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. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 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. 
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TITLE I—TAXATION 
SEC. 101. ESTABLISHMENT OF TAXES RELATING TO MARI-
JUANA PRODUCTS. 
(a) IN GENERAL.—Subtitle E of title I of the Inter-
nal Revenue Code of 1986 is amended by adding at the 
end the following new chapter: 
‘‘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 
‘‘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. 
‘‘SEC. 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 ef-
fective, the applicable percentage of the price for 
which such product is sold, and 
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‘‘(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 deter-
mined 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 para-
graph (1), 15 percent. 
‘‘(3) For any marijuana product sold during the 
calendar year after the period described in para-
graph (2), 20 percent. 
‘‘(4) For any marijuana product sold during the 
calendar year after the period described in para-
graph (3), 25 percent. 
‘‘(c) APPLICABLE EQUIVALENT RATE.— 
‘‘(1) IN GENERAL.—For purposes of subsection 
(a)(2), the applicable equivalent rate for each cal-
endar 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 
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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 frac-
tional parts of a gram of tetrahydrocannabinol 
in such product). 
‘‘(2) APPLICABLE RATE.— 
‘‘(A) IN GENERAL.—For purposes of para-
graph (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 pe-
riod ending one calendar quarter before such 
calendar year, expressed on a per ounce basis, 
as determined by the Secretary. 
‘‘(B) MARIJUANA DERIVATIVES.—For pur-
poses 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 
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‘‘(ii) 2.83495. 
‘‘(d) TIME OF ATTACHMENT ON MARIJUANA PROD-
UCTS.—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 trans-
ferred into any other substance, either in the process of 
original production or by any subsequent process. 
‘‘SEC. 5902. DEFINITIONS. 
‘‘For purposes of this chapter: 
‘‘(1) EXPORT WAREHOUSE.—The term ‘export 
warehouse’ means a bonded internal revenue ware-
house for the storage of marijuana products, upon 
which the internal revenue tax has not been paid— 
‘‘(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 jurisdic-
tion of the internal revenue laws of the United 
States. 
‘‘(2) EXPORT WAREHOUSE PROPRIETOR.—The 
term ‘export warehouse proprietor’ means any per-
son who operates an export warehouse. 
‘‘(3) IMPORTER.—The term ‘importer’ means 
any person who— 
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‘‘(A) is in the United States and to whom 
nontaxpaid marijuana products, produced in a 
foreign country, Puerto Rico, the Virgin Is-
lands, 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’ has 
the meaning given the term ‘marihuana’ under sec-
tion 102(16) of the Controlled Substances Act (21 
U.S.C. 802(16)). 
‘‘(5) 
MARIJUANA
DERIVATIVE.—The 
term 
‘marijuana derivative’ means any article containing 
marijuana, or any derivative thereof, which is not a 
naturally grown and unadulterated marijuana flow-
er. 
‘‘(6) 
MARIJUANA
ENTERPRISE.—The 
term 
‘marijuana enterprise’ means a producer, export 
warehouse proprietor, or importer. 
‘‘(7) MARIJUANA PRODUCT.— 
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‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), the term ‘marijuana prod-
uct’ means any article which contains mari-
juana or any marijuana derivative. 
‘‘(B) EXCEPTIONS.— 
‘‘(i) IN GENERAL.—The term ‘mari-
juana product’ shall not include— 
‘‘(I) any article containing mari-
juana which has been approved by the 
Food and Drug Administration for 
sale for therapeutic purposes and is 
marketed and sold solely for such pur-
pose, or 
‘‘(II) industrial hemp. 
‘‘(ii) INDUSTRIAL
HEMP.—For pur-
poses of clause (i)(II), the term ‘industrial 
hemp’ means the plant Cannabis sativa L. 
and any part of such plant, whether grow-
ing 
or 
not, 
with 
a 
delta-9 
tetrahydrocannabinol concentration of not 
more than 0.3 percent on a dry weight 
basis. 
‘‘(8) MARIJUANA PRODUCTION FACILITY.—The 
term ‘marijuana production facility’ means an estab-
lishment which is qualified under subchapter C to 
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perform any operation for which such qualification is 
required under such subchapter. 
‘‘(9) PRODUCER.—The term ‘producer’ means 
any person who— 
‘‘(A) plants, cultivates, harvests, or other-
wise produces marijuana or marijuana prod-
ucts, or 
‘‘(B) manufactures, compounds, converts, 
processes, prepares, or packages marijuana 
products. 
‘‘(10) REMOVAL; REMOVE.—The terms ‘re-
moval’ or ‘remove’ mean— 
‘‘(A) the removal of marijuana products 
from the premises of a producer, or from inter-
nal revenue bond under section 5904, as the 
Secretary shall by regulation prescribe, 
‘‘(B) release of such products from cus-
toms custody, or 
‘‘(C) smuggling or other unlawful importa-
tion of such products into the United States. 
‘‘(11) RETAILER.—The term ‘retailer’ means a 
person who sells marijuana products to consumers. 
‘‘SEC. 5903. LIABILITY AND METHOD OF PAYMENT. 
‘‘(a) LIABILITY FOR TAX.— 
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‘‘(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 trans-
ferred between the bonded premises of pro-
ducers 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 prod-
ucts 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 
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customs custody, and the importer shall there-
upon 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 re-
turned to bond upon withdrawal from the mar-
ket 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 reg-
ulations, prescribe the period or the event for 
which such return shall be made and the infor-
mation 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 con-
ditioned upon the filing of such additional 
bonds, and upon compliance with such require-
ments, as the Secretary may prescribe for the 
protection of the revenue. The Secretary may, 
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by regulations, require payment of tax on the 
basis of a return prior to removal of the mari-
juana products where a person defaults in the 
postponed payment of tax on the basis of a re-
turn under this subsection or regulations pre-
scribed 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 
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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 pe-
riod during which the article is removed 
from the first such warehouse. 
‘‘(iii) FOREIGN
TRADE
ZONES.—Ex-
cept as provided in clause (iv) and in regu-
lations 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 DES-
TINED 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 
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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 semi-
monthly 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 para-
graph 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 hol-
iday. 
‘‘(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 imme-
diately upon production. 
‘‘(3) PAYMENT BY ELECTRONIC FUND TRANS-
FER.—Any person who in any 12-month period, end-
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ing 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 pre-
ceding sentence. 
‘‘(c) DEFINITION OF PRICE.— 
‘‘(1) CONTAINERS, PACKING
AND
TRANSPOR-
TATION 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 inci-
dent 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 stat-
ed 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.— 
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‘‘(A) IN GENERAL.—If an article is sold di-
rectly 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’ has the meaning 
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given to such term by subsection (a) 
of section 1563, except that ‘more 
than 50 percent’ shall be substituted 
for ‘at least 80 percent’ each place it 
appears in such subsection. 
‘‘(II) 
CONTROLLED
GROUPS 
WHICH
INCLUDE
NONINCORPORATED 
PERSONS.—Under 
regulations 
pre-
scribed 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 corpora-
tion. 
‘‘(d) PARTIAL PAYMENTS AND INSTALLMENT AC-
COUNTS.— 
‘‘(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 notwith-
standing partial payment by installments, 
‘‘(B) a conditional sale, or 
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‘‘(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 para-
graph (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 re-
spect to which credit or refund is allowable by rea-
son 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 pay-
able if such installment accounts had not 
been sold or otherwise disposed of (com-
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puted as provided in paragraph (1)), ex-
cept 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 in-
solvency 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 install-
ment payment, by 
‘‘(ii) the rate of tax under this chap-
ter in effect on the date such unpaid in-
stallment 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. 
‘‘SEC. 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— 
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‘‘(1) exclusively in scientific research by a lab-
oratory, 
‘‘(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 non-
consumption purposes. 
‘‘(b) MARIJUANA PRODUCTS TRANSFERRED OR RE-
MOVED IN BOND FROM DOMESTIC FACTORIES AND EX-
PORT WAREHOUSES.— 
‘‘(1) IN GENERAL.—Subject to such regulations 
and under such bonds as the Secretary shall pre-
scribe, 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 arti-
cles, without payment of tax, for shipment to a for-
eign country, Puerto Rico, the Virgin Islands, or a 
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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 un-
less such products bear such marks, labels, or no-
tices as the Secretary shall by regulations prescribe. 
‘‘(c) MARIJUANA PRODUCTS RELEASED
IN BOND 
FROM
CUSTOMS
CUSTODY.—Marijuana products im-
ported or brought into the United States may be released 
from customs custody, without payment of tax, for deliv-
ery 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 RE-
TURNED.—Marijuana products classifiable under item 
9801.00.10 of the Harmonized Tariff Schedule of the 
United States (relating to duty on certain articles pre-
viously exported and returned), as in effect on the date 
of the enactment of the Marijuana Revenue and Regula-
tion Act, may be released from customs custody, without 
payment of that part of the duty attributable to the inter-
nal revenue tax for delivery to the original producer of 
such marijuana products or to the export warehouse pro-
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prietor authorized by such producer to receive such prod-
ucts, in accordance with such regulations and under such 
bond as the Secretary shall prescribe. Upon such release 
such products shall be subject to this chapter as if they 
had not been exported or otherwise removed from internal 
revenue bond. 
‘‘SEC. 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 al-
lowed or made (without interest) to the producer, 
importer, or export warehouse proprietor on proof 
satisfactory to the Secretary that the claimant pro-
ducer, 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
DE-
STROYED IN BOND.— 
‘‘(A) EXTENT OF LOSS ALLOWANCE.—No 
tax shall be collected in respect of marijuana 
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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, con-
signor, consignee, bailee, or carrier, or 
their employees or agents, 
‘‘(ii) in the case of voluntary destruc-
tion, 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 pro-
duction 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 
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5901 to establish to the satisfaction of the Sec-
retary that such loss did not occur as the result 
of connivance, collusion, fraud, or negligence on 
the part of the proprietor of the marijuana pro-
duction 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 sub-
paragraph (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, re-
mitted, credited, or refunded under this para-
graph where the loss occurred after the tax was 
determined. The abatement, remission, credit, 
or refund of taxes provided for by subpara-
graphs (A) and (C) in the case of loss of mari-
juana 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 re-
spect of marijuana products lost after the tax 
was determined and before completion of the 
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physical removal of the marijuana products 
from the bonded premises. 
‘‘(3) VOLUNTARY DESTRUCTION.—The propri-
etor of a marijuana production facility or other per-
sons 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 re-
fund of tax under this subsection shall be filed with-
in 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 allow-
ance 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 Sec-
retary shall prescribe. 
‘‘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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‘‘SEC. 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’) in respect of each premises at 
which such business is carried on. 
‘‘(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 occupa-
tion tax shall be fined not more than $5,000, or impris-
oned not more than 2 years, or both, for each such offense. 
‘‘SEC. 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 occu-
pational tax shall be reckoned for 1 year, and in the 
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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 com-
menced, to and including the 30th day of June fol-
lowing. 
‘‘(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 re-
mittance of any occupational tax, the Secretary shall 
issue to the taxpayer an appropriate stamp as a re-
ceipt denoting payment of the tax. This paragraph 
shall not apply in the case of a return covering li-
ability for a past period. 
‘‘SEC. 5913. PROVISIONS RELATING TO LIABILITY FOR OC-
CUPATIONAL TAXES. 
‘‘(a) PARTNERS.—Any number of persons doing busi-
ness 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, 
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except as otherwise provided in this subchapter, the occu-
pational 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 para-
graph (1) shall require imposition of an occupational 
tax for the storage of marijuana products at a loca-
tion 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’ means the entire office, 
plant or area of the business in any one loca-
tion under the same proprietorship. 
‘‘(B) DIVISIONS.—For purposes of this 
paragraph, any passageways, streets, highways, 
rail crossings, waterways, or partitions dividing 
the premises shall not be deemed sufficient sep-
aration to require an additional occupational 
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tax, if the various divisions are otherwise con-
tiguous. 
‘‘(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 de-
scribed in paragraph (2) may secure the right to 
carry on, without incurring any additional occupa-
tional tax, the same business at the same place for 
the remainder of the taxable period for which the oc-
cupational tax was paid. 
‘‘(2) ELIGIBLE
PERSONS.—The persons de-
scribed in this paragraph are the following: 
‘‘(A) The surviving spouse or child, or ex-
ecutor or administrator or other legal represent-
ative, 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 
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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 re-
mainder of the taxable period for which the occupa-
tional tax was paid. To secure the right to carry on 
the business without incurring additional occupa-
tional tax, the successor, or the person relocating 
their business, must register the succession or relo-
cation with the Secretary in accordance with regula-
tions prescribed by the Secretary. 
‘‘(e) FEDERAL
AGENCIES
OR
INSTRUMENTAL-
ITIES.—Any tax imposed by this subchapter shall apply 
to any agency or instrumentality of the United States un-
less such agency or instrumentality is granted by statute 
a specific exemption from such tax. 
‘‘SEC. 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 commence-
ment or continuance of such trade or business con-
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trary to the laws of such State or in places prohib-
ited 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. 
‘‘Subchapter C—Bond and Permits 
‘‘Sec. 5921. Establishment and bond. 
‘‘Sec. 5922. Application for permit. 
‘‘Sec. 5923. Permit. 
‘‘SEC. 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 mari-
juana production facility duly authorized to produce 
marijuana products according to law— 
‘‘(A) no marijuana may be planted, cul-
tivated, harvested, or grown in any building or 
on any premises, and 
‘‘(B) no marijuana product may be manu-
factured, compounded, converted, processed, 
prepared, or packaged in any building or on 
any premises. 
‘‘(2) AUTHORIZED PRODUCERS ONLY.—No per-
son other than a producer which has filed the bond 
required under subsection (b) and received a permit 
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described in section 5923 may produce any mari-
juana product. 
‘‘(b) BOND.— 
‘‘(1) WHEN REQUIRED.—Every person, before 
commencing business as a producer or an export 
warehouse proprietor, shall file such bond, condi-
tioned upon compliance with this chapter and regu-
lations issued thereunder, in such form, amount, and 
manner as the Secretary shall by regulation pre-
scribe. A new or additional bond may be required 
whenever the Secretary considers such action nec-
essary 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 dis-
approved, upon notice to the principal on the bond, 
if the Secretary determines that the bond is not ade-
quate to protect the revenue. 
‘‘(3) CANCELLATION.—Any bond filed here-
under may be canceled, upon notice to the principal 
on the bond, whenever the Secretary determines that 
the bond no longer adequately protects the revenue. 
‘‘SEC. 5922. APPLICATION FOR PERMIT. 
‘‘(a) IN
GENERAL.—Every person, before com-
mencing business as a marijuana enterprise, and at such 
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other time as the Secretary shall by regulation prescribe, 
shall make application for the permit provided for in sec-
tion 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 pre-
scribe, or 
‘‘(3) such person (including, in the case of a 
corporation, any officer, director, or principal stock-
holder and, in the case of a partnership, a part-
ner)— 
‘‘(A) is, by reason of their business experi-
ence, financial standing, or trade connections or 
by reason of previous or current legal pro-
ceedings involving a felony violation of any 
other provision of Federal criminal law relating 
to marijuana or marijuana products, not likely 
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to maintain operations in compliance with this 
chapter, 
‘‘(B) has been convicted of a felony viola-
tion of any provision of Federal or State crimi-
nal law relating to marijuana or marijuana 
products, or 
‘‘(C) has failed to disclose any material in-
formation required or made any material false 
statement in the application therefor. 
‘‘SEC. 5923. PERMIT. 
‘‘(a) ISSUANCE.—A person shall not engage in busi-
ness as a marijuana enterprise without a permit to engage 
in such business. Such permit, conditioned upon compli-
ance 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 per-
mit— 
‘‘(A) has not in good faith complied with 
this chapter, or with any other provision of this 
title involving intent to defraud, 
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‘‘(B) has violated the conditions of such 
permit, 
‘‘(C) has failed to disclose any material in-
formation 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 re-
lating to marijuana, not likely to maintain oper-
ations in compliance with this chapter, or 
‘‘(F) has been convicted of a felony viola-
tion of any provision of Federal or State crimi-
nal 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 sus-
pended or revoked, such permit shall be suspended 
for such period as the Secretary deems proper or 
shall be revoked. 
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