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Senators Could Vote On These Marijuana Tax Amendments This Week

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U.S. senators are expected to consider two far-reaching marijuana amendments to a broad Republican-led tax bill being debated on the floor this week. Both measures are sponsored by GOP Sen. Cory Gardner of Colorado, and they concern the ability state-legal cannabis businesses to take tax deductions that are available to operators in other industries.

Under current federal law, a 1980s provision — known as 280E — effectively forces cannabis businesses to pay a much higher tax rate than other companies.

The statute was originally intended to to stop drug cartel leaders from writing off yachts and expensive cars, but today its language means that that growers, processors and sellers of marijuana — which is still a Schedule I substance under federal law — can’t take business expense deductions that are available to operators in other sectors.

As a result, cannabis businesses often pay an effective tax rate upwards of 65-75 percent, compared with a normal rate of around 15-30 percent.

The full text of both of Gardner’s measures are included below.

See Marijuana Moment’s earlier report on Gardner’s cannabis tax advocacy for background and context.

Gardner’s first amendment provides a simple exemption to the provision known as 280E for marijuana businesses that are operating in accordance with state laws:

                                 ______
  SA 1609. Mr. GARDNER submitted an amendment intended to be proposed 
by him to the bill H.R. 1, to provide for reconciliation pursuant to 
titles II and V of the concurrent resolution on the budget for fiscal 
year 2018; which was ordered to lie on the table; as follows:

       At the end of part IV of subtitle C of title I, add the 
     following:

     SEC. 13311. ALLOWANCE OF DEDUCTIONS AND CREDITS RELATING TO 
                   EXPENDITURES IN CONNECTION WITH MARIJUANA SALES 
                   CONDUCTED IN COMPLIANCE WITH STATE LAW.

       (a) In General.--Section 280E is amended by inserting 
     before the period at the end the following: ``, unless such 
     trade or business consists of marijuana sales conducted in 
     compliance with State law''.
       (b) Effective Date.--The amendment made by this section 
     shall apply with respect to taxable years ending after the 
     date of the enactment of this Act.
                                 ______

Gardner’s second amendment is more complicated. It also provides the 280E fix for state-legal cannabis businesses, but requires that they meet a certain definition of “properly regulated” in order to qualify for the exemption:

                                 ______
 SA 1639. Mr. GARDNER submitted an amendment intended to be proposed 
to amendment SA 1618 proposed by Mr. McConnell (for Mr. Hatch (for 
himself and Ms. Murkowski)) to the bill H.R. 1, to provide for 
reconciliation pursuant to titles II and V of the concurrent resolution 
on the budget for fiscal year 2018; which was ordered to lie on the 
table; as follows:

       At the appropriate place, insert the following:

     SEC. __. EXCEPTION FOR EXPENDITURES IN CONNECTION WITH 
                   CERTAIN CANNABIS RELATED TRADES OR BUSINESSES.

       (a) In General.--Section 280E of the Internal Revenue Code 
     of 1986 is amended--
       (1) by striking ``drugs'' and all that follows through ``No 
     deduction'' and inserting ``drugs

       ``(a) General Rule.--Except as provided in subsection (b), 
     no deduction''; and
       (2) by adding at the end the following:

       ``(b) Exception for Certain Cannabis Related Trades or 
     Businesses.--
       ``(1) Exclusion from trafficking.--Those activities 
     undertaken in connection with a qualified cannabis trade or 
     business shall not be considered trafficking in controlled 
     substances for purposes of subsection (a).
       ``(2) Definitions.--For purposes of this subsection:
       ``(A) Cannabis related trade or business.--The term 
     `cannabis related trade or business' means a trade or 
     business that earns cannabis related income.
       ``(B) Cannabis related income.--The term `cannabis related 
     income' means any income earned from the manufacture, 
     production, cultivation, processing, refinement, 
     transportation and delivery, distribution, testing, use, 
     sale, or exchange of cannabis or cannabis-derived materials.
       ``(C) Qualified cannabis related trade or business.--The 
     term `qualified cannabis related trade or business' means a 
     cannabis related trade or business that meets the following 
     requirements:
       ``(i) The activities giving rise to the cannabis related 
     income of the trade or business are properly regulated under 
     the laws of the State in which they are conducted.
       ``(ii) No cannabis or cannabis-derived materials owned by 
     the trade or business are sold, exchanged, provided free of 
     charge, gifted, donated, sampled, embedded in the sale of 
     another item, embedded within the provision of a service, or 
     otherwise transferred in a manner that does not give rise to 
     cannabis related income.
       ``(iii) None of the activities of the trade or business are 
     trafficking in controlled substances other than cannabis or 
     cannabis-derived materials regulated under State law.
       ``(iv) To the extent that the cannabis related trade or 
     business was in existence prior to the date of enactment of 
     this subsection, the person who held or controlled a license 
     described in paragraph (3)(A) in taxable years ending before 
     such date of enactment has not had a cannabis license revoked 
     by State licensing authorities.
       ``(3) Properly regulated.--The term `properly regulated' 
     means, with respect to a qualified cannabis related trade or 
     business, the following:
       ``(A) Persons engaged in the activities giving rise to the 
     cannabis related gross receipts are licensed by the State in 
     which they conduct such activities and such license is 
     subject to periodic renewal.
       ``(B) State licensing rules impose limitations on the 
     production and distribution of cannabis and items derived 
     from cannabis.
       ``(C) State licensing rules restrict the distribution of 
     cannabis and items derived from cannabis to minors, 
     including--
       ``(i) a minimum age on legal purchases of 18; and
       ``(ii) restrictions on advertising, marketing ,and 
     promotional activities that are at least as stringent as 
     those imposed on alcohol products in the State.
       ``(D) Sufficient books and records are employed by the 
     cannabis related trade or business--
       ``(i) to enable the seed to sale identification of all the 
     cannabis or cannabis derived materials owned or used in 
     connection with the manufacturing, production, growth, 
     processing, refinement, distribution, testing, use, sale, or 
     exchange activities of the cannabis related trade or 
     business; and
       ``(ii) to enable the association of the income of the 
     cannabis trade or business with the cannabis or cannabis 
     derived materials identified in accordance with clause (i).
       ``(E) Personal use exemptions to the State licensing 
     requirements, if any, contain limitations similar to those 
     contained in section 5053(e), applied--
       ``(i) by limiting the definition of any permissible 
     transfer to another person, whether by sale, exchange, gift, 
     sharing, concurrent use, or otherwise, to transfers between 
     the persons who constitute family members within the meaning 
     of section 267(c)(4) and who are not minors; and
       ``(ii) by substituting 8 plants for 200 gallons in each 
     place it appears for applying a household limitation 
     involving more than 1 adult and 4 plants for 100 gallons in 
     each place it appears for applying a household limitation 
     involving only 1 adult.
       ``(F) State licensing rules limit caregiver, agency, 
     designation arrangements, cooperative agreements, or any 
     other arrangement involving cannabis or cannabis derived 
     materials purporting not to involve a trade or business to 8 
     plants per patient or person per calendar year.
       ``(4) Application to persons engaged in more than one trade 
     or business.--The activities of all persons who are related 
     parties within the meaning of section 52 shall be taken into 
     account in applying this subsection.''.

       (b) Effective Date.--The amendments made by this section 
     shall apply with respect to taxable years ending after the 
     date of the enactment of this Act.
                                 ______

One or both of the Gardner amendments are expected to be considered as part of a so-called “vote-a-rama” on the Senate floor late Thursday or on Friday.

Marijuana Moment is made possible with support from readers. If you rely on our cannabis advocacy journalism to stay informed, please consider a monthly Patreon pledge.

Tom Angell is the editor of Marijuana Moment. A 15-year veteran in the cannabis law reform movement, he covers the policy and politics of marijuana. Separately, he founded the nonprofit Marijuana Majority. Previously he reported for Marijuana.com and MassRoots, and handled media relations and campaigns for Law Enforcement Against Prohibition and Students for Sensible Drug Policy. (Organization citations are for identification only and do not constitute an endorsement or partnership.)

Culture

Lots Of Politicians And Companies Are Tweeting About Marijuana On 4/20

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It’s 4/20 again, and that means another slew of tweets from politicians and mainstream brands looking to use the marijuana holiday as a hook to get their message out.

Here’s a roundup of some of the best, funniest, most important or otherwise notable cannabis-related tweets of the day…

Sen. Cory Booker (D-NJ), a presidential candidate:

Sen. Bernie Sanders (I-VT), a presidential candidate:

Sen. Kamala Harris (D-CA), a presidential candidate:

Sen. Kirsten Gillibrand (D-NY), a presidential candidate:

Rep. Tulsi Gabbard (D-HI), a presidential candidate:

Rep. Eric Swalwell (D-CA), a presidential candidate:

Former Rep. Beto O’Rourke (D-TX), a presidential candidate:

Former Sen. Mike Gravel (D-AK), a presidential candidate:

Washington State Gov. Jay Inslee (D), a presidential candidate:

Former San Antonio, Texas Mayor Julián Castro (D), a presidential candidate:

Democratic presidential candidate Andrew Yang:

Senate Minority Leader Chuck Schumer (D-NY):

House Committee on Small Business:

Congressional Black Caucus:

Sen. Jacky Rosen (D-NV):

Rep. Earl Blumenauer (D-OR):

Rep. Ilhan Omar (D-MN):

Rep. Barbara Lee (D-CA):

Rep. Ro Khanna (D-CA):

Rep. Charlie Crist (D-FL):

Rep. Steve Cohen (D-TN):

Rep. Deb Haaland (D-NM):

Pennsylvania Lt. Gov. John Fetterman (D):

Los Angeles, California City Council President Herb Wesson (D):

Cook County, Illinois State’s Attorney Kim Foxx (D):

The American Civil Liberties Union:

Ben & Jerry’s:

Denny’s:

Hidden Valley Ranch:

Carl’s Jr.:

Boston Market:

George Washington’s Mount Vernon:

Bill Maher:

Miley Cyrus:

311:

The Onion:

Ben & Jerry’s Stands Out From Companies Just Trying To Make Money From 4/20

Marijuana Moment is made possible with support from readers. If you rely on our cannabis advocacy journalism to stay informed, please consider a monthly Patreon pledge.
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State-Legal Marijuana Use Makes Immigrants Morally Unfit for Citizenship, Trump Administration Warns

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A federal immigration agency clarified on Friday that using marijuana or engaging in cannabis-related “activities” such as working for a dispensary—even in states where it’s legal—is an immoral offense that makes immigrants ineligible for citizenship.

When applying for naturalization, the process of gaining citizenship, individuals must have established “good moral character” in the five years preceding the application. Good moral character is a vague requirement that has been criticized by scholars and civil rights advocates, as assessing morality is arguably subjective.

According to the U.S. Citizenship and Immigration Services (USCIS), state-legal marijuana consumption renders individuals morally unfit for citizenship. The new policy clarification reflects a sentiment once expressed by former Attorney General Jeff Sessions, who said that “good people don’t smoke marijuana.”

The USCIS memo says that “violation of federal controlled substance law, including for marijuana, established by a conviction or admission, is generally a bar to establishing [good moral character] for naturalization even where the conduct would not be a violation of state law.”

Further, an applicant “who is involved in certain marijuana related activities may lack GMC if found to have violated federal law, even if such activity is not unlawful under applicable state or foreign laws,” the document says. The policy also applies to individuals who worked in the state-legal cannabis industry.

There have already been reports of people being denied citizenship due to their proximity to state-legal marijuana businesses. Earlier this month, Denver Mayor Michael Hancock hosted a group of immigrants who said their work in the state’s cannabis industry was being used as justification by federal officials to deny them citizenship.

“In Colorado, cannabis has been legal for 5 years. For work in a legal industry to be used against an individual trying to gain citizenship is a prime example of why we need to harmonize our state and federal laws to ensure that states like Colorado that have moved to legalize cannabis can act in our own authority to expand and regulate our cannabis industry,” Rep. Joe Neguse (D-CO), told Marijuana Moment in reaction to the Trump administration memo.

Legalization activists also criticized the move.

“The cruel treatment of immigrants for offenses related to something as minor as marijuana is illustrative of the way this administration has used the war on drugs to pursue communities of color,” Michael Collins, director of national affairs at the Drug Policy Alliance, told Marijuana Moment. “It also shows that pursuing a state by state approach to federal policy doesn’t work for these communities. Federal descheduling is essential.”

While the federal policy deeming marijuana use a violation of “good moral character” standards for immigration purposes was already on the books, it seems the spread of state-level cannabis legalization has prompted the agency, which is part of the Department of Homeland Security, to issue the clarification.

“A number of states and the District of Columbia (D.C.) have enacted laws permitting ‘medical’ or ‘recreational’ use of marijuana. Marijuana, however, remains classified as a ‘Schedule I’ controlled substance under the federal CSA,” the updated USCIS policy manual now reads. “Schedule I substances have no accepted medical use pursuant to the CSA. Classification of marijuana as a Schedule I controlled substance under federal law means that certain conduct involving marijuana, which is in violation of the CSA, continues to constitute a conditional bar to GMC for naturalization eligibility, even where such activity is not a criminal offense under state law.”

“Such an offense under federal law may include, but is not limited to, possession, manufacture or production, or distribution or dispensing of marijuana. For example, possession of marijuana for recreational or medical purposes or employment in the marijuana industry may constitute conduct that violates federal controlled substance laws. Depending on the specific facts of the case, these activities, whether established by a conviction or an admission by the applicant, may preclude a finding of GMC for the applicant during the statutory period. An admission must meet the long held requirements for a valid ‘admission’ of an offense. Note that even if an applicant does not have a conviction or make a valid admission to a marijuana-related offense, he or she may be unable to meet the burden of proof to show that he or she has not committed such an offense.”

The underlying policy does provide an exception for “a single offense of simple possession of 30 grams or less of marijuana.”

An additional update to the policy manual stipulates that the exception “is also applicable to paraphernalia offenses involving controlled substances as long as the paraphernalia offense is ‘related to’ simple possession of 30 grams or less of marijuana.”

That detail wasn’t included in an earlier 2014 version of the USCIS policy manual.

The policy alert is similar to an update the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) issued in 2017 when the federal gun purchase application form was revised to include a warning that the “use or possession of marijuana remains unlawful under Federal law regardless of whether it has been legalized or decriminalized for medicinal or recreational purposes in the state where you reside” and therefore disqualifies applicants.

But the USCIS clarification also reflects a recent ratcheting up of anti-immigration policy moves under the Trump administration.

Jason Ortiz, vice president of the Minority Cannabis Business Association, told Marijuana Moment that the new memo reflects a “callous and irrational decision” by the administration and “is a reminder that without comprehensive cannabis reform our communities of color will continue to be prosecuted and subject to deportation for activity that is legal for affluent communities around the country.”

“Proposals such as the STATES act which seek to simply ease the risk on business do not address these deeper issues related to federal prohibition,” he said. “Considering the devastating effects our war on drugs had on Latin America, immigration reform must be a necessary component of any comprehensive cannabis legalization policy.”

People Could Use Marijuana In Public Housing Under New Congressional Bill

This story has been updated to include comment from Neguse.

Marijuana Moment is made possible with support from readers. If you rely on our cannabis advocacy journalism to stay informed, please consider a monthly Patreon pledge.
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USDA Clarifies That Farmers Can Import Hemp Seeds From Other Countries

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The U.S. Department of Agriculture (USDA) clarified on Friday that hemp seeds can be imported into the U.S., and that the Justice Department no longer has a role in that process.

While USDA is still developing regulations for hemp cultivation under the 2018 Farm Bill, which federally legalized the crop and its derivatives, farmers can still obtain seeds in the meantime.

The agriculture legislation “removed hemp and hemp seeds from DEA authority for products containing THC levels not greater than 0.3 percent” and “DEA no longer has authority to require hemp seed permits for import purposes.”

“U.S. producers and hemp seed exporters have requested assistance from USDA to provide an avenue for hemp seed exports to the United States,” the department wrote in a bulletin. “The U.S. Department of Agriculture regulates the importation of all seeds for planting to ensure safe agricultural trade. Under this authority, USDA is providing an alternative way for the safe importation of hemp seeds into the United States.”

Sen. Jon Tester (D-MT) is among those who’ve requested assistance related to hemp importations. Earlier this month, he told Agriculture Secretary Sonny Perdue that the DEA was blocking Montana farmers from importing hemp seeds.

Perdue said during the hearing that the matter was “news to me” and explained that farmers can import and cultivate hemp under the research-focused provisions in the prior 2014 version of the legislation while the USDA worked to enact new regulations.

In a letter sent to the acting administrator of Customs and Border Protect (CBP) on Tuesday, Tester and Sen. Patrick Leahy (D-VT) raised the concern again, imploring CBP to update its policy to reflect that hemp seeds can be lawfully imported. The letter was obtained by the industry advocacy group Vote Hemp.

The USDA bulletin specified how the process works for imports from Canada and other countries.

Importation of Hemp Seed from Canada

“Hemp seeds can be imported into the United States from Canada if accompanied by either: 1) a phytosanitary certification from Canada’s national plant protection organization to verify the origin of the seed and confirm that no plant pests are detected; or 2) a Federal Seed Analysis Certificate (SAC, PPQ Form 925) for hemp seeds grown in Canada.”

Importation of Hemp Seed from Countries other than Canada

“Hemp seeds may be imported into the United States from countries other than Canada if accompanied by a phytosanitary certificate from the exporting country’s national plant protection organization to verify the origin of the seed and confirm that no plant pests are detected.

Hemp seed shipments may be inspected upon arrival at the first port of entry by Customs and Border Protection (CBP) to ensure USDA regulations are met, including certification and freedom from plant pests.”

The rulemaking process for hemp may take some time, as Perdue said the department would not expedite the regulations and will be “taking this slow.” Once the USDA has a regulatory framework in place, it will begin approving state plans, and those states will be the primary regulators.

For the time being, however, there’s nothing stopping farmers from collecting certified hemp seeds. Not even the DEA.

Trump Agriculture Secretary Accepts Invitation To Tour Hemp Farms

Marijuana Moment is made possible with support from readers. If you rely on our cannabis advocacy journalism to stay informed, please consider a monthly Patreon pledge.
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