THE CANNABIS REVENUE ACT (1982)
This
prototype legislation for cannabis regulation and taxation on the federal
level was drafted by an ad hoc committee of mostly lawyers called "The
National Task Force on Cannabis Regulation," and distributed in a 1982
report titled "The Regulation and Taxation of Cannabis Commerce." ISBN
83-116763
Introduction
and Summary
(from the 1982 Report)
When alcohol prohibition was repealed in
1933, policymakers were faced with novel questions about how best to
regulate, control and tax commerce in a theretofore illegal substance.
The repeal of marijuana prohibition reprises many such issues. The model
legislation which follows represents the authors' earnest attempt to
identify and address those issues as they relate to a legal market in cannabis---in
other words, to specify what, exactly, in our opinion, ought to replace
prohibition.
The Cannabis Revenue Act sets up a system
of regulation and taxation of commerce in cannabis aimed at the following
policy goals:
1. The minimization of abuse. “Abuse” is
defined as the use of cannabis to the extent that it interferes with
personal development or achievement, or violates the rights of others.
2. The protection of public health. A cannabis
policy should contain strong disincentives for adulterated or contaminated
cannabis, as such disincentives exist for foods and other ingestibles.
3. Elimination of the illicit market in cannabis,
permitting the concentration of law enforcement resources on the prevention
and investigation of crime against persons, property and the public.
4. The production of revenue, by subjecting
the cannabis industry and profits made by it, to taxation.
5. The removal of legal obstacles to the
natural growth of the hemp industry, stimulating the agricultural economy
and boosting research and development in non-fossil fuel sources and
a myriad of “green” products.
To achieve these goals, the authors recommend enactment of
the Cannabis Revenue Act. This model bill stands broadly on the principles
that (1) adults must bear full and ultimate responsibility for the
consequences of their own actions, and cannot look to government for
self-protection, and (2) that as between state and federal authority
over the sumptuary practices of its citizens, federal prerogatives should
yield to state prerogatives.
The CRA is enabling legislation that allows states to adopt
a variety of alternative policies to control marijuana use and commerce.
Because the authors are of the view that federal involvement in cannabis
regulation should be minimized, the statute regulates by federal law
only those aspects of the cannabis market which are demanding of uniform
legal treatment throughout the United States, so as to preclude widespread
smuggling across state lines. The CRA would also set up a federal regulatory
framework, into which states can plug and thus avoid setting up state regulatory
schemes in order to gain the benefits of regulation and taxation.
If the CRA were enacted into law, states would have three policy
options from which to choose:
1. To disregard the CRA, and continue to
enforce the prohibition laws.
2. To participate with the federal government
in the regulation and taxation of cannabis.
3. To create its own regulatory scheme
As to the first option, following the repeal of alcohol prohibition
in 1933, a number of states—despite their having supported the repeal
amendment in constitutional conventions—opted to remain “dry.”
Many counties remain dry today. Nothing in the CRA requires any state to
repeal its marijuana prohibition laws.
The second choice available to states would be to participate
with the federal government in the regulation and taxation of cannabis
under the CRA. Under this option, a state would repeal its current provisions
of laws governing marijuana, and replace them only with the following
provisions, required by the CRA (as, under one option, a condition to
recovering revenue from the federal government):
A. Measures restricting sale or distribution
of cannabis to minors, imposing such sanctions as each state determines;
B. Measures restricting the operation of
motor vehicles under the influence of cannabis, with appropriate penalties,
civil and/or criminal, as determined by the state, as well as legal
safeguards which are based on quantitative standards for determining
actual levels of impairment.
Without further regulation at the state level, commerce in
cannabis would then be regulated exclusively by the CRA and the administrative
regulations promulgated thereunder by the Secretary of the Treasury.
The market would have the following features:
■ An individual who wished to go into the
business of cultivating, processing, storing, distributing or selling
cannabis, even on a small scale, would be required to obtain a license.
Such license would be readily obtainable; the requirements would pose
no obstacle to any qualified person’s engaging in legal cannabis commerce.
Adults would be free to grow, possess and give away cannabis for personal
use. As current alcohol laws now permit individuals to brew a quantity
of beer and wine for personal and household use, so too would individuals
be allowed personal cultivation, possession and non-commercial distribution
of cannabis.
■ Like wine, cannabis would be commercially
available for purchase by adults from licensed retailers. Cannabis
packages, like pipe tobacco or herbal tea, would contain one ounce of
processed cannabis. The package would bear a tax stamp, and the label
would reveal the origin of the cannabis, the identity of the contents
by species and variety, the net quantity, potency and a cautionary label.
There would be no legal sale of “spiked” products, like snacks or beverages
containing cannabis.
■ Retail sales of cannabis, like the retail
sale of tobacco cigarettes, would take place from a wide variety of
merchants, including liquor stores and tobacconists. Since the retail
price will contain a large revenue component, the price of cannabis
packages will be relatively high, compared to packages of tobacco cigarettes,
probably from $25 to $50 per package. Storekeepers, always cautious about
the security of small, high-priced items like watches or expensive cigars,
will probably display cannabis packages in a glass case near the cash
register. Cannabis will not be sold by vending machine.
■ Advertising would be regulated,
but not necessarily banned. (§5941). Option One would ban all
advertising; Option Two would subject cannabis advertising to the same
restrictions that the wine and beer industry are now subject to.
■ The CRA also contains alternative provisions
for disposition of revenue collected by the federal tax on cannabis
(§5936). Under Option One, revenue is shared between the federal
government and the states that regulate; under Option Two, the federal
government would retain revenue.
The third choice available to states would
be to impose their own regulatory and/or taxation schemes in addition
to the CRA, as many states now do with alcohol and tobacco. For example,
a state could impose the following restrictions on the cannabis industry:
1. License quotas, such as now exist for
retail alcohol licenses.
2. Restrictions on public use of cannabis,
including the types of public establishments where cannabis can be
consumed.
3. Further taxation of cannabis, perhaps
earmarking cannabis revenue for particular purposes, like housing for
the elderly, energy conservation or research institutes.
States would not be eligible for federal revenue sharing if
they imposed further restrictions on advertising, labeling or personal
use as defined in §5921(b).
This portrait of a legal, taxed market in
cannabis is not meant to be the last word on the subject; rather, it
is intended to be a beginning word in an informed and responsible public
debate over marijuana policy in the first decade of the new century.
-----
Original Draft 12.82
Revised 11.01
BRACKETS [ ] INDICATE OPTIONAL OR ARBITRARY
PROVISIONS
The Cannabis Revenue Act of 200_
A BILL to amend the Internal Revenue Code to tax and regulate
the interstate and foreign commerce in cannabis, to amend the Controlled
Substances Act to delete marijuana and for other purposes.
BE IT ENACTED, by the [Senate] [House of
Representatives] of the United States of America in Congress assembled
That Title 26 of the United States Code is
amended by inserting following Chapter 53 a new chapter to read as
follows:
TITLE 26, UNITED STATES CODE
SUBTITLE E, EXCISE TAXES
CHAPTER 54, CANNABIS
Subchapter
A. Short title; statement of policy; definitions
§5901. Short title
§5902. Statement of policy
§5903. Definitions
B. Administration.
§5904. Administration
C. Licenses.
§5921. Unlawful businesses
§5922. Licenses requirements and qualifications
§5923. Exemptions
§5924. Commercial cultivation, possession and trading of
cannabis
D. Revenue.
§5931. Imposition of tax
§5932. Liability, determination and method of payments
§5933. Exemption from credit
§5934. Credit, refund or allowance of tax
§5935. Losses caused by a disaster
§5936. Disposition of revenue
E. Advertising.
§5941. Advertising
F. General Provisions.
§5951. Application to states and territories
§5952. Separability
§5953. Unfair competition and unlawful practices
F. Enforcement
§5961. Inspection
§5962. Criminal penalties
§5963. Civil penalties
§5964. Detention of containers
§5965. Disposition and release of seized property
§5966. Forfeiture of cannabis not stamped, marked or branded
as required by law
§5967. Burden of proof in cases of seizure of cannabis
§5968. Penalty for having, possessing or using cannabis
or property intended to be used in violating provisions of this chapter
G. Other
§5969 Reports and Studies
§5970 Treaty and Convention Termination
§5971 Amendments to Title 18, United States Code
§5972 Amendments to Title 19, United States Code
§5973 Amendments to Title 21, United States Code
§5974 Amendments to Title 22, United States Code
§5975 Amendments to Title 49, United States Code
SUBCHAPTER A – SHORT TITLE; STATEMENT
OF POLICY; DEFINITIONS
§5901. Short title. This chapter shall be called The Cannabis
Revenue Act of 200_.
§5902. Statement of policy. It is the policy of Congress
and the purpose of this chapter to establish a comprehensive federal
program to regulate the commerce in cannabis in the United States whereby
(a) the abuse of cannabis is diminished;
(b) the use of cannabis by children is curtailed;
(c) the public health is protected
by regulating the purity of cannabis in commerce;
(d) illegal trafficking in cannabis
is eliminated;
(e) the commerce in cannabis is taxed sufficiently
to generate revenue commensurate to its place in the national economy;
(f) national resources shall no longer be diverted
to ineffective law enforcement efforts regarding cannabis;
(g) medical research concerning cannabis is encouraged;
and
(h) barriers to the development of a domestic
hemp industry are removed.
§5903. Definitions.
(a) The term
“cultivation” as used in this chapter means the propagation, nurture
and harvest of cannabis.
(b) The term
“processing” as used in this chapter means the importing, cleaning,
testing, preparation, packaging or labeling of cannabis for sale.
(c) The term
“cannabis” as used in this chapter means any part of the plant Cannabis
sativa L. or any species thereof, including Cannabis indica, Cannabis
ruderalis, Cannabis americana or any other variety of the species Cannabis
sativa L. whether growing or not; the seeds thereof, and resin extracted
from any part of the plant, its seeds or resin. The term does not include
the mature stalks of the plant, fiber produced from the stalks, oil or
cake made from the seeds of the plant, any other compound, manufacture,
salt derivative, mixture or preparation of the mature stalks except the
resin extracted therefrom, fiber, oil or cake or the sterilized seed
of the plant which is incapable of germination.
(d) The term
“trade” as used in this chapter means the sale, transfer, exportation,
or distribution for any kind of consideration, of cannabis, whether
by wholesale or retail and includes speculation, or trading in contracts
for future delivery or purchase of any quantity of cannabis.
(e) The term
“secretary” as used in this chapter means the Secretary of the Treasury.
(f) The term
“commercial” as used in this chapter means of, or related to, a non-gratuitous
exchange; or an exchange with consideration.
(g) The term
“United States” as used in this chapter means the several States and
Territories and the District of Columbia; the term “State” includes
a Territory and the District of Columbia.
(h) The term
“wholesale” as used in this chapter means the sale or transfer to a
retailer, or sale or transfer for purposes other than human consumption.
(i) The term
‘purity” as used in this chapter means freedom from substances not
indigenous to cannabis, except for water.
(j) The term
“gratuitous” as used in this chapter means without consideration; non-commercial.
Transfer of anything of value contemporaneously with the sale or tendering
for sale of any goods, services or other things of value, shall be deemed
not gratuitous.
SUBCHAPTER B – ADMINISTRATION
§5904. Administration.
(a) The Secretary
of the Treasury shall enforce this chapter.
(b) The Secretary
is authorized and directed to prescribe such rules and regulations as
may be necessary to carry out the provisions of this chapter.
(c) The Secretary
is authorized to require in such manner and form as shall be prescribed,
such reports as are necessary to carry out his powers or duties.
(d) Not later
than March 1 of each year following the effective date of this chapter,
the Secretary shall submit to the Speaker of the House of Representatives
and the President of the Senate a comprehensive and detailed written
report with respect to the cultivation, processing, storage, handling
and distribution of cannabis subject to the provisions of this chapter,
the inspection of establishments operated in connection therewith and
recommendations for legislation to improve the regulation of commerce in
cannabis.
(e) The Secretary
shall by regulation prescribe the type or kinds of containers which
may be used to contain, store, transfer, convey, remove or withdraw cannabis
prior to packing for sale at retail.
(f) In carrying
out his duties prescribed by this chapter, the Secretary shall consult
with the Secretary of Health and Human Services in order to further the
purposes of this chapter.
SUBCHAPTER C – LICENSES
§5921. Unlawful businesses.
(a) It shall be unlawful, except pursuant to a license
issued under this chapter by the Secretary, and in compliance with the
regulations promulgated under the authority of this chapter;
1. to cultivate cannabis for other than personal use;
2. to process cannabis for other than for personal use;
3. to distribute cannabis for consideration to any person;
4. to possess, cultivate or process cannabis
with intent to distribute for consideration to any person;
5. to otherwise be engaged in commerce in cannabis for consideration.
(b) As used in this section, and Section 5962, “personal use”
means the use or consumption of cannabis by a person or members of
his immediate household and donees. The possession of in excess of
the greater of
1. [25] cannabis plants; or
2. [5] pounds of crude cannabis
shall raise a rebuttable presumption that possession is
not for personal use.
§5922.
License requirements and qualifications.
(a) Applications
for license. Every person, before commencing business as a cultivator,
processor or trader of cannabis, and at such other time as the Secretary
shall by regulation prescribe, shall make application for and obtain
the appropriate license prescribed by this subsection. 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. Applications
shall not be denied unless the Secretary or his designee finds by a preponderance
of the evidence following notice and a hearing, that such applicant has
failed to disclose any material information required or made any material
false statement in the application therefor; provided, however, that no
license under this chapter shall be issued to any applicant who has not
reached the age of [21] years.
(b) Conviction
of any cannabis-related offense under state or federal law, prior to
the effective date of this Act, shall not disqualify any applicant.
(c) Cannabis
licenses issued pursuant to this chapter shall expire upon the [2nd]
anniversary of the issuance thereof, unless renewed.
(d) The surviving
spouse or legal representative of a deceased non-corporate licensee
may continue to exercise the license for 30 days following the death
of the licensee, but thereafter only with the written consent of the Secretary,
which consent shall expire, if not sooner revoked, [15] months from the
date of death. Consent shall be withheld unless the said surviving spouse
or legal representative meets the qualifications prescribed by this
chapter for the type of license sought to be retained.
(e) The Secretary,
his agents and employees, may, during reasonable business hours and
without notice thereof, conduct such inspections of the licensed premises,
including the books, records and accounts of the licensee, as he shall
deem appropriate for the enforcement of this chapter.
(f) Any person
aggrieved by an action of the Secretary shall have such recourse as
provided in the Act of September 6, 1966, P.L. 89-554, as amended (Title
5, United States Code, Section 551 et seq. and Section 701 et seq.).
(g) Sale or
distribution of cannabis by vending machine or similar automation is
prohibited.
(h) No license
issued under this chapter shall be transferable to any other person,
except in accordance with the subsection (d) of this section concerning
death of the licensee.
§5923. Exemptions. The prohibitions contained in sections
5921(a)(3), 5921(a) (4) and 5921(a)(5) shall not apply to a common carrier
or freight forwarder for hire.
§5924. Commercial cultivation, processing and trading of
cannabis.
(a) Commercial Cultivation.
1. The Secretary shall issue cultivation licenses to any person who
shall meet the requirements prescribed in §5922 of this chapter.
2. The holding of a commercial cultivation license shall be conditional
upon compliance with this chapter and the regulations promulgated hereunder.
3. It shall be unlawful for the holder of a commercial cultivation license
to distribute cannabis commercially to any person not holding a current
license issued by authority of this chapter. A copy of the license bearing
the seal of the Secretary shall constitute prima facie evidence of such
license. Except in case of conspiracy or accomplice liability, holders
of a commercial cultivation license shall not be liable for the acts of
transferees in violation of this chapter. For purposes of this provision,
transfer is accomplished when the cultivator makes physical delivery of
the cannabis, despite any reservation of a security interest or delivery
of a document of title at a different time or place.
(b) Processing.
1. The Secretary shall issue processing licenses
to any person who shall meet the requirements prescribed in §5922
of this chapter.
2. The holding of a processing license shall be conditional upon compliance
with this chapter and the regulations promulgated hereunder.
3. No person licensed to process shall distribute packaged cannabis
if the package fails to bear a permanent label containing the following
information, in such style and form as the Secretary may prescribe:
a. the identity of the contents by species and variety;
b. the name and place of business of the processor;
c. the following
statements: “Caution: Smoking any substance irritates the mouth, throat,
breathing passages and lungs, and may be harmful to other organs. Inexperience
or overdose may cause confusion or disorientation. Do not use around or
when operating hazardous equipment. Do not use during pregnancy. The operation
of a motor vehicle under the influence of cannabis, alcohol, or any other
intoxicant is a serious crime, and may result in the loss of your license
to drive.”
d. the net quantity of contents in terms of
dry weight by grams;
e. potency as expressed as the percentage
of THC by dry weight, without seeds;
f. such marking or branding as shall prevent
deception of the consumer with respect to the contents of the quality
thereof.
4. The Secretary shall promulgate regulations concerning the labeling
of cannabis:
a. to prohibit deception of the consumer with
respect to such cannabis or the quantity thereof and to prohibit, irrespective
of falsity, such statements relating to age, cultivation processes,
guarantees and scientific or irrelevant matters as the Secretary finds
to be likely to mislead the consumers;
b. to prohibit statements on the label that
are disparaging of a competitor’s products or are false, misleading,
obscene or indecent;
c. to prevent deception of the consumer
use of a trade or brand name that is the name of any living individual
of public prominence, or existing private or public organization, or
is a name that is in simulation or is an abbreviation thereof, and to
prevent the use of a graphic, pictorial or emblematic representation of
any such individual or organization, if the use of such name or representative
is likely to lead the consumer to believe that the product has been endorsed,
made or used by, or produced for, or under the supervision of, or in accordance
with the specifications of, such individual or organization. This clause
shall not apply to the use of the name of any person engaged in business
as a cultivator, processor, distributor, importer or retailer of cannabis,
nor to the use by any person of a trade or brand name used by him or his
predecessor in interest prior to the effective date of this chapter. This
clause shall not apply to regulations requiring, at time of release from
customs custody, certificates issued by foreign governments covering origin,
age, and identity of imported cannabis. Provided further, that nothing
herein, nor any decision, ruling, or regulation of any department of the
Government shall deny the right of any person to use any trade name or
brand of foreign origin not presently effectively registered in the
United States Patent and Trademark Office which has been used by such person
or predecessor in the United States for a period of at least five years
last past, if the use of such name or brand is qualified by the name of
the locality in the United States in which the product is produced, and,
in the case of the use of such name or brand on any label or in any advertisement,
if such qualification is as conspicuous as such name or brand.
5. It shall be the duty of processing licensees
to analyze and test cannabis intended for distribution and to determine
potency of such cannabis for the purpose of labeling.
6. It shall be unlawful for any processing
licensee to distribute or commercially possess for more than 24 hours
any package containing cannabis which fails to bear a tax stamp or such
other documentation as the Secretary may prescribe as evidence that the
revenue imposed by this chapter has been paid.
7. The provisions of subsections (3), (4)
and (5) shall not apply in the case of transfer of unpackaged cannabis
between licensed processors.
8. Before any license required by this section
is granted to a processor, the Secretary may require a bond in such form
and amount as he may prescribe to insure compliance with the terms of
the license and the provisions of this chapter.
9. It shall be unlawful for the holder
of a processing license to distribute cannabis to any person not holding
a current license issued by authority of this Act.
10. No holder of a processing license shall
affix the tax stamps or such other documentation that the Secretary
may require pursuant to subsection (4) to any package containing cannabis
which contains a dilutant, retardant or accelerator, preservative or
any additive of any kind, the effect whereof is to reduce the purity
of cannabis to less than 100%.
11. A processing licensee who rakes
possession of processed cannabis :imported into the United States shall
comply with all requirements set forth in this subsection.
12. It shall be unlawful for any person
to alter, mutilate, destroy, obliterate or remove any mark, brand or
label upon cannabis held for distribution in interstate or foreign commerce
or after shipment therein, except as authorized by federal law or except
pursuant to regulations of the Secretary authorizing relabeling for purposes
of compliance with the requirements of this chapter.
(c) Commercial trading.
1. The Secretary shall issue trade licenses
to any person meeting the qualifications of §5922 for the sale
of cannabis at retail.
2. It shall be unlawful for the holder of
a trade license to sell, offer for sale or otherwise transfer with
consideration cannabis to any person who has not reached the age of
[18] years or who is intoxicated.
3. Before any license required by this section
is granted to a trader, the Secretary may require a bond in such form
and amount as he may prescribe to insure compliance with the terms of the
license and the provisions of this chapter.
Option 1
[(d) Research license. The Secretary shall issue research licenses
for the conduct of bona fide medical, social, behavioral or other research
upon such terms and conditions as he shall prescribe consistent with
the purposes of this Act as set forth in §5902. ]
Option 2
[(d) Research license. Under such regulations as the Secretary
may prescribe and on the filing of such bonds and applications as he
may require, any scientific university, college of learning or institution
of scientific research may produce, process, receive, blend, treat, test
and store, without payment of tax, for experimental or research use but
not for consumption (other than organoleptic tests) or sale, in such
quantities as may be reasonably necessary for such purposes. ]
SUBCHAPTER D – REVENUE
[§5931. Imposition of tax.
(a) Subject to adjustment as provided herein, there is hereby imposed
on all cannabis sold in or imported into the United States a tax at the
rate of
1. [$20] per ounce of cannabis containing
not more than 2% THC and a proportionate tax at the same rate
on all fractional parts of an ounce of such cannabis;
2. [$25] per ounce of cannabis containing
more than 2% but not more than 4% THC and a proportionate tax at the
same rate on all fractional parts of any ounce of such cannabis;
3. [$35] per ounce of cannabis containing
more than 4% but not more than 6% THC and a proportionate tax at the
same rate on all fractional parts of an ounce of such cannabis.
4. [$45] per ounce of cannabis containing
more than 6% THC and a proportionate tax at the same rate on all fractional
parts of an ounce of such cannabis.
[(b) Adjustment of tax rate.
1. On March 1of
each odd-numbered year following the enactment of this chapter, the
aforesaid tax rates shall be increased y a percentage equal to the percent
increase, if any, in the cost of living.
2. The cost of living shall be based on the “Revised
(all urban consumer) Consumer Price Index-Cities (1967=100),” hereinafter
called the Index, published by the Bureau of Labor Statistics of the
United States Department of Labor. The Index number in the column entitled
“All items” for the month of December next following the enactment of this
chapter shall be the “base Index number” and the corresponding Index number
for the month of December prior to the first day of March upon which adjustments
are required to be made hereunder, shall be the “current Index number.”
The current Index number shall be divided by the base Index number.
From the quotient thereof, there shall be subtracted the integer 1 and
any resulting positive number shall be deemed to be the percentage of increase
in the cost of living. ]
[(b) Adjustment
of tax rate
1. On March 1 of each
odd-numbered year following the enactment of this chapter, the aforesaid
tax rates shall be increased by a percentage equal to the percent increase,
if any, if the cost of living.
2. The cost of living shall be based on the GNP implicit
price deflator. The first increase, if any, shall reflect the percentage
increase, if any, of the aforesaid GNP implicit price deflator published
next prior to the date of such increase, compared to the GNP implicit
price deflator published next prior to the enactment of this chapter.
In subsequent odd-numbered years in which an increase, if any, to cannabis
tax rates is required to be made as prescribed herein, such increase, if
any, shall be the percentage of increase or decrease in the GNP implicit
price deflator published next prior to the most recent increase in such
cannabis tax rates.
3. For purposes of this section, the term “GNP implicit
price deflator” means the preliminary estimate of the implicit price
deflator, seasonally adjusted, for the gross national product, as computed
and published by the Department of Commerce. ]
[§5931. Imposition of Tax. The licensed processor shall
remit to the Secretary [on a quarterly basis] [90%] of gross receipts
from the sale of cannabis. For purposes of this provision, gross receipts
shall include all consideration therefor, whether received by the processor
or not.]
§5932. Liability, determination and method
of payments.
(a) Liability
for tax. The holder of a processing license shall be liable for the taxes
imposed thereon by §5931.
(b) Determination
and method of payment. The taxes imposed by §5931 shall be determined
at the time of removal of the cannabis from the processor s premises.
Such taxes shall be paid on the basis of a return. The secretary shall,
by regulation, prescribe the period or event for which such return shall
be made, the information to be furnished, the time for making the return,
and the time for payment of such taxes. Any postponement under this subsection
of the payment of taxes determined at the time of removal may be conditioned
upon the filing of such additional bonds, and upon compliance with such
requirements, as the secretary may require. All administrative and penal
provisions of this title, insofar as applicable, shall apply to any tax
imposed by §5931.
(c) Use of government depositaries. The secretary
may authorize Federal Reserve banks, and incorporated banks or trust
companies which are depositaries or financial agents of the United States,
to receive any tax imposed by this chapter, in such manner, at such times,
and under such conditions as he may prescribe; and he shall prescribe
the manner, time, and condition under which the receipt of such tax by
such banks and trust companies is to be treated as payment for tax purposes.
(d) Assessment.
Whenever any tax required to be paid by this chapter is not paid in
full at the tine required for such payment, it shall be the duty of the
secretary, subject to the limitations prescribed in this chapter, on proof
satisfactory to him, to determine the amount of tax to be paid which has
been omitted, and to make an assessment therefor against the person liable
for the tax. The tax so assessed shall be in addition to the penalties imposed
by law for failure to pay such tax when required. Except in cases where delay
may jeopardize collection of the tax, or where the amount is nominal or
the result of an evident mathematical error, no such assessment shall be
made until and after the person liable for the tax has been afforded reasonable
notice and opportunity to show cause, in writing,
against such assessment.
§5933. Exemption from taxation.
(a) Cannabis
for research purposes. The Secretary, upon proof by accredited scientific
authorities or agencies that they are about to engage in or are engaging
in research which requires the use of cannabis, may authorize the removal
of cannabis from a processor’ s premises without tax stamps affixed
and without the payment of tax, provided, however, that such cannabis
packages shall be packaged and plainly marked, “For Research Purposes
Only” and bear such other label as the secretary shall by regulation prescribe.
(b) Cannabis
products released in bond from customs custody. Cannabis products,
imported or brought into the United States, may be released from customs
custody, without the payment of a tax, for delivery to a processor
duly licensed to import cannabis, in accordance with such rules and
regulations and under such bond as the secretary shall prescribe.
(c) Processors
of cannabis stalks or hemp shall be exempt from taxation under the
terms of this chapter.
(d) Losses.
1. No tax shall be collected in respect of any cannabis lost or
destroyed while in bond, except that tax shall be collected
a. in the case of loss by theft, if the secretary shall find that the
theft occurred with connivance, collusion, fraud or negligence on the
part of the person responsible for the tax, or the owner, consignor, consignee,
bailee, or carrier, or the agents or employees of such person; and
b. in the case of voluntary destruction, unless the cannabis was destroyed
under government supervision, or on such adequate notice to, and approval
by, the secretary as regulations shall provide.
2. In any case in which the cannabis is lost or destroyed, whether
by theft or otherwise, the secretary may require, by regulation, the
processor 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 on the
processor or other person liable for the tax to establish to the satisfaction
of the secretary, that such loss did not occur as the result of connivance,
collusion, fraud, or negligence on his/her part or by the consignor, consignee,
bailee, or carrier, or the agents or employees of such person.
(e) Packages of cannabis manufactured, imported, or packaged
(1) for export from the United States or (2) for delivery to a vessel
or aircraft, as supplies, for consumption beyond the jurisdiction of
the Internal Revenue laws of the United States shall be exempt from the
requirements of this chapter, but such exemptions shall not apply to cannabis
manufactured, imported, or packaged for sale or distribution to members
or units of the Armed Forces of the United States.
§5934. Credit, refund or allowance of tax.
(a) Credit or refund. Credit
or refund of any tax imposed by this chapter shall be allowed or made
[without interest] to the processor or trade licensee on proof satisfactory
to the secretary that the claimant processor or trade licensee has
paid the tax on cannabis withdrawn by him or lost by fire, casualty,
or act of God, while in the possession or ownership of the claimant.
(b) Allowance. If the tax has not yet been paid on the cannabis
products proved to have been withdrawn from the market or lost or destroyed
as aforesaid, relief from the tax on such articles may be extended upon
the filing of a claim for allowance therefor in accordance with such
regulations as the secretary shall prescribe.
(c) Limitation.
Any claim for credit or refund under this section shall be filed within
six months after the date of the withdrawal from the market, loss, or
destruction of the articles to which the claim relates, and shall be
in such form and contain such information as the secretary shall by regulation
prescribe.
§5935. Losses caused by a disaster.
(a) Authorization.
Where the President has determined under the Disaster Relief Act of
1974, that a “major disaster” as defined in such Act has occurred in
any part of the United States, the secretary shall pay [without interest]
an amount equal to the amount of the Internal Revenue taxes paid or determined
and customs duties paid on cannabis products removed, which were lost,
rendered unmarketable, or condemned by a duly authorized official by reason
of such disaster occurring in such part of the United States on and after
the effective date of this section, if such cannabis products were held
and intended for sale at the time of such disaster. The payments authorized
by this section shall be made to the person holding such cannabis at the
time of the disaster.
(c) Claims.
No claims shall be allowed under this section unless
1. Filed within six months after the date on which the President makes
the determination that the disaster referred to in subsection (a) has
occurred; and
2. The claimant furnishes proof to the satisfaction of the secretary
that
a. he was not indemnified by any valid claim of insurance or otherwise
in respect of the tax, or tax and duty, on the cannabis products covered
by the claim, and
b. he is entitled to payment under this section. Claims under
this section shall be filed under such regulations as the secretary shall
prescribe.
(c) Destruction of cannabis products. Before the secretary makes
payments under this section in respect of the tax, or tax and duty,
on the cannabis products condemned by a duly authorized official or rendered
unmarketable, such cannabis products shall be destroyed under such supervision
as the secretary may prescribe, unless such cannabis products are previously
destroyed under supervision satisfactory to the secretary.
(d) Other laws applicable. All provisions of law, including
penalties, applicable in respect of Internal Revenue taxes on cannabis
products shall insofar as applicable and not inconsistent with this
section, be applied in respect of the payments provided for in this section
to the sane extent as if such payments constituted refunds of such taxes.
[§5936 Disposition of Revenue. All monies received by the
secretary under this chapter, whether by cannabis taxes, license or
application fees, or other such fees as the secretary shall by regulation
prescribe and collect, shall be distributed as follows:
a. [ ]% to the general fund of the United States treasury;
b. [ ]% to such States as shall have elected to permit commerce
in cannabis consistent with this chapter in such proportion as
[the population of each state (as determined by the last decennial
census) shall bear to the total population (as determined by the
last decennial census) of all states allowing commerce in cannabis.]
[the revenue derived from
each respective state bears to the total revenue derived under this
chapter, including fees and taxes.]
c. Such revenues shall be distributed
to the several states entitled under this section 90 days following the
end of the fiscal year.
d. Provided, however, that no state shall
be eligible for revenue unless it permits commerce in cannabis and enacts
and enforces appropriate provisions of law to
1. Regulate availability of cannabis to minors.
2. Prohibit the operation of motor vehicles under the influence
of cannabis, based on quantitative standards for actual levels of impairment.
3. Secure to adults the privilege to possess and cultivate cannabis
for personal use as defined in §5921 of this chapter.
e. No state shall be eligible for revenue sharing hereunder which
enacts laws imposing further restrictions on advertising, labeling or
personal use as defined in this chapter.]
§5936. Disposition of revenue. All monies received by the
secretary under this chapter, whether by cannabis taxes, license or
application fees, or other such fees as the secretary shall by regulation
prescribe and collect, shall be deposited to the general fund of the United
States treasury.
SUBCHAPTER E – ADVERTISING
§5941. Advertising.. No person shall, directly or indirectly,
personally or through any agent or employee, whether for consideration
or gratuitously cause to be published in a newspaper or magazine distributed
anywhere in the United States or to be broadcast or cablecast to a radio
or television receiver in the United States, or to appear in any display
signs or personal solicitation, or any manner of advertising, any advertisement
of notice to promote or encourage the consumption or use in any way of
cannabis or any cannabis product. The preceding prohibition shall
not apply to the following:
(a) Cannabis packages, crates, cartons and
boxes of cannabis products, provided, however, that no such items shall
be used for any display, ornament or fixture on the licensed premises.
(b) Logos contained in private correspondence or trade
publications not intended for public distribution.
(c) A single notice reading “[Authorized Cannabis Outlet] ,” in
a style prescribed by the secretary.
§5941 Advertising. It shall be unlawful for
any person engaged in business as a cultivator, processor, distributor,
researcher or retailer of cannabis, or any agent, servant, or employee
of such person, to publish or disseminate or cause to be published or
disseminated by radio or television broadcast or cablecast, or in any
newspaper, periodical or printed or graphic matter, any advertisement of
cannabis or any cannabis products, if such advertisement is in, or is
calculated to induce sales in, interstate or foreign commerce, or is disseminated
by mail, unless such advertisement is in conformity with such regulations
to be prescribed by the secretary
(a) As will prevent deception of the consumer with respect to the products
advertised and as will prohibit, irrespective of falsity, such statements
relating to age, origin, cultivation, processes, analyses, guarantees
and scientific or irrelevant matters as the secretary finds to be likely
to mislead the consumer:
(b) As will provide the consumer with adequate information as to the
identity and quality of the products advertised, the potency thereof,
and the person responsible for the advertisement;
(c) As will prohibit statements that are disparaging of a competitor’
s products or are false, misleading, obscene or indecent; and
(d) As will prevent statements inconsistent with any statement on the
labeling of the products advertised.
(e) The prohibitions of this subsection and regulations thereunder
shall not apply to the publisher of any newspaper, periodical or other
publication, or radio or television broadcaster or cablecaster, unless
such publisher or radio or television broadcaster or cablecaster is engaged
in business as a cultivator, processor, distributor or retailer, or as
an importer or wholesaler of cannabis.
SUBCHAPTER F - GENERAL PROVISIONS
§5951. Application to states and territories.
(a) State law not contravened. Nothing in this
act shall be construed as authorizing the possession, commercial distribution
or possession of cannabis with intent to distribute commercially, in any
state or territory in contravention of the laws of such state or territory.
(b) All cannabis transported into any State
or Territory or the District of Columbia, and remaining therein for use,
consumption, sale or storage therein, shall, upon the arrival within the
limits of such State or Territory or the District of Columbia, be subject
to the operation and effect of the laws of such State or Territory
or the District of Columbia, enacted in the exercise of its police powers
to the same extent and in the same manner as though such cannabis had been
produced in such State or Territory or the District of Columbia, and shall
not be exempt therefrom by reason of being introduced therein in original
packages or otherwise.
§5952. Separability If any provision of this chapter
is declared unconstitutional, or the applicability thereof to any person
or circumstances is held invalid, the constitutionality of the remainder
of the chapter and the applicability thereof to other persons and circumstances
shall not be affected thereby.
§5953. Unfair competition and unlawful practices. It shall
be unlawful for any person engaged as a cultivator, processor, distributor,
researcher or retailer of cannabis, directly or indirectly or through
an affiliate to require, by agreement or otherwise, that any retailer
engaged in the sale of cannabis purchase any such cannabis from such person
to the exclusion in whole or in part of cannabis sold or offered for sale
by other persons in interstate or foreign commerce, if such requirement
is made in the course of interstate or foreign commerce, or if such person
engages in such practice to such extent as substantially to restrain or
prevent transactions in interstate or foreign commerce in any such products,
or if the direct effect of such requirement is to prevent, deter, hinder,
or restrict other persons from selling or offering for sale any such products
to such retailer in interstate or foreign commerce;
(1) by acquiring or holding (after expiration
of any existing license) any interest in any license with respect to
the premises of the retailer;
(2) by acquiring any interest in real or personal property owned, occupied
or used by the retailer in the conduct of his business;
(3) by furnishing, giving, renting, lending or selling to
the retailer, any equipment, fixtures, signs, supplies, money, services
or other thing of value, subject to such exceptions as the secretary shall
by regulation prescribe, having due regard for public health, the quantity
and value of articles involved, established trade customs not contrary
to the public interest and the purposes of this subsection;
(4) by paying or crediting the retailer for any advertising,
display or distribution service;
(5) by guaranteeing any loan or the repayment of any financial
obligation of the retailer;
(6) by extending to the retailer credit for a period in
excess of the credit period usual and customary to the industry for the
particular class of transact ions, as ascertained and prescribed by
the secretary; or
(7) by requiring the retailer to take and dispose of a certain
quota of any of such products.
SUBCHAPTER G - ENFORCEMENT
§596l. All premises and activities conducted under
license issued pursuant to this chapter shall be subject to inspection
during reasonable hours. Cultivating, processing and storage of cannabis
in violation of this chapter shall be subject to search and seizure in
accordance with the Fourth Amendment to the Constitution and the Federal
Rules of Criminal Procedure.
§5962. Criminal penalties.
(a) Whoever,
1. engages in business as a cultivator, processor, distributor,
researcher, importer, or retailer of cannabis without having a current
license issued in accordance with this chapter; or
2. with intent to defraud the United States shall purchase, receive,
possess, offer for sale or sell or otherwise dispose of, after removal,
any cannabis upon which the tax has not been determined in the manner
and at the time prescribed by this chapter or regulations thereunder;
or
4. with intent to defraud the United States
shall purchase, receive, possess, offer for sale or sell or otherwise
dispose of, after removal, any cannabis which is not put up in packages
as required under §5924 or which are put up in packages not bearing
the marks, labels and notices, as required under this section;
shall, for each such offense, be fined not more than [$_____],
or imprisoned not more than [ ___ mo./yrs.] or both.
(b) Whoever shall possess a quantity of cannabis
upon which no tax has been paid, not for personal use as defined in §5921
of this chapter shall be fined not more than [$____], or imprisoned
not more than [ __ mo./yrs.] or both.
(c) Whoever shall, with intent to defraud the United States,
destroy, obliterate, or deface any mark, label or notice prescribed or
authorized by this chapter or regulations thereunder, to appear on, or
be affixed to, any package of cannabis before such package is emptied,
shall be fined not more than [$____], or imprisoned not more than [___
mo./yrs.] or both.
§5963. Civil penalties.
(a) Whoever
willfully omits, neglects or refuses to comply with any duty imposed
upon him 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 penalty of [$1,000], to be recovered, with costs of suit, in a civil
action, except where a penalty under subsection (b) may be collected from
such person by assessment.
(b) 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 [5] percent of the tax due but
unpaid.
§5964. Detention of containers. It shall be lawful for
an internal revenue officer to detain any package or other container
containing or supposed to contain cannabis when he has reason to believe
that the tax imposed by law on such cannabis has not been paid or determined
as required by law, or that such package or container is being removed
in violation of law; and every such container may be held by him at a safe
place until it shall be determined whether the property so detained is liable
by law to be proceeded against for forfeiture; but such summary detention
shall not continue in any case longer than 72 hours without process of law
or intervention of the officer to whom such detention is to be reported.
§5965. Disposition and release of seized property.
(a) Forfeiture.
1. All cannabis forfeited, summarily or by order of court, under any
law of the United States, shall be delivered to the administrator of General
Services to be disposed of as hereinafter provided.
2. The administrator of General Services shall dispose of all cannabis
that has been delivered to him pursuant to paragraph (1)
a. by delivery to such government agencies as have a need for such cannabis
for medicinal or scientific purposes, or for any other official purpose
for which appropriated funds may be expended by a government agency;
or
b. by gifts to such eleemosynary institutions as, in his opinion, have
a need for such cannabis for medicinal or other lawful purposes; or
c. by destruction.
3. Except as otherwise provided by law, no cannabis which has
been seized under any law of the United States may be disposed of in any
manner whatsoever except after forfeiture and as provided in this subsection.
4. The Administrator of General Services is authorized to make all rules
and regulations necessary to carry out the provision of this subsection.
5. Nothing in this section shall affect the authority of the Secretary,
under the customs or internal revenue laws, to remit or mitigate the
forfeiture, or alleged forfeiture, of cannabis, or to compromise any
civil or criminal case in respect of such cannabis prior to commencement
of suit thereon, or to compromise any claim under the customs laws in
respect to such cannabis.
(b) All cannabis
sold by order of court, or under process of distraint, shall be sold
subject to tax; and the purchaser shall immediately, and before he takes
possession of said cannabis, pay the tax thereon, pursuant to the applicable
provisions of this chapter and in accordance with regulations to be
prescribed by the secretary.
(c) Release
of seized vessels or vehicles by courts. Notwithstanding any provisions
of law relating to the return on bond of any vessel or vehicle seized
for the violation of any law of the United States, the court having jurisdiction
of the subject matter may, in its discretion and upon good cause shown
by the United States, refuse to order such return of any such vessel
or vehicle to the claimant thereof. As used in this subsection, the word
“vessel” includes every description of watercraft used, or capable of being
used, as a means of transportation in water or in water and air; and the
word “vehicle” includes every animal and description of carriage or other
contrivance used, or capable of being used, as a means of transportation
on land or through air.
§5966. Forfeiture of cannabis not stamped,
marked or branded as required by law.
(a) Unmarked or unbranded packages. All cannabis
found in any container or package required by this chapter or any regulation
issued pursuant thereto to bear a mark, brand or identification, which
container or package is not marked, branded or identified in compliance
with this chapter and regulations issued pursuant thereto, shall be forfeited
to the United States.
(b) Unstamped packages or containers. All
cannabis found in any container required by this chapter or any regulations
issued pursuant thereto to bear a stamp, which container is not stamped
in compliance with this chapter and regulations issued pursuant thereto,
shall be forfeited to the United States.
§5967. Burden of proof in cases of seizure of cannabis.
Whenever seizure is made of any cannabis found elsewhere than on the
premises of a cannabis processing plant, or than in any warehouse authorized
by law, or than in the store or place of business of a wholesale cannabis
dealer, or than in transit from any one of said places; or if any cannabis
found in any ore of the places aforesaid, or in transit therefrom, which
have not been received into or sent out therefrom in conformity to law,
or in regard to which any of the entries required by law or regulations
issued pursuant thereto, to be made in respect of such cannabis, have not
been made at the time or in the manner required, or in respect to which
any owner or person having possession, control or charge of said cannabis,
has omitted t do any act required to be done, or has done or committed any
act prohibited in regard to said cannabis, the burden of proof shall be
upon the claimant of said cannabis to show that no fraud has been committed,
and that all the requirements of the law in relation to the payment of
the tax have been complied with.
§5968. Penalty for having, possessing or using cannabis
or property intended to be used in violating provisions of this chapter.
It shall be unlawful to have or possess any cannabis or property intended
for use in violating any provision of this chapter or regulations issued
pursuant thereto, or which has been so used, and every person so having
or possessing or using such cannabis or property, shall be fined not
more than [$5,000], or imprisoned not more than [1] year or both.
SUBCHAPTER G – OTHER
§5969. Reports and Studies.
(a) The Secretary shall report to the Congress
any matters which require immediate changes in this chapter in order
to prevent abuses and evasions of this chapter in order to prevent abuses
and evasions of this chapter or the rules and regulations promulgated
thereunder or to rectify undesirable conditions with the administration
of this chapter.
(b) For the five years next following the
enactment of this chapter, the Secretary shall carry on a continuous
study and investigation of cannabis commerce in order (1) to ascertain
any defects in this chapter or in the administration thereof or any
evasion of said law or said rules and regulations as may arise or be
practiced, and (2) to formulate recommendations for changes in said
law and the rules and regulations promulgated thereunder to prevent
such abuses and evasions, arid (3) to guard against the use of said law
and regulations issued thereunder as a cover for the carrying on of criminal
activities. Such study and investigation shall thereafter be conducted
every five years.
§5970. Treaty and Convention Termination. It is the judgment
of the Congress that articles in treaties and conventions entered into
by the United States, in so far as they provide far the prohibition
of the cultivation, sale, use and importation of cannabis, and any other
treaty provision in conflict with the provisions of this Act be denounced
and terminated, and to this end the President be, and hereby is requested
and directed, to give notice to the several governments, the United Nations
and other appropriate international bodies, that all such treaties and conventions
will terminate and cease to be of force on the expiration of such periods
following notice of denunciation or abrogation provided for in such treaties
and conventions.
§5971. Amendments to Title 18, United States Code.
(a) Section 842(d) of Title 18, United States
Code is amended by striking out in paragraph (5), “marihuana (as defined
in §4761 of the Internal Revenue Code of 1954) or.”
(b) Section 842(i) of Title 18, United States
Code is amended by striking out in paragraph (3) “marihuana (as defined
in §4761 of the Internal Revenue Code of 1954) or.”
(c) Section 992(d) of Title 18, United States
Code, is amended by striking out in paragraph (3) “marihuana or.”
(d) Sections 992(g) and (h), United States
Code, are amended by striking out in paragraph (3) of each subsection
‘marihuana or.”
(e) Section 2516 of Title 18, United States
Code, is attended in
paragraph (1)
(e) by striking out “marihuana.”
§5972. Amendments to Title 19, United States Code. Section
1584(a) of Title 19, United States Code, is amended in paragraph (2)
in the second sentence by striking out “or marihuana,” wherever it appears;
and in the last sentence of such paragraph by striking out “and marihuana,”
and striking out “those terms by sections 102(17);” and by striking
out “terms” where it first appears and inserting “term’ in lieu thereof.
§5973. Amendments to Title 21, United States Code
(a) Section 102 of the Controlled Substances
Act (21 U. S.C. 802) is amended by deleting paragraph (15) and redesignating
all succeeding paragraphs.
(c) Section 202 of the Controlled Substances
Act (21 U.S.C. 812) is amended by striking out in Schedule 1(c) (10)
“Marihuana,” and redesignating succeeding paragraphs.
(c) Section 401 of the Controlled Substances Act (21 U.S.C.
841) is amended by
1. In subsection (b) (1) (A) striking out
“marihuana.”
2. In subsection (b)(1)(B) striking out “marihuana.”
3. Striking out subsection (b) (4).
4. In Subsection (b) (5) striking out
“marihuana.”
5. Striking out subsection (b) (6).
6. Redesignating subsection (b) (5)
as subsection (b) (4).
§5974. Amendments to Title 22, United States Code. Section
502(a)(l), (b) of the Act of Decmter 29, 1981,
P.L. 97-113 (22 U.S.C. S2291(d)) is repealed.
§5975. Amendments to Title 49, United States Code. Section
787 of Title 49, United States Code (amended by Section
1102(r) of the Comprehensive Drug Abuse, Treatment and Prevention Act
of 1970 (P.L. 19-513) is amended in subsection (d) by sulking out “and
shall also include marihuana as defined by section 103(15) of such Act.”
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