connections or 

22 by reason of previous or current legal pro23 ceedings involving a felony violation of any 

24 other provision of Federal criminal law relating 

25 to marijuana or marijuana products, not likely 

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1 to maintain operations in compliance with this 

2 chapter, 

3 ‘‘(B) has been convicted of a felony viola4 tion of any provision of Federal or State crimi5 nal law relating to marijuana or marijuana 

6 products, or 

7 ‘‘(C) has failed to disclose any material in8 formation required or made any material false 

9 statement in the application therefor. 

10 ‘‘SEC. 5923. PERMIT. 

11 ‘‘(a) ISSUANCE.—A person shall not engage in busi12 ness as a marijuana enterprise without a permit to engage 

13 in such business. Such permit, conditioned upon compli14 ance with this chapter and regulations issued thereunder, 

15 shall be issued in such form and in such manner as the 

16 Secretary shall by regulation prescribe. A new permit may 

17 be required at such other time as the Secretary shall by 

18 regulation prescribe. 

19 ‘‘(b) SUSPENSION OR REVOCATION.— 

20 ‘‘(1) SHOW CAUSE HEARING.—If the Secretary 

21 has reason to believe that any person holding a per22 mit— 

23 ‘‘(A) has not in good faith complied with 

24 this chapter, or with any other provision of this 

25 title involving intent to defraud, 

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1 ‘‘(B) has violated the conditions of such 

2 permit, 

3 ‘‘(C) has failed to disclose any material in4 formation required or made any material false 

5 statement in the application for such permit, 

6 ‘‘(D) has failed to maintain their premises 

7 in such manner as to protect the revenue, 

8 ‘‘(E) is, by reason of previous or current 

9 legal proceedings involving a felony violation of 

10 any other provision of Federal criminal law re11 lating to marijuana, not likely to maintain oper12 ations in compliance with this chapter, or 

13 ‘‘(F) has been convicted of a felony viola14 tion of any provision of Federal or State crimi15 nal law relating to marijuana or marijuana 

16 products, 

17 the Secretary shall issue an order, stating the facts 

18 charged, citing such person to show cause why their 

19 permit should not be suspended or revoked. 

20 ‘‘(2) ACTION FOLLOWING HEARING.—If, after 

21 hearing, the Secretary finds that such person has 

22 not shown cause why their permit should not be sus23 pended or revoked, such permit shall be suspended 

24 for such period as the Secretary deems proper or 

25 shall be revoked. 

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1 ‘‘(c) INFORMATION REPORTING.—The Secretary may 

2 require— 

3 ‘‘(1) information reporting by any person issued 

4 a permit under this section, and 

5 ‘‘(2) information reporting by such other per6 sons as the Secretary deems necessary to carry out 

7 this chapter. 

8 ‘‘(d) INSPECTION OR DISCLOSURE OF INFORMA9 TION.—For rules relating to inspection and disclosure of 

10 returns and return information, see section 6103(o). 

11 ‘‘Subchapter D—Operations 

‘‘Sec. 5931. Inventories, reports, and records. 

‘‘Sec. 5932. Packaging and labeling. 

‘‘Sec. 5933. Purchase, receipt, possession, or sale of marijuana products after 

removal. 

‘‘Sec. 5934. Restrictions relating to marks, labels, notices, and packages. 

‘‘Sec. 5935. Restriction on importation of previously exported marijuana products. 

12 ‘‘SEC. 5931. INVENTORIES, REPORTS, AND RECORDS. 

13 ‘‘Every producer, importer, and export warehouse 

14 proprietor shall— 

15 ‘‘(1) make a true and accurate inventory at the 

16 time of commencing business, at the time of con17 cluding business, and at such other times, in such 

18 manner and form, and to include such items, as the 

19 Secretary shall by regulation prescribe, with such in20 ventories to be subject to verification by any internal 

21 revenue officer, 

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1 ‘‘(2) make reports containing such information, 

2 in such form, at such times, and for such periods as 

3 the Secretary shall by regulation prescribe, and 

4 ‘‘(3) keep such records in such manner as the 

5 Secretary shall by regulation prescribe, with such 

6 records to be available for inspection by any internal 

7 revenue officer during business hours. 

8 ‘‘SEC. 5932. PACKAGING AND LABELING. 

9 ‘‘(a) PACKAGES.—All marijuana products shall, be10 fore removal, be put up in such packages as the Secretary 

11 shall by regulation prescribe. 

12 ‘‘(b) MARKS, LABELS, AND NOTICES.—Every pack13 age of marijuana products shall, before removal, bear the 

14 marks, labels, and notices if any, that the Secretary by 

15 regulation prescribes. 

16 ‘‘(c) LOTTERY FEATURES.—No certificate, coupon, 

17 or other device purporting to be or to represent a ticket, 

18 chance, share, or an interest in, or dependent on, the event 

19 of a lottery shall be contained in, attached to, or stamped, 

20 marked, written, or printed on any package of marijuana 

21 products. 

22 ‘‘(d) INDECENT OR IMMORAL MATERIAL PROHIB23 ITED.—No indecent or immoral picture, print, or rep24 resentation shall be contained in, attached to, or stamped, 

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1 marked, written, or printed on any package of marijuana 

2 products. 

3 ‘‘(e) EXCEPTIONS.—Subject to regulations prescribed 

4 by the Secretary, marijuana products may be exempted 

5 from subsections (a) and (b) if such products are— 

6 ‘‘(1) for experimental purposes, or 

7 ‘‘(2) transferred to the bonded premises of an8 other producer or export warehouse proprietor or re9 leased in bond from customs custody for delivery to 

10 a producer. 

11 ‘‘SEC. 5933. PURCHASE, RECEIPT, POSSESSION, OR SALE OF 

12 MARIJUANA PRODUCTS AFTER REMOVAL. 

13 ‘‘(a) RESTRICTION.—No person shall— 

14 ‘‘(1) with intent to defraud the United States, 

15 purchase, receive, possess, offer for sale, or sell or 

16 otherwise dispose of, after removal, any marijuana 

17 products— 

18 ‘‘(A) upon which the tax has not been paid 

19 or determined in the manner and at the time 

20 prescribed by this chapter or regulations there21 under, or 

22 ‘‘(B) which, after removal without payment 

23 of tax pursuant to section 5904, have been di24 verted from the applicable purpose or use speci25 fied in that section, 

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1 ‘‘(2) with intent to defraud the United States, 

2 purchase, receive, possess, offer for sale, or sell or 

3 otherwise dispose of, after removal, any marijuana 

4 products which are not put up in packages as re5 quired under section 5932 or which are put up in 

6 packages not bearing the marks, labels, and notices, 

7 as required under such section, or 

8 ‘‘(3) otherwise than with intent to defraud the 

9 United States, purchase, receive, possess, offer for 

10 sale, or sell or otherwise dispose of, after removal, 

11 any marijuana products which are not put up in 

12 packages as required under section 5932 or which 

13 are put up in packages not bearing the marks, la14 bels, and notices, as required under such section. 

15 ‘‘(b) EXCEPTION.—Paragraph (3) of subsection (a) 

16 shall not prevent the sale or delivery of marijuana prod17 ucts directly to consumers from proper packages, nor 

18 apply to such articles when so sold or delivered. 

19 ‘‘(c) LIABILITY TO TAX.—Any person who possesses 

20 marijuana products in violation of paragraph (1) or (2) 

21 of subsection (a) shall be liable for a tax equal to the tax 

22 on such articles. 

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1 ‘‘SEC. 5934. RESTRICTIONS RELATING TO MARKS, LABELS, 

2 NOTICES, AND PACKAGES. 

3 ‘‘No person shall, with intent to defraud the United 

4 States, destroy, obliterate, or detach any mark, label, or 

5 notice prescribed or authorized, by this chapter or regula6 tions thereunder, to appear on, or be affixed to, any pack7 age of marijuana products before such package is emptied. 

8 ‘‘SEC. 5935. RESTRICTION ON IMPORTATION OF PRE9 VIOUSLY EXPORTED MARIJUANA PRODUCTS. 

10 ‘‘(a) EXPORT LABELED MARIJUANA PRODUCTS.— 

11 ‘‘(1) IN GENERAL.—Marijuana products pro12 duced in the United States and labeled for expor13 tation under this chapter— 

14 ‘‘(A) may be transferred to or removed 

15 from the premises of a producer or an export 

16 warehouse proprietor only if such articles are 

17 being transferred or removed without tax in ac18 cordance with section 5904, 

19 ‘‘(B) may be imported or brought into the 

20 United States, after their exportation, only if 

21 such articles either are eligible to be released 

22 from customs custody with the partial duty ex23 emption provided in section 5904(d) or are re24 turned to the original producer of such article 

25 as provided in section 5904(c), and 

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1 ‘‘(C) may not be sold or held for sale for 

2 domestic consumption in the United States un3 less such articles are removed from their export 

4 packaging and repackaged by the original pro5 ducer into new packaging that does not contain 

6 an export label. 

7 ‘‘(2) ALTERATIONS BY PERSONS OTHER THAN

8 ORIGINAL PRODUCER.—This section shall apply to 

9 articles labeled for export even if the packaging or 

10 the appearance of such packaging to the consumer 

11 of such articles has been modified or altered by a 

12 person other than the original producer so as to re13 move or conceal or attempt to remove or conceal (in14 cluding by the placement of a sticker over) any ex15 port label. 

16 ‘‘(3) EXPORTS INCLUDE SHIPMENTS TO PUER17 TO RICO.—For purposes of this section, section 

18 5904(d), section 5941, and such other provisions as 

19 the Secretary may specify by regulations, references 

20 to exportation shall be treated as including a ref21 erence to shipment to the Commonwealth of Puerto 

22 Rico. 

23 ‘‘(b) EXPORT LABEL.—For purposes of this section, 

24 an article is labeled for export or contains an export label 

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1 if it bears the mark, label, or notice required under section 

2 5904(b). 

3 ‘‘Subchapter E—Penalties 

‘‘Sec. 5941. Civil penalties. 

‘‘Sec. 5942. Criminal penalties. 

4 ‘‘SEC. 5941. CIVIL PENALTIES. 

5 ‘‘(a) OMITTING THINGS REQUIRED OR DOING

6 THINGS FORBIDDEN.—Whoever willfully omits, neglects, 

7 or refuses to comply with any duty imposed upon them 

8 by this chapter, or to do, or cause to be done, any of the 

9 things required by this chapter, or does anything prohib10 ited by this chapter, shall in addition to any other penalty 

11 provided in this title, be liable to a penalty of $10,000, 

12 to be recovered, with costs of suit, in a civil action, except 

13 where a penalty under subsection (b) or (c) or under sec14 tion 6651 or 6653 or part II of subchapter A of chapter 

15 68 may be collected from such person by assessment. 

16 ‘‘(b) FAILURE TO PAY TAX.—Whoever fails to pay 

17 any tax imposed by this chapter at the time prescribed 

18 by law or regulations, shall, in addition to any other pen19 alty provided in this title, be liable to a penalty of 10 per20 cent of the tax due but unpaid. 

21 ‘‘(c) SALE OF MARIJUANA OR MARIJUANA PRODUCTS

22 FOR EXPORT.— 

23 ‘‘(1) Every person who sells, relands, or receives 

24 within the jurisdiction of the United States any 

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1 marijuana products which have been labeled or 

2 shipped for exportation under this chapter, 

3 ‘‘(2) every person who sells or receives such re4 landed marijuana products, and 

5 ‘‘(3) every person who aids or abets in such 

6 selling, relanding, or receiving, 

7 shall, in addition to the tax and any other penalty provided 

8 in this title, be liable for a penalty equal to the greater 

9 of $10,000 or 10 times the amount of the tax imposed 

10 by this chapter. All marijuana products relanded within 

11 the jurisdiction of the United States shall be forfeited to 

12 the United States and destroyed. All vessels, vehicles, and 

13 aircraft used in such relanding or in removing such mari14 juana products from the place where relanded, shall be 

15 forfeited to the United States. 

16 ‘‘(d) APPLICABILITY OF SECTION 6665.—The pen17 alties imposed by subsections (b) and (c) shall be assessed, 

18 collected, and paid in the same manner as taxes, as pro19 vided in section 6665(a). 

20 ‘‘(e) CROSS REFERENCES.—For penalty for failure to 

21 make deposits or for overstatement of deposits, see section 

22 6656. 

23 ‘‘SEC. 5942. CRIMINAL PENALTIES. 

24 ‘‘(a) FRAUDULENT OFFENSES.—Whoever, with in25 tent to defraud the United States— 

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1 ‘‘(1) engages in business as a marijuana enter2 prise without filing the application and obtaining the 

3 permit where required by this chapter or regulations 

4 thereunder, 

5 ‘‘(2) fails to keep or make any record, return, 

6 report, or inventory, or keeps or makes any false or 

7 fraudulent record, return, report, or inventory, re8 quired by this chapter or regulations thereunder, 

9 ‘‘(3) refuses to pay any tax imposed by this 

10 chapter, or attempts in any manner to evade or de11 feat the tax or the payment thereof, 

12 ‘‘(4) sells or otherwise transfers, contrary to 

13 this chapter or regulations thereunder, any mari14 juana products subject to tax under this chapter, or 

15 ‘‘(5) with intent to defraud the United States, 

16 purchases, receives, possesses, offers for sale, or sells 

17 or otherwise disposes of, any marijuana product— 

18 ‘‘(A) upon which the tax has not been paid 

19 or determined in the manner and at the time 

20 prescribed by this chapter or regulations there21 under, or 

22 ‘‘(B) which, without payment of tax pursu23 ant to section 5904, have been diverted from 

24 the applicable purpose or use specified in that 

25 section, 

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1 shall, for each such offense, be fined not more than 

2 $10,000, or imprisoned not more than 5 years, or both. 

3 ‘‘(b) OFFENSES RELATING TO RETAIL TRANS4 ACTIONS.—Any retailer who sells, in any single trans5 action, more than 1 ounce of any marijuana product (or 

6 in the case of any marijuana product containing a mari7 juana derivative, an equivalent amount, as established by 

8 the Secretary) shall be, upon conviction, fined not more 

9 than $10,000, or imprisoned for not more than 5 years, 

10 or both. 

11 ‘‘(c) OTHER OFFENSES.—Whoever, otherwise than 

12 as provided in subsections (a) and (b) and section 

13 5911(b), violates any provision of this chapter, or of regu14 lations prescribed thereunder, shall, for each such offense, 

15 be fined not more than $1,000, or imprisoned not more 

16 than 1 year, or both. 

17 ‘‘(d) LIABILITY TO TAX.—Any person who possesses 

18 marijuana products in violation of subsection (a) shall be 

19 liable for a tax equal to the tax on such articles.’’. 

20 (b) STUDY.—Not later than 2 years after the date 

21 of the enactment of this Act, and every 5 years thereafter, 

22 the Secretary of the Treasury, or the Secretary’s delegate, 

23 shall— 

24 (1) conduct a study concerning the characteris25 tics of the marijuana industry, including the number 

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1 of persons operating marijuana enterprises at each 

2 level of such industry, the volume of sales, the 

3 amount of tax collected each year, and the areas of 

4 evasion, and 

5 (2) submit to Congress recommendations to im6 prove the regulation of the industry and the admin7 istration of the related tax. 

8 (c) CONFORMING AMENDMENT.—Section 

9 6103(o)(1)(A) of the Internal Revenue Code of 1986 is 

10 amended by striking ‘‘and firearms’’ and inserting ‘‘fire11 arms, and marijuana’’. 

12 (d) CLERICAL AMENDMENT.—The table of chapters 

13 for subtitle E of title I of the Internal Revenue Code of 

14 1986 is amended by adding at the end the following new 

15 chapter: 

‘‘CHAPTER 56. MARIJUANA PRODUCTS’’. 

16 (e) EFFECTIVE DATE.— 

17 (1) IN GENERAL.—The amendments made by 

18 this section shall apply to sales, and applications for 

19 permits under section 5922 of the Internal Revenue 

20 Code of 1986 (as added by subsection (a)), after 

21 180 days after the date of the enactment of this Act. 

22 (2) SPECIAL RULES FOR EXISTING BUSI23 NESSES.—In the case of any producer operating 

24 under a permit issued on or before the date of the 

25 enactment of this Act under State law, the requiremstockstill on DSK3G9T082PROD with BILLS

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1 ments under section 5922 of such Code (as so 

2 added) shall apply beginning on the date that is 6 

3 months after the date of the enactment of this Act. 

Æ 

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