Marijuana Revenue and Regulation Act

To amend the Internal Revenue Code of 1986 to provide for the taxation and regulation of marijuana products, and for other purposes. 1. Short title; table of contents (a) Short title This Act may be cited as the Marijuana Revenue and Regulation Act (b) Table of contents The table of contents of this Act is as follows: Sec. 1. Short title; table of contents. TITLE I—Taxation Sec. 101. Establishment of taxes relating to marijuana products. I Taxation 101. Establishment of taxes relating to marijuana products (a) In general Subtitle E of title I of the Internal Revenue Code of 1986 is amended by adding at the end the following new chapter: 56 Marijuana Products Subchapter A. Tax on Marijuana Products Subchapter B. Occupational Tax Subchapter C. Bond and Permits Subchapter D. Operations Subchapter E. Penalties 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. 5901. Imposition of tax (a) Imposition of tax There is hereby imposed on any marijuana product produced in or imported into the United States a tax equal to— (1) for any such product sold during the first 5 calendar years in which this chapter becomes effective, the applicable percentage of the price for which such product is sold, and (2) for any product sold during any calendar year after the period described in paragraph (1), the applicable equivalent rate. (b) Applicable percentage For purposes of subsection (a)(1), the applicable percentage shall be determined as follows: (1) For any marijuana product sold during the first 2 calendar years in which this chapter becomes effective, 10 percent. (2) For any marijuana product sold during the calendar year after the period described in paragraph (1), 15 percent. (3) For any marijuana product sold during the calendar year after the period described in paragraph (2), 20 percent. (4) For any marijuana product sold during the calendar year after the period described in paragraph (3), 25 percent. (c) Applicable equivalent rate (1) In general For purposes of subsection (a)(2), the applicable equivalent rate for each calendar year shall be equal to— (A) in the case of any marijuana product not described in subparagraph (B) which is sold during such year, the applicable rate per ounce of such product (and a proportionate tax at the like rate on all fractional parts of an ounce of such product), and (B) in the case of any marijuana product containing a marijuana derivative which is sold during such year, the applicable rate per gram of tetrahydrocannabinol in such product (and a proportionate tax at the like rate on all fractional parts of a gram of tetrahydrocannabinol in such product). (2) Applicable rate (A) In general For purposes of paragraph (1)(A), the applicable rate per ounce for any calendar year shall be equal to 25 percent of the prevailing sales price of marijuana sold in the United States during the 12-month period ending one calendar quarter before such calendar year, expressed on a per ounce basis, as determined by the Secretary. (B) Marijuana derivatives For purposes of paragraph (1)(B), the applicable rate per gram of tetrahydrocannabinol shall be equal to the quotient obtained by dividing— (i) the applicable rate per ounce (as determined under subparagraph (A)), by (ii) 2.83495. (d) Time of attachment on marijuana products The tax under this section shall attach to any marijuana 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. 5902. Definitions For purposes of this chapter: (1) Export warehouse The term export warehouse (A) for subsequent shipment to a foreign country, Puerto Rico, the Virgin Islands, or a possession of the United States, or (B) for consumption beyond the jurisdiction of the internal revenue laws of the United States. (2) Export warehouse proprietor The term export warehouse proprietor (3) Importer The term importer (A) is in the United States and to whom nontaxpaid marijuana products, produced in a foreign country, Puerto Rico, the Virgin Islands, or a possession of the United States, are shipped or consigned, (B) removes marijuana products for sale or consumption in the United States from a customs bonded warehouse, or (C) smuggles or otherwise unlawfully brings marijuana or marijuana products into the United States. (4) Marijuana The term marijuana marihuana 21 U.S.C. 802(16) (5) Marijuana derivative The term marijuana derivative (6) Marijuana enterprise The term marijuana enterprise (7) Marijuana product (A) In general Except as provided in subparagraph (B), the term marijuana product (B) Exceptions (i) In general The term marijuana product (I) any article containing marijuana which has been approved by the Food and Drug Administration for sale for therapeutic purposes and is marketed and sold solely for such purpose, or (II) industrial hemp. (ii) Industrial hemp For purposes of clause (i)(II), the term industrial hemp (8) Marijuana production facility The term marijuana production facility (9) Producer The term producer (A) plants, cultivates, harvests, or otherwise produces marijuana or marijuana products, or (B) manufactures, compounds, converts, processes, prepares, or packages marijuana products. (10) Removal; remove The terms removal remove (A) the removal of marijuana products from the premises of a producer, or from internal revenue bond under section 5904, as the Secretary shall by regulation prescribe, (B) release of such products from customs custody, or (C) smuggling or other unlawful importation of such products into the United States. (11) Retailer The term retailer 5903. Liability and method of payment (a) Liability for tax (1) Original liability The producer or importer of any marijuana product shall be liable for the taxes imposed thereon by section 5901. (2) Transfer of liability (A) In general When marijuana products are transferred, without payment of tax, pursuant to section 5904, the liability for tax shall be transferred in accordance with the provisions of this paragraph. (B) Transfer between producer and export warehouse proprietor In the case of marijuana products which are transferred between the bonded premises of producers and export warehouse proprietors, the transferee shall become liable for the tax upon receipt by the transferee of such articles, and the transferor shall thereupon be relieved of their liability for such tax. (C) Transfer from customs custody to producer In the case of marijuana products which are released in bond from customs custody for transfer to the bonded 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. (D) Returned to bond All provisions of this chapter applicable to marijuana products in bond shall be applicable to such articles returned to bond upon withdrawal from the market or returned to bond after previous removal for a tax-exempt purpose. (b) Method of payment of tax (1) In general (A) Determination and payment of tax The taxes imposed by section 5901 shall be determined at the time of removal of the marijuana products. Such taxes shall be paid on the basis of return. The Secretary shall, by regulations, prescribe the period or the event for which such return shall be made and the information to be furnished on such return. (B) Postponement Any postponement under this subsection of the payment of taxes determined at the time of removal shall be conditioned upon the filing of such additional bonds, and 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 marijuana products where a person defaults in the postponed payment of tax on the basis of a return under this subsection or regulations prescribed thereunder. (C) Administration and penalties All administrative and penalty provisions of this title, insofar 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 marijuana products removed during any semimonthly period under bond for deferred payment of tax, the last day for payment of such taxes shall be the 14th day after the last day of such semimonthly period. (B) Imported articles In the case of marijuana products which 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 which is shown to the satisfaction of the Secretary to be destined for export. (C) Marijuana products brought into the United States from Puerto Rico In the case of marijuana products which are brought into the United States from Puerto Rico, 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 which is not a Saturday, Sunday, or such a holiday. (E) Special rule for unlawfully produced marijuana products In the case of any marijuana products produced in the United States at any place other than the premises of a producer that has filed the bond and 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 $5,000,000 in taxes imposed on marijuana 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 $5,000,000 amount specified in the preceding sentence. (c) Definition of Price (1) Containers, packing and transportation charges In determining, for the purposes of this chapter, the price for which an article is sold, there shall be included any charge for coverings and containers of whatever nature, and any charge incident to placing the article in condition packed ready for shipment, but there shall be excluded the amount of tax imposed by this chapter, whether or not stated as a separate charge. A transportation, delivery, insurance, installation, or other charge (not required by the preceding sentence to be included) shall be excluded from the price only if the amount thereof is established to the satisfaction of the Secretary in accordance with regulations. (2) Constructive sale price (A) In general If an article is sold 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, or (II) the sale is made pursuant to special arrangements between a producer and a purchaser. (ii) Controlled groups (I) In general The term controlled group more than 50 percent at least 80 percent (II) Controlled groups which include nonincorporated persons Under regulations prescribed by the Secretary, principles similar to the principles of subclause (I) shall apply to a group of persons under common control where one or more of such persons is not a corporation. (d) Partial payments and installment accounts (1) Partial payments In the case of— (A) a contract for the sale of an article wherein it is provided that the price shall be paid by installments and title to the article sold does not pass until a future date notwithstanding partial payment by installments, (B) a conditional sale, or (C) a chattel mortgage arrangement wherein it is provided that the sales price shall be paid in installments, there shall be paid upon each payment with respect to the article a percentage of such payment equal to the rate of tax in effect on the date such payment is due. (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 which 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 which is allocable to each unpaid installment payment, by (ii) the rate of tax under this chapter in effect on the date such unpaid installment payment is or was due. The sum of the amounts payable under this subsection in respect of the sale of any article shall not exceed the total tax. 5904. Exemption from tax (a) In general Marijuana 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 bonded 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 marijuana production facility in research, development, or testing (other than consumer testing or other market analysis) of processes, systems, materials, or equipment, relating to marijuana or marijuana 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, or (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. (b) Marijuana products transferred or removed in bond from domestic factories and export warehouses (1) In general Subject to such regulations and under such bonds as the Secretary shall prescribe, a producer or export warehouse proprietor may transfer marijuana products, without payment of tax, to the bonded 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 Marijuana 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) Marijuana products released in bond from customs custody Marijuana 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 and under such bond as the Secretary shall prescribe. (d) Marijuana products exported and returned Marijuana 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 Marijuana Revenue and Regulation Act 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) marijuana 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) Marijuana products lost or destroyed in bond (A) Extent of loss allowance No tax shall be collected in respect of marijuana products lost or destroyed while in bond, 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 marijuana production facility, 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 marijuana products. (B) Proof of loss In any case in which marijuana products are lost or destroyed, whether by theft or otherwise, the Secretary may require the proprietor of a marijuana 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 marijuana 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 marijuana production facility, 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 marijuana 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 marijuana products lost after the tax was determined and before completion of the physical removal of the marijuana products from the bonded premises. (3) Voluntary destruction The proprietor of a marijuana production facility or other persons liable for the tax imposed by this chapter or by section 7652 with respect to any marijuana product in bond 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 marijuana products, when shipped from the United States, in accordance with such regulations and upon the filing of such bond as the Secretary shall prescribe. 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. 5911. Imposition and rate of tax (a) In general Any person engaged in business as a producer or an export warehouse proprietor shall pay a tax of $1,000 per year (referred to in this subchapter as an occupational tax (b) Penalty for failure To register Any person engaged in business as a producer or an export warehouse proprietor who willfully fails to pay the occupation tax shall be fined not more than $5,000, or imprisoned not more than 2 years, or both, for each such offense. 5912. Payment of tax (a) Condition precedent to carrying on business No person shall be engaged in or carry on any trade or business subject to the occupational tax until such person has paid such tax. (b) Computation (1) In general The occupational tax shall be imposed— (A) as of on the first day of July in each year, or (B) on commencing any trade or business on which such tax is imposed. (2) Period In the case of a tax imposed under subparagraph (A) of paragraph (1), the occupational tax shall be reckoned for 1 year, and in the case of subparagraph (B) of such paragraph, it shall be reckoned proportionately, from the first day of the month in which the liability to such tax commenced, to and including the 30th day of June following. (c) Method of payment (1) Payment by return The occupational tax shall be paid on the basis of a return under such regulations as the Secretary shall prescribe. (2) Stamp denoting payment of tax After receiving a properly executed return and remittance of any occupational tax, the Secretary shall issue to the taxpayer an appropriate stamp as a receipt denoting payment of the tax. This paragraph shall not apply in the case of a return covering liability for a past period. 5913. Provisions relating to liability for occupational taxes (a) Partners Any number of persons doing business in partnership at any one place shall be required to pay a single occupational tax. (b) Different businesses of same ownership and location Whenever more than one of the pursuits or occupations described in this subchapter are carried on in the same place by the same person at the same time, except as otherwise provided in this subchapter, the occupational tax shall be paid for each according to the rates severally prescribed. (c) Businesses in more than one location (1) Liability for tax The payment of the occupational tax shall not exempt from an additional occupational tax the person carrying on a trade or business in any other place than that stated in the register kept in the office of the official in charge of the internal revenue district. (2) Storage Nothing contained in paragraph (1) shall require imposition of an occupational tax for the storage of marijuana products at a location other than the place where such products are sold or offered for sale. (3) Place (A) In general For purposes of this section, the term place (B) Divisions For purposes of this paragraph, any passageways, streets, highways, rail crossings, waterways, or partitions dividing the premises shall not be deemed sufficient separation to require an additional occupational tax, if the various divisions are otherwise contiguous. (d) Death or change of location (1) In general In addition to the person who has paid the occupational tax for the carrying on of any business at any place, any person described in paragraph (2) may secure the right to carry on, without incurring any additional occupational tax, the same business at the same place for the remainder of the taxable period for which the occupational tax was paid. (2) Eligible persons The persons described in this paragraph are the following: (A) The surviving spouse or child, or executor or administrator or other legal representative, of a deceased taxpayer. (B) A husband or wife succeeding to the business of his or her living spouse. (C) A receiver or trustee in bankruptcy, or an assignee for benefit of creditors. (D) The partner or partners remaining after death or withdrawal of a member of a partnership. (3) Change of location When any person moves to any place other than the place for which occupational tax was paid for the carrying on of any business, such person may secure the right to carry on, without incurring additional occupational tax, the same business at the new location for the remainder of the taxable period for which the occupational tax was paid. To secure the right to carry on the business without incurring additional occupational tax, the successor, or the person relocating their business, must register the succession or relocation with the Secretary in accordance with regulations prescribed by the Secretary. (e) Federal agencies or instrumentalities Any tax imposed by this subchapter shall apply to any agency or instrumentality of the United States unless such agency or instrumentality is granted by statute a specific exemption from such tax. 5914. Application to State laws The payment of any tax imposed by this subchapter for carrying on any trade or business shall not be held to— (1) exempt any person from any penalty or punishment provided by the laws of any State for carrying on such trade or business within such State, or in any manner to authorize the commencement or continuance of such trade or business contrary to the laws of such State or in places prohibited by municipal law, or (2) prohibit any State from placing a duty or tax on the same trade or business, for State or other purposes. C Bond and Permits Sec. 5921. Establishment and bond. Sec. 5922. Application for permit. Sec. 5923. Permit. 5921. Establishment and bond (a) Prohibition on production outside of bonded marijuana production facility (1) In general Except as authorized by the Secretary or on the bonded premises of a marijuana production facility duly authorized to produce marijuana products according to law— (A) no marijuana may be planted, cultivated, harvested, or grown in any building or on any premises, and (B) no marijuana product may be manufactured, compounded, converted, processed, prepared, or packaged in any building or on any premises. (2) Authorized producers only No person other than a producer which has filed the bond required under subsection (b) and received a permit described in section 5923 may produce any marijuana product. (b) Bond (1) When required Every person, before commencing business as a producer or an export warehouse proprietor, shall file such bond, conditioned upon compliance with this chapter and regulations issued thereunder, in such form, amount, and manner as the Secretary shall by regulation prescribe. A new or additional bond may be required whenever the Secretary considers such action necessary for the protection of the revenue. (2) Approval or disapproval No person shall engage in such business until he receives notice of approval of such bond. A bond may be disapproved, upon notice to the principal on the bond, if the Secretary determines that the bond is not adequate to protect the revenue. (3) Cancellation Any bond filed hereunder may be canceled, upon notice to the principal on the bond, whenever the Secretary determines that the bond no longer adequately protects the revenue. 5922. Application for permit (a) In general Every person, before commencing business as a marijuana enterprise, and at such other time as the Secretary shall by regulation prescribe, shall make application for the permit provided for in section 5923. The application shall be in such form as the Secretary shall prescribe and shall set forth, truthfully and accurately, the information called for on the form. Such application may be rejected and the permit denied if the Secretary, after notice and opportunity for hearing, finds that— (1) the premises on which it is proposed to conduct the marijuana enterprise are not adequate to protect the revenue, (2) the activity proposed to be carried out at such premises does not meet such minimum capacity or activity requirements as the Secretary may prescribe, or (3) such person (including, in the case of a corporation, any officer, director, or principal stockholder and, in the case of a partnership, a partner)— (A) is, by reason of their business experience, financial standing, or trade connections or by reason of previous or current legal proceedings involving a felony violation of any other provision of Federal criminal law relating to marijuana or marijuana products, not likely to maintain operations in compliance with this chapter, (B) has been convicted of a felony violation of any provision of Federal or State criminal law relating to marijuana or marijuana products, or (C) has failed to disclose any material information required or made any material false statement in the application therefor. 5923. Permit (a) Issuance A person shall not engage in business as a marijuana enterprise without a permit to engage in such business. Such permit, conditioned upon compliance with this chapter and regulations issued thereunder, shall be issued in such form and in such manner as the Secretary shall by regulation prescribe. A new permit may be required at such other time as the Secretary shall by regulation prescribe. (b) Suspension or Revocation (1) Show cause hearing If the Secretary has reason to believe that any person holding a permit— (A) has not in good faith complied with this chapter, or with any other provision of this title involving intent to defraud, (B) has violated the conditions of such permit, (C) has failed to disclose any material information required or made any material false statement in the application for such permit, (D) has failed to maintain their premises in such manner as to protect the revenue, (E) is, by reason of previous or current legal proceedings involving a felony violation of any other provision of Federal criminal law relating to marijuana, not likely to maintain operations in compliance with this chapter, or (F) has been convicted of a felony violation of any provision of Federal or State criminal law relating to marijuana or marijuana products, the Secretary shall issue an order, stating the facts charged, citing such person to show cause why their permit should not be suspended or revoked. (2) Action following hearing If, after hearing, the Secretary finds that such person has not shown cause why their permit should not be suspended or revoked, such permit shall be suspended for such period as the Secretary deems proper or shall be revoked. (c) Information reporting The Secretary may require— (1) information reporting by any person issued a permit under this section, and (2) information reporting by such other persons as the Secretary deems necessary to carry out this chapter. (d) Inspection or disclosure of information For rules relating to inspection and disclosure of returns and return information, see section 6103(o). 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. 5931. Inventories, reports, and records Every producer, importer, and export warehouse proprietor shall— (1) make a true and accurate inventory at the time of commencing business, at the time of concluding business, and at such other times, in such manner and form, and to include such items, as the Secretary shall by regulation prescribe, with such inventories to be subject to verification by any internal revenue officer, (2) make reports containing such information, in such form, at such times, and for such periods as the Secretary shall by regulation prescribe, and (3) keep such records in such manner as the Secretary shall by regulation prescribe, with such records to be available for inspection by any internal revenue officer during business hours. 5932. Packaging and labeling (a) Packages All marijuana 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 marijuana products shall, before removal, bear the marks, labels, and notices if any, that the Secretary by regulation prescribes. (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 marijuana products. (d) Indecent or immoral material prohibited No indecent or immoral picture, print, or representation shall be contained in, attached to, or stamped, marked, written, or printed on any package of marijuana products. (e) Exceptions Subject to regulations prescribed by the Secretary, marijuana products may be exempted from subsections (a) and (b) if such products are— (1) for experimental purposes, or (2) transferred to the bonded premises of another producer or export warehouse proprietor or released in bond from customs custody for delivery to a producer. 5933. Purchase, receipt, possession, or sale of marijuana 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 marijuana 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) which, after removal without payment of tax pursuant to section 5904, 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 marijuana products which are not put up in packages as required under section 5932 or which 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 marijuana products which are not put up in packages as required under section 5932 or which 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 marijuana 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 marijuana products in violation of paragraph (1) or (2) of subsection (a) shall be liable for a tax equal to the tax on such articles. 5934. 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 marijuana products before such package is emptied. 5935. Restriction on importation of previously exported marijuana products (a) Export labeled marijuana products (1) In general Marijuana 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 5941, 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). E Penalties Sec. 5941. Civil penalties. Sec. 5942. Criminal penalties. 5941. 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 Marijuana or Marijuana Products for Export (1) Every person who sells, relands, or receives within the jurisdiction of the United States any marijuana products which have been labeled or shipped for exportation under this chapter, (2) every person who sells or receives such relanded marijuana products, and (3) every person who aids or abets in such selling, relanding, or receiving, shall, in addition to the tax and any other penalty provided in this title, be liable for a penalty equal to the greater of $10,000 or 10 times the amount of the tax imposed by this chapter. All marijuana products relanded within the jurisdiction of the United States shall be forfeited to the United States and destroyed. All vessels, vehicles, and aircraft used in such relanding or in removing such marijuana 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. 5942. Criminal penalties (a) Fraudulent Offenses Whoever, with intent to defraud the United States— (1) engages in business as a marijuana enterprise 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 marijuana products subject to tax under this chapter, or (5) with intent to defraud the United States, purchases, receives, possesses, offers for sale, or sells or otherwise disposes of, any marijuana product— (A) upon which the tax has not been paid or determined in the manner and at the time prescribed by this chapter or regulations thereunder, or (B) which, without payment of tax pursuant to section 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. (b) Offenses relating to retail transactions Any retailer who sells, in any single transaction, more than 1 ounce of any marijuana product (or in the case of any marijuana product containing a marijuana derivative, an equivalent amount, as established by the Secretary) shall be, upon conviction, fined not more than $10,000, or imprisoned for not more than 5 years, or both. (c) Other Offenses Whoever, otherwise than as provided in subsections (a) and (b) and section 5911(b), violates any provision of this chapter, or of regulations prescribed thereunder, shall, for each such offense, be fined not more than $1,000, or imprisoned not more than 1 year, or both. (d) Liability to tax Any person who possesses marijuana products in violation of subsection (a) shall be liable for a tax equal to the tax on such articles. . (b) Study Not later than 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 marijuana industry, including the number of persons operating marijuana enterprises 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. (c) Conforming Amendment Section 6103(o)(1)(A) and firearms firearms, and marijuana (d) Clerical amendment The table of chapters for subtitle E of title I of the Internal Revenue Code of 1986 is amended by adding at the end the following new chapter: Chapter 56. Marijuana Products . (e) Effective date (1) In general The amendments made by this section shall apply to sales, and applications for permits under section 5922 (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 5922 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.

Summary: Marijuana Revenue and Regulation Act This bill amends the Internal Revenue Code to impose: (1) an excise tax on any marijuana product produced in or imported into the United States, and (2) an occupational tax on marijuana production facilities and export warehouses. The term "marijuana product" does not include: (1) any article containing marijuana which has been approved by the Food and Drug Administration for sale for therapeutic purposes and is marketed and sold solely for such purpose, or (2) industrial hemp. The excise tax includes exemptions for: (1) marijuana products that are used for research or by government entities for nonconsumption purposes; and (2) the transfer of products between production, import, and export facilities. A credit or refund of the tax must be issued for products that are withdrawn from the market, lost, or destroyed. The bill requires producers, importers, and exporters of marijuana products to: obtain a permit and a bond covering tax liability from the Department of the Treasury prior to beginning operations, meet recordkeeping requirements, and comply with certain policies and restrictions regarding packaging and labeling. The bill also: (1) establishes penalties for violations of marijuana laws, and (2) prohibits the sale of more than one ounce of marijuana in any single retail transaction.