I 
116TH CONGRESS 
2D SESSION 
H. R. 8131 
To amend the Internal Revenue Code of 1986 to establish Hemp Opportunity 
Zones. 
IN THE HOUSE OF REPRESENTATIVES 
AUGUST 28, 2020 
Mr. RIGGLEMAN introduced the following bill; which was referred to the Com-
mittee on Ways and Means, and in addition to the Committee on Agri-
culture, for a period to be subsequently determined by the Speaker, in 
each case for consideration of such provisions as fall within the jurisdic-
tion of the committee concerned 
A BILL 
To amend the Internal Revenue Code of 1986 to establish 
Hemp Opportunity Zones. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Hemp Opportunity 
Zone Act of 2020’’. 
SEC. 2. HEMP OPPORTUNITY ZONES. 
(a) IN GENERAL.—Chapter 1 of the Internal Rev-
enue Code of 1986 is amended by inserting after sub-
chapter V the following new subchapter: 
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‘‘Subchapter W—Hemp Opportunity Zones 
‘‘SEC. 1400W–1. DESIGNATION. 
‘‘(a) HEMP OPPORTUNITY ZONE DEFINED.—For 
purposes of this subchapter, the term ‘hemp opportunity 
zone’ means a population census tract that is a low-income 
community that is designated as a hemp opportunity zone. 
‘‘(b) DESIGNATION.— 
‘‘(1) IN GENERAL.—For purposes of subsection 
(a), a population census tract that is a low-income 
community is designated as a hemp opportunity 
zone if— 
‘‘(A) not later than the end of the deter-
mination period, the chief executive office of the 
State in which the tract is located— 
‘‘(i) nominates the tract for designa-
tion as a hemp opportunity zone, and 
‘‘(ii) notifies the Secretary in writing 
of such nomination, and 
‘‘(B) the Secretary certifies such nomina-
tion and designates such tract as a hemp oppor-
tunity zone before the end of the consideration 
period. 
‘‘(2) FACTORS FOR CONSIDERATION.—In nomi-
nating tracts (and considering such nominations for 
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certification) preference shall be given to areas 
which— 
‘‘(A) are facing obstacles to economic de-
velopment due to a lack of resources, 
‘‘(B) are the focus of mutually reinforcing 
state, local, or private economic development 
initiatives, 
‘‘(C) are poised for economic growth that 
requires access to a larger hemp market for 
commercial purposes, and 
‘‘(D) represent the areas of a State where 
such service would result in the highest return 
on investment. 
‘‘(3) EXTENSION OF PERIODS.—A chief execu-
tive officer of a State may request that the Sec-
retary extend either the determination or consider-
ation period, or both (determined without regard to 
this subparagraph), for an additional 30 days. 
‘‘(c) OTHER DEFINITIONS.—For purposes of this 
subsection— 
‘‘(1) LOW-INCOME
COMMUNITIES.—The term 
‘low-income community’ has the same meaning as 
when used in section 45D(e). 
‘‘(2) DEFINITION OF PERIODS.— 
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‘‘(A) CONSIDERATION PERIOD.—The term 
‘consideration period’ means the 30-day period 
beginning on the date on which the Secretary 
receives notice under subsection (b)(1)(A)(ii), 
as extended under subsection (b)(3). 
‘‘(B) DETERMINATION PERIOD.—The term 
‘determination period’ means the 90-day period 
beginning on the date of the enactment of this 
section, as extended under subsection (b)(2). 
‘‘(C) STATE.—For purposes of this sec-
tion, the term ‘State’ includes any possession of 
the United States. 
‘‘(d) NUMBER OF DESIGNATIONS.— 
‘‘(1) IN
GENERAL.—Except as provided by 
paragraph (2), the number of population census 
tracts in a State that may be designated as hemp 
opportunity zones under this section may not exceed 
25 percent of the number of low-income communities 
in the State. 
‘‘(2) EXCEPTION.—If the number of low-income 
communities in a State is less than 100, then a total 
of 25 of such tracts may be designated as qualified 
opportunity zones. 
‘‘(e) DESIGNATION OF TRACTS CONTIGUOUS WITH 
LOW-INCOME COMMUNITIES.— 
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‘‘(1) IN GENERAL.—A population census tract 
that is not a low-income community may be des-
ignated as a hemp opportunity zone under this sec-
tion if— 
‘‘(A) the tract is contiguous with the low- 
income community that is designated as a hemp 
opportunity zone, and 
‘‘(B) the median family income of the tract 
does not exceed 125 percent of the median fam-
ily income of the low-income community with 
which the tract is contiguous. 
‘‘(2) LIMITATION.—Not more than 5 percent of 
the population census tracts designated in a State as 
a hemp opportunity zone may be designated under 
paragraph (1). 
‘‘(f) PERIOD FOR WHICH DESIGNATION IS IN EF-
FECT.—A designation as a hemp opportunity zone shall 
remain in effect for the period beginning on the date of 
the designation and ending at the close of the 10th cal-
endar year beginning on or after such date of designation. 
‘‘SEC. 1400W–2. DEFERRAL FOR ELIGIBLE TAXPAYER OF 
CAPITAL GAINS INVESTED IN HEMP OPPOR-
TUNITY ZONES. 
‘‘(a) IN GENERAL.— 
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‘‘(1) EXCLUSION OF GAIN INVESTED IN HEMP 
OPPORTUNITY ZONE PROPERTY.—In the case of gain 
from the sale to, or exchange with, an unrelated per-
son of any property held by the taxpayer, at the 
election of the taxpayer— 
‘‘(A) gross income for the taxable year 
shall not include so much of such gain as does 
not exceed the aggregate cost of all qualified 
hemp opportunity zone property acquired by the 
taxpayer during the 180-day period beginning 
on the date of such sale or exchange, and 
‘‘(B) the amount of gain excluded by sub-
paragraph (A) shall be included in gross income 
as provided by paragraph (2). 
‘‘(2) DEFERRAL OF GAIN INVESTED IN QUALI-
FIED HEMP OPPORTUNITY ZONE PROPERTY.— 
‘‘(A) YEAR
OF
INCLUSION.—Except as 
provided by subparagraph (C), gain to which 
paragraph (1)(B) applies shall be included in 
income in the taxable year in which the quali-
fied hemp opportunity zone property related to 
such gain is sold or exchanged in the amount 
determined under subparagraph (B). 
‘‘(B) AMOUNT INCLUDIBLE.—The amount 
of gain determined under this clause shall be— 
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‘‘(i) 100 percent of such gain in the 
case of the sale or exchange of the quali-
fied hemp opportunity zone property with 
respect to which gain is deferred under 
paragraph (1) that is held for less than 5 
years, 
‘‘(ii) 90 percent of such gain in the 
case of the sale or exchange of the quali-
fied hemp opportunity zone property with 
respect to which gain is deferred under 
paragraph (1) that is held for at least 5 
years but less than 7 years, and 
‘‘(iii) 85 percent of such gain in the 
case of the sale or exchange of the quali-
fied hemp opportunity zone property with 
respect to which gain is deferred under 
paragraph (1) that is held for at least 7 
years. 
‘‘(3) EXCLUSION OF GAIN ON QUALIFIED HEMP 
OPPORTUNITY ZONE PROPERTY HELD FOR AT LEAST 
10 YEARS.—Except as provided in paragraph (2), in 
the case of the sale or exchange of qualified hemp 
opportunity zone property, or an investment in a 
qualified opportunity fund, held for at least 10 
years, gross income for the taxable year shall not in-
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clude any gain from the sale or exchange of such 
property or investment. 
‘‘(4) ONE ELECTION PER PROPERTY.—No elec-
tion may be made under paragraph (1) with respect 
to a sale or exchange if an election previously made 
with respect to such sale or exchange is in effect. 
‘‘(b) BASIS RULES RELATING TO QUALIFIED HEMP 
OPPORTUNITY ZONE PROPERTY.— 
‘‘(1) REDUCED
BY
GAIN
DEFERRED
UNDER 
SUBSECTION (a)(1).—The basis of a qualified hemp 
opportunity zone property immediately after its ac-
quisition under subsection (a) shall be reduced by 
the amount of gain deferred by reason of subsection 
(a)(1)(A) with respect to such property. 
‘‘(2) INCREASE FOR GAIN RECOGNIZED UNDER 
SUBSECTION (a)(2).—The basis of qualified hemp 
opportunity zone property shall be increased by the 
amount of gain recognized by reason of subsection 
(a)(2) with respect to such property. 
‘‘(3) SUBSEQUENT
INCREASE
IN
BASIS
FOR 
PROPERTY HELD FOR AT LEAST 5 YEARS BUT LESS 
THAN 10 YEARS.—In the case of qualified hemp op-
portunity zone property held for at least 5 years but 
less than 10 years— 
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‘‘(A) PROPERTY HELD FOR 5 YEARS.—For 
qualified hemp opportunity zone property held 
for at least 5 years, the basis of such property 
shall be increased by an amount equal to 10 
percent of the amount of gain deferred by rea-
son of subsection (a)(1)(A) with respect to such 
property. 
‘‘(B) PROPERTY HELD FOR 7 YEARS.—For 
qualified hemp opportunity zone property held 
for at least 7 years, the basis of such property 
shall be increased by an amount equal to 5 per-
cent of the amount of gain deferred by reason 
of subsection (a)(1)(A) with respect to such 
property. 
‘‘(c) QUALIFIED HEMP OPPORTUNITY ZONE PROP-
ERTY.—For purposes of this section: 
‘‘(1) IN GENERAL.—The term ‘qualified hemp 
opportunity zone property’ means property which 
is— 
‘‘(A) qualified hemp opportunity zone 
stock, 
‘‘(B) qualified hemp opportunity zone part-
nership interest, 
‘‘(C) qualified hemp opportunity zone busi-
ness property, or 
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‘‘(D) an interest in a qualified investment 
fund. 
‘‘(2) QUALIFIED
HEMP
OPPORTUNITY
ZONE 
STOCK.— 
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), the term ‘qualified hemp op-
portunity zone stock’ means any stock in a do-
mestic corporation if— 
‘‘(i) such stock is acquired by the tax-
payer after December 31, 2019, at its 
original issue (directly or through an un-
derwriter) from the corporation solely in 
exchange for cash, 
‘‘(ii) as of the time such stock was 
issued, such corporation was a qualified 
hemp opportunity zone business (or, in the 
case of a new corporation, such corporation 
was being organized for purposes of being 
a qualified hemp opportunity zone busi-
ness), and 
‘‘(iii) during substantially all of the 
taxpayer’s holding period for such stock, 
such corporation qualified as a qualified 
hemp opportunity zone business. 
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‘‘(B) REDEMPTIONS.—A rule similar to 
the rule of section 1202(c)(3) shall apply for 
purposes of this paragraph. 
‘‘(3) QUALIFIED
HEMP
OPPORTUNITY
ZONE 
PARTNERSHIP INTEREST.—The term ‘qualified hemp 
opportunity zone partnership interest’ means any 
capital or profits interest in a domestic partnership 
if— 
‘‘(A) such interest is acquired by the tax-
payer after December 31, 2019, from the part-
nership solely in exchange for cash, 
‘‘(B) as of the time such interest was ac-
quired, such partnership was a qualified hemp 
opportunity zone business (or, in the case of a 
new partnership, such partnership was being 
organized for purposes of being a qualified 
hemp opportunity zone business), and 
‘‘(C) during substantially all of the tax-
payer’s holding period for such interest, such 
partnership qualified as a qualified hemp oppor-
tunity zone business. 
‘‘(4) QUALIFIED
HEMP
OPPORTUNITY
ZONE 
BUSINESS PROPERTY.— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
hemp opportunity zone business property’ 
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means tangible property used in a trade or 
business of the taxpayer if— 
‘‘(i) such property is used primarily in 
the trade or business of producing hemp— 
‘‘(ii) such property was acquired by 
the taxpayer by purchase (as defined in 
section 179(d)(2)) after December 31, 
2019, 
‘‘(iii) the original use of such property 
in the qualified hemp opportunity zone 
commences with the taxpayer or the tax-
payer substantially improves the property, 
and 
‘‘(iv) during substantially all of the 
taxpayer’s holding period for such prop-
erty, substantially all of the use of such 
property was in a qualified hemp oppor-
tunity zone. 
‘‘(B) SUBSTANTIAL
IMPROVEMENT.—For 
purposes of subparagraph (A)(iii), property 
shall be treated as substantially improved by 
the taxpayer only if, during any 30-month pe-
riod beginning after the date of acquisition of 
such property, additions to basis with respect to 
such property in the hands of the taxpayer ex-
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ceed an amount equal to the adjusted basis of 
such property at the beginning of such 30- 
month period in the hands of the taxpayer. 
‘‘(C) TREATMENT
OF
RELATED
PAR-
TIES.—For purposes of subparagraph (A)(ii), 
the rules of subparagraph (A) of section 
179(d)(2) shall be applied using the relation-
ship described in subsection (e)(2) in lieu of the 
relationship described in such subparagraph. 
‘‘(5) QUALIFIED HEMP OPPORTUNITY FUND.— 
The term ‘qualified hemp opportunity fund’ means 
any investment vehicle organized as a corporation or 
a partnership for the purpose of investing in quali-
fied hemp opportunity zone property (other than an-
other qualified hemp opportunity fund) that holds at 
least 90 percent of its assets in qualified hemp op-
portunity zone property, determined— 
‘‘(A) on the last day of the first 6-month 
period of the taxable year of the fund, and 
‘‘(B) on the last day of the taxable year of 
the fund. 
‘‘(6) QUALIFIED
HEMP
OPPORTUNITY
ZONE 
BUSINESS.— 
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‘‘(A) IN
GENERAL.—The term ‘qualified 
hemp opportunity zone business’ means a trade 
or business— 
‘‘(i) in which substantially all of the 
tangible property owned or leased by the 
taxpayer is qualified hemp opportunity 
zone business property, 
‘‘(ii) which satisfies the requirements 
of paragraphs (2), (4), and (8) of section 
1397C(b), and 
‘‘(iii) which is not described in section 
144(c)(6)(B). 
‘‘(B) SPECIAL
RULE.—For purposes of 
subparagraph (A), tangible property that ceases 
to be a qualified hemp opportunity zone busi-
ness property shall continue to be treated as a 
qualified hemp opportunity zone business prop-
erty for the lesser of— 
‘‘(i) 5 years after the date on which 
such tangible property ceases to be so 
qualified, or 
‘‘(ii) the date on which such tangible 
property is no longer held by the qualified 
hemp opportunity zone business. 
‘‘(d) APPLICABLE RULES.— 
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‘‘(1) IN GENERAL.—For purposes of this sec-
tion and except as otherwise provided in this section, 
rules similar to the rules applicable to deferred like 
kind exchanges under section 1031 shall apply ex-
cept that reinvestment in qualified hemp opportunity 
zone property need not require an intermediary 
party. 
‘‘(2) RELATED PERSONS.—For purposes of this 
subsection, persons are related to each other if such 
persons are described in section 267(b) or 707(b)(1), 
determined by substituting ‘20 percent’ for ‘50 per-
cent’ each place it occurs in such sections. 
‘‘(3) DECEDENTS.—In the case of a decedent, 
amounts recognized under this section shall, if not 
properly includible in the gross income of the dece-
dent, be includible in gross income as provided by 
section 691. 
‘‘(4) REGULATIONS.—The Secretary shall pre-
scribe such regulations as may be necessary or ap-
propriate to carry out the purposes of this section, 
including— 
‘‘(A) rules providing for proportionate in-
clusion in income and increases in basis for 
purposes of subsections (a) and (b) in cases in 
which a sale or exchange of any qualified hemp 
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opportunity zone property with respect to which 
gain is deferred under subsection (a)(1)(A) is 
less than all of such property, 
‘‘(B) rules requiring taxpayers to provide 
such information as the Secretary determines to 
be necessary or appropriate for the identifica-
tion of both the assets sold (including basis and 
sale price) and the assets acquired and invest-
ments made, and 
‘‘(C) rules to prevent abuse. 
‘‘SEC. 1400W–3. IMMEDIATE EXPENSING OF QUALIFIED 
HEMP OPPORTUNITY ZONE BUSINESS PROP-
ERTY. 
‘‘(a) IN GENERAL.—A taxpayer engaged in the trade 
or business of hemp production may elect to treat the cost 
of any qualified hemp opportunity zone business property 
(as defined in section 1400W–2) as an expense which is 
not chargeable to capital account. Any cost so treated shall 
be allowed as a deduction for the taxable year in which 
the qualified hemp opportunity zone business property is 
placed in service. 
‘‘(b) EXCEPTION
FOR CERTAIN PROPERTY.—For 
purposes of this section, the term ‘qualified hemp oppor-
tunity zone business property’ shall not include any prop-
erty to which section 168(g) applies. 
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‘‘(c) ELECTION.—An election under this section shall 
be made under rules similar to the rules of section 179(c). 
‘‘(d) COORDINATION WITH SECTION 179.—For pur-
poses of section 179, qualified hemp opportunity zone 
business property shall not be treated as section 179 prop-
erty. 
‘‘(e) APPLICATION OF OTHER RULES.—Rules similar 
to the rules of paragraphs (3), (4), (5), (7), (9), and (10) 
of section 179(d) shall apply for purposes of this section. 
‘‘(f) TAXPAYER REPORTING.—This section shall not 
apply with respect to any taxpayer for any taxable year 
unless such taxpayer provides the Secretary with such in-
formation as the Secretary may require to allow the Sec-
retary to evaluate the effectiveness of the program estab-
lished under this part.’’. 
(b) BASIS ADJUSTMENTS.—Section 1016(a) of such 
Code is amended by striking ‘‘and’’ at the end of para-
graph (37), by striking the period at the end of paragraph 
(38) and inserting ‘‘, and’’, and by inserting after para-
graph (38) the following new paragraph: 
‘‘(39) to the extent provided in section 1400W– 
2(b).’’. 
(c) CLERICAL AMENDMENT.—The table of sub-
chapters for chapter 1 of such Code is amended by insert-
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ing after the item relating to subchapter V the following 
new item: 
‘‘SUBCHAPTER W. HEMP OPPORTUNITY ZONES’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
SEC. 3. INCREASED QUALIFIED BUSINESS INCOME DEDUC-
TION FOR HEMP PRODUCERS. 
(a) IN GENERAL.—Section 199A(b) of the Internal 
Revenue Code of 1986 is amended by adding at the end 
the following new paragraph: 
‘‘(8) SPECIAL RULE WITH RESPECT TO QUALI-
FIED
BUSINESS
INCOME
FROM
HEMP
PRODUC-
TION.— 
‘‘(A) IN
GENERAL.—In the case of any 
qualified trade or business which is engaged in 
hemp production and the gross receipts for the 
preceding taxable year of which do not exceed 
$25,000,000, the amount determined under 
paragraph (2) with respect to such trade or 
business shall be increased by an amount equal 
to 15 percent of so much of the qualified busi-
ness income with respect to such trade or busi-
ness as is properly allocable to hemp produc-
tion. 
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‘‘(B) COMMON CONTROL.—Any trades or 
business which are under common control and 
treated as a single employer under section 52 
shall be treated as a single trade or business for 
purposes of applying the $25,000,000 gross re-
ceipts test under subparagraph (A).’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning the date 
of the enactment of this Act. 
SEC. 4. HEMP FARMER START-UP TAX CREDIT. 
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of 
1986 is amended by adding at the end the following new 
section: 
‘‘SEC. 45U. HEMP FARMER START-UP CREDIT. 
‘‘(a) IN GENERAL.—For purposes of section 38, in 
the case of an eligible hemp farmer, the hemp farmer 
start-up credit determined under this section for any tax-
able year is an amount equal to— 
‘‘(1) 10 percent of the cash rent paid by the 
taxpayer for land in connection with the trade or 
business of producing hemp, or 
‘‘(2) 15 percent of the crop share rent so paid 
by the taxpayer. 
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