,i #aafth ,,congress #b;d ,session ,h4 ,r4 #haca ,,in ,,the ,,house ,,of ,,representatives ,august #bh1 #bjbj,mr4 ,riggleman introduced the following bill2 which was referred to the ,committee on ,ways and ,means1 and in addition to the ,committee on ,agriculture1 for a period to be subsequently determined by the ,speaker1 in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned ,a ,,bill ,to amend the ,internal ,revenue ,code of #aihf to establish ,hemp ,opportunity ,zones4 #a4 ,short title ,this ,act may be cited as the ,hemp ,opportunity ,zone ,act of #bjbj4 #b4 ,hemp ,opportunity ,zones 7a7 ,in general ,chapter #a of the ,internal ,revenue ,code of #aihf is amended by inserting after subchapter ,v the following new subchapter3 ,w ,hemp ,opportunity ,zones #adjj,w-#a4 ,designation 7a7 ,hemp ,opportunity ,zone defined ,for purposes of this subchapter1 the term hemp opportunity zone means a population census tract that is a low-income community that is designated as a hemp opportunity zone4 7b7 ,designation 7#a7 ,in general ,for purposes of subsection 7a71 a population census tract that is a low-income community is designated as a hemp opportunity zone if-- 7,a7 not later than the end of the determination period1 the chief executive office of the ,state in which the tract is located-- 7i7 nominates the tract for designation as a hemp opportunity zone1 and 7ii7 notifies the ,secretary in writing of such nomination1 and 7,b7 the ,secretary certifies such nomination and designates such tract as a hemp opportunity zone before the end of the consideration period4 7#b7 ,factors for consideration ,in nominating tracts 7and considering such nominations for certification7 preference shall be given to areas which-- 7,a7 are facing obstacles to economic development due to a lack of resources1 7,b7 are the focus of mutually reinforcing state1 local1 or private economic development initiatives1 7,c7 are poised for economic growth that requires access to a larger hemp market for commercial purposes1 and 7,d7 represent the areas of a ,state where such service would result in the highest return on investment4 7#c7 ,extension of periods ,a chief executive officer of a ,state may request that the ,secretary extend either the determination or consideration period1 or both 7determined without regard to this subparagraph71 for an additional #cj days4 7c7 ,other definitions ,for purposes of this subsection-- 7#a7 ,low-income communities ,the term low-income community has the same meaning as when used in section #de;,d7e74 7#b7 ,definition of periods 7,a7 ,consideration period ,the term consideration period means the #cj-;day period beginning on the date on which the ,secretary receives notice under subsection 7b77#a77;,a77ii71 as extended under subsection 7b77#c74 7,b7 ,determination period ,the term determination period means the #ij-;day period beginning on the date of the enactment of this section1 as extended under subsection 7b77#b74 7,c7 ,state ,for purposes of this section1 the term ,state includes any possession of the ,united ,states4 7d7 ,number of ,designations 7#a7 ,in general ,except as provided by paragraph 7#b71 the number of population census tracts in a ,state that may be designated as hemp opportunity zones under this section may not exceed #be percent of the number of low-income communities in the ,state4 7#b7 ,exception ,if the number of low-income communities in a ,state is less than #ajj1 then a total of #be of such tracts may be designated as qualified opportunity zones4 7e7 ,designation of tracts contiguous with low-,income communities 7#a7 ,in general ,a population census tract that is not a low-income community may be designated as a hemp opportunity zone under this section if-- 7,a7 the tract is contiguous with the low-income community that is designated as a hemp opportunity zone1 and 7,b7 the median family income of the tract does not exceed #abe percent of the median family income of the low-income community with which the tract is contiguous4 7#b7 ,limitation ,not more than #e percent of the population census tracts designated in a ,state as a hemp opportunity zone may be designated under paragraph 7#a74 7f7 ,period for ,which ,designation ,is in ,effect ,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 #ajth calendar year beginning on or after such date of designation4 #adjj,w-#b4 ,deferral for eligible taxpayer of capital gains invested in hemp opportunity zones 7a7 ,in general 7#a7 ,exclusion of gain invested in hemp opportunity zone property ,in the case of gain from the sale to1 or exchange with1 an unrelated person of any property held by the taxpayer1 at the election of the taxpayer-- 7,a7 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 #ahj-;day period beginning on the date of such sale or exchange1 and 7,b7 the amount of gain excluded by subparagraph 7,a7 shall be included in gross income as provided by paragraph 7#b74 7#b7 ,deferral of gain invested in qualified hemp opportunity zone property 7,a7 ,year of inclusion ,except as provided by subparagraph 7,c71 gain to which paragraph 7#a77;,b7 applies shall be included in income in the taxable year in which the qualified hemp opportunity zone property related to such gain is sold or exchanged in the amount determined under subparagraph 7,b74 7,b7 ,amount includible ,the amount of gain determined under this clause shall be-- 7i7 #ajj percent of such gain in the case of the sale or exchange of the qualified hemp opportunity zone property with respect to which gain is deferred under paragraph 7#a7 that is held for less than #e years1 7ii7 #ij percent of such gain in the case of the sale or exchange of the qualified hemp opportunity zone property with respect to which gain is deferred under paragraph 7#a7 that is held for at least #e years but less than #g years1 and 7iii7 #he percent of such gain in the case of the sale or exchange of the qualified hemp opportunity zone property with respect to which gain is deferred under paragraph 7#a7 that is held for at least #g years4 7#c7 ,exclusion of gain on qualified hemp opportunity zone property held for at least #aj years ,except as provided in paragraph 7#b71 in the case of the sale or exchange of qualified hemp opportunity zone property1 or an investment in a qualified opportunity fund1 held for at least #aj years1 gross income for the taxable year shall not include any gain from the sale or exchange of such property or investment4 7#d7 ,one election per property ,no election may be made under paragraph 7#a7 with respect to a sale or exchange if an election previously made with respect to such sale or exchange is in effect4 7b7 ,basis rules relating to qualified hemp opportunity zone property 7#a7 ,reduced by gain deferred under subsection 7a77#a7 ,the basis of a qualified hemp opportunity zone property immediately after its acquisition under subsection 7a7 shall be reduced by the amount of gain deferred by reason of subsection 7a77#a77;,a7 with respect to such property4 7#b7 ,increase for gain recognized under subsection 7a77#b7 ,the basis of qualified hemp opportunity zone property shall be increased by the amount of gain recognized by reason of subsection 7a77#b7 with respect to such property4 7#c7 ,subsequent increase in basis for property held for at least #e years but less than #aj years ,in the case of qualified hemp opportunity zone property held for at least #e years but less than #aj years-- 7,a7 ,property held for #e years ,for qualified hemp opportunity zone property held for at least #e years1 the basis of such property shall be increased by an amount equal to #aj percent of the amount of gain deferred by reason of subsection 7a77#a77;,a7 with respect to such property4 7,b7 ,property held for #g years ,for qualified hemp opportunity zone property held for at least #g years1 the basis of such property shall be increased by an amount equal to #e percent of the amount of gain deferred by reason of subsection 7a77#a77;,a7 with respect to such property4 7c7 ,qualified hemp opportunity zone property ,for purposes of this section3 7#a7 ,in general ,the term qualified hemp opportunity zone property means property which is-- 7,a7 qualified hemp opportunity zone stock1 7,b7 qualified hemp opportunity zone partnership interest1 7,c7 qualified hemp opportunity zone business property1 or 7,d7 an interest in a qualified investment fund4 7#b7 ,qualified hemp opportunity zone stock 7,a7 ,in general ,except as provided in subparagraph 7,b71 the term qualified hemp opportunity zone stock means any stock in a domestic corporation if-- 7i7 such stock is acquired by the taxpayer after ,december #ca1 #bjai1 at its original issue 7directly or through an underwriter7 from the corporation solely in exchange for cash1 7ii7 as of the time such stock was issued1 such corporation was a qualified hemp opportunity zone business 7or1 in the case of a new corporation1 such corporation was being organized for purposes of being a qualified hemp opportunity zone business71 and 7iii7 during substantially all of the taxpayer's holding period for such stock1 such corporation qualified as a qualified hemp opportunity zone business4 7,b7 ,redemptions ,a rule similar to the rule of section #abjb7;c77#c7 shall apply for purposes of this paragraph4 7#c7 ,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-- 7,a7 such interest is acquired by the taxpayer after ,december #ca1 #bjai1 from the partnership solely in exchange for cash1 7,b7 as of the time such interest was acquired1 such partnership was a qualified hemp opportunity zone business 7or1 in the case of a new partnership1 such partnership was being organized for purposes of being a qualified hemp opportunity zone business71 and 7,c7 during substantially all of the taxpayer's holding period for such interest1 such partnership qualified as a qualified hemp opportunity zone business4 7#d7 ,qualified hemp opportunity zone business property 7,a7 ,in general ,the term qualified hemp opportunity zone business property means tangible property used in a trade or business of the taxpayer if-- 7i7 such property is used primarily in the trade or business of producing hemp-- 7ii7 such property was acquired by the taxpayer by purchase 7as defined in section #agi7;d77#b77 after ,december #ca1 #bjai1 7iii7 the original use of such property in the qualified hemp opportunity zone commences with the taxpayer or the taxpayer substantially improves the property1 and 7iv7 during substantially all of the taxpayer's holding period for such property1 substantially all of the use of such property was in a qualified hemp opportunity zone4 7,b7 ,substantial improvement ,for purposes of subparagraph 7,a77iii71 property shall be treated as substantially improved by the taxpayer only if1 during any #cj-month period beginning after the date of acquisition of such property1 additions to basis with respect to such property in the hands of the taxpayer exceed an amount equal to the adjusted basis of such property at the beginning of such #cj-month period in the hands of the taxpayer4 7,c7 ,treatment of related parties ,for purposes of subparagraph 7,a77ii71 the rules of subparagraph 7,a7 of section #agi7;d77#b7 shall be applied using the relationship described in subsection 7e77#b7 in lieu of the relationship described in such subparagraph4 7#e7 ,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 qualified hemp opportunity zone property 7other than another qualified hemp opportunity fund7 that holds at least #ij percent of its assets in qualified hemp opportunity zone property1 determined-- 7,a7 on the last day of the first #f-month period of the taxable year of the fund1 and 7,b7 on the last day of the taxable year of the fund4 7#f7 ,qualified hemp opportunity zone business 7,a7 ,in general ,the term qualified hemp opportunity zone business means a trade or business-- 7i7 in which substantially all of the tangible property owned or leased by the taxpayer is qualified hemp opportunity zone business property1 7ii7 which satisfies the requirements of paragraphs 7#b71 7#d71 and 7#h7 of section #acig;,c7b71 and 7iii7 which is not described in section #add7;c77#f77;,b74 7,b7 ,special rule ,for purposes of subparagraph 7,a71 tangible property that ceases to be a qualified hemp opportunity zone business property shall continue to be treated as a qualified hemp opportunity zone business property for the lesser of-- 7i7 #e years after the date on which such tangible property ceases to be so qualified1 or 7ii7 the date on which such tangible property is no longer held by the qualified hemp opportunity zone business4 7d7 ,applicable rules 7#a7 ,in general ,for purposes of this section and except as otherwise provided in this section1 rules similar to the rules applicable to deferred like kind exchanges under section #ajca shall apply except that reinvestment in qualified hemp opportunity zone property need not require an intermediary party4 7#b7 ,related persons ,for purposes of this subsection1 persons are related to each other if such persons are described in section #bfg7;b7 or #gjg7;b77#a71 determined by substituting #bj percent for #ej percent each place it occurs in such sections4 7#c7 ,decedents ,in the case of a decedent1 amounts recognized under this section shall1 if not properly includible in the gross income of the decedent1 be includible in gross income as provided by section #fia4 7#d7 ,regulations ,the ,secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this section1 including-- 7,a7 rules providing for proportionate inclusion in income and increases in basis for purposes of subsections 7a7 and 7b7 in cases in which a sale or exchange of any qualified hemp opportunity zone property with respect to which gain is deferred under subsection 7a77#a77;,a7 is less than all of such property1 7,b7 rules requiring taxpayers to provide such information as the ,secretary determines to be necessary or appropriate for the identification of both the assets sold 7including basis and sale price7 and the assets acquired and investments made1 and 7,c7 rules to prevent abuse4 #adjj,w-#c4 ,immediate expensing of qualified hemp opportunity zone business property 7a7 ,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 7as defined in section #adjj,w-#b7 as an expense which is not chargeable to capital account4 ,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 service4 7b7 ,exception for certain property ,for purposes of this section1 the term qualified hemp opportunity zone business property shall not include any property to which section #afh7;g7 applies4 7c7 ,election ,an election under this section shall be made under rules similar to the rules of section #agi7;c74 7d7 ,coordination with section #agi ,for purposes of section #agi1 qualified hemp opportunity zone business property shall not be treated as section #agi property4 7e7 ,application of other rules ,rules similar to the rules of paragraphs 7#c71 7#d71 7#e71 7#g71 7#i71 and 7#aj7 of section #agi7;d7 shall apply for purposes of this section4 7f7 ,taxpayer reporting ,this section shall not apply with respect to any taxpayer for any taxable year unless such taxpayer provides the ,secretary with such information as the ,secretary may require to allow the ,secretary to evaluate the effectiveness of the program established under this part4 4 7b7 ,basis adjustments ,section #ajaf7;a7 of such ,code is amended by striking and at the end of paragraph 7#cg71 by striking the period at the end of paragraph 7#ch7 and inserting 1 and1 and by inserting after paragraph 7#ch7 the following new paragraph3 7#ci7 to the extent provided in section #adjj,w-#b7;b74 4 7c7 ,clerical amendment ,the table of subchapters for chapter #a of such ,code is amended by inserting after the item relating to subchapter ,v the following new item3 ,subchapter ,w4 ,hemp opportunity zones 4 7d7 ,effective date ,the amendments made by this section shall apply to taxable years beginning after the date of the enactment of this ,act4 #c4 ,increased qualified business income deduction for hemp producers 7a7 ,in general ,section #aii;,a7b7 of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new paragraph3 7#h7 ,special rule with respect to qualified business income from hemp production 7,a7 ,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 #be1jjj1jjj1 the amount determined under paragraph 7#b7 with respect to such trade or business shall be increased by an amount equal to #ae percent of so much of the qualified business income with respect to such trade or business as is properly allocable to hemp production4 7,b7 ,common control ,any trades or business which are under common control and treated as a single employer under section #eb shall be treated as a single trade or business for purposes of applying the #be1jjj1jjj gross receipts test under subparagraph 7,a74 4 7b7 ,effective date ,the amendment made by this section shall apply to taxable years beginning the date of the enactment of this ,act4 #d4 ,hemp farmer start-up tax credit 7a7 ,in general ,subpart ,d of part ,,iv of subchapter ,a of chapter #a of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new section3 #de,u4 ,hemp farmer start-up credit 7a7 ,in general ,for purposes of section #ch1 in the case of an eligible hemp farmer1 the hemp farmer start-up credit determined under this section for any taxable year is an amount equal to-- 7#a7 #aj percent of the cash rent paid by the taxpayer for land in connection with the trade or business of producing hemp1 or 7#b7 #ae percent of the crop share rent so paid by the taxpayer4 7b7 ,definitions and special rules ,for purposes of this section-- 7#a7 ,eligible hemp farmer ,the term eligible hemp farmer means any person who-- 7,a7 engaged in the trade or business of hemp farming1 and 7,b7 has gross receipts for the preceding taxable year of not more than #be1jjj1jjj4 7#b7 ,cash rent ,the term cash rent means any rent paid for the use of land in cash or as a crop share that is guaranteed as to the dollar amount of the commodity paid in rent4 7#c7 ,crop share rent ,the term crop share rent means any rent paid for the use of land as a crop share and that is not described in paragraph 7#b74 7#d7 ,years of election ,the taxpayer may elect the application of this section only for #c taxable years of the first #e taxable years for which ordinary and necessary expenses paid or incurred in carrying on such trade or business are allowable as a deduction by the taxpayer under section #afb4 7#e7 ,controlled groups and common control ,all persons treated as a single employer under subsections 7a7 and 7b7 of section #eb shall be treated as #a person4 4 7b7 ,part of general business credit ,section #ch7;b7 of such ,code is amended by striking plus at the end of paragraph 7#cb71 by striking the period at the end of paragraph 7#cc7 and inserting 1 plus1 and by adding at the end the following new paragraph3 7#cd7 the hemp farmer start-up credit determined under section #de,u7a74 4 7c7 ,clerical amendment ,the table of sections for subpart ,d of part ,,iv of subchapter ,a of chapter #a is amended by adding at the end the following new item3 ,sec4 #de,u4 ,hemp farmer start-up credit4 4 7d7 ,effective date ,the amendments made by this section shall apply to taxable years beginning after ,december #ca1 #bjbj4 #e4 ,small hemp farmer investment credit 7a7 ,in general ,subpart ,e of part ,,iv of subchapter ,a of chapter #a of the ,internal ,revenue ,code of #aihf is amended by inserting after section #dh;,c the following new section3 #dh;,d4 ,small hemp farmer credit 7a7 ,in general ,for purposes of section #df1 in the case of an eligible hemp farmer1 the small hemp farmer credit for any taxable year is an amount equal to #cj percent of the basis of hemp farming property placed in service during the taxable year4 7b7 ,eligible hemp farmer ,for purposes of this section1 the term eligible hemp farmer means any person who-- 7#a7 engaged in the trade or business of hemp farming1 and 7#b7 has gross receipts for the preceding taxable year of not more than #bej1jjj4 7c7 ,hemp farming property ,for purposes of this section1 the term hemp farming property means any property 7of a character subject to the allowance for depreciation7 which placed in service by the taxpayer for use in the trade or business of hemp farming4 7d7 ,controlled groups and common control ,all persons treated as a single employer under subsections 7a7 and 7b7 of section #eb shall be treated as #a person for purposes of subsection 7b77#b74 4 7b7 ,part of investment credit ,section #df of such ,code is amended by striking and at the end of paragraph 7#e71 by striking the period at the end of paragraph 7#f7 and inserting 1 and1 and by adding at the end the following new paragraph3 7#g7 the small hemp farmer credit4 4 7c7 #ej-,percent basis reduction ,section #ej7;c77#c7 of such ,code is amended by inserting or small hemp farmer credit after energy credit4 7d7 ,clerical amendment ,the table of sections for subpart ,e of part ,,iv of subchapter ,a of chapter #a of such ,code is amended by inserting after the item relating to section #dh;,c the following new item3 ,sec4 #dh;,d4 ,small hemp farmer credit4 4 7e7 ,effective date ,the amendments made by this section shall apply to property placed in service in taxable years beginning after ,december #ca1 #bjbj4 #f4 ,marketability study and report 7a7 ,in general ,the ,secretary of the ,treasury1 in consultation with the ,secretary of ,agriculture1 shall study the issues described in subsection 7b7 with respect to the production of hemp and1 not later than #a year after the date of the enactment of this ,act1 submit to ,congress a report of the findings of such study4 7b7 ,issues ,the issues described in this subsection1 with respect to the production of hemp1 are as follows3 7#a7 ,the potential opportunities for hemp seed to be used as an animal feed and any obstacles to approval for such use4 7#b7 ,the potential opportunities for hemp to be used to create personal protective equipment for healthcare workers and first responders4 7#c7 ,the feasibility and financial impact of hemp producer compliance with applicable ,department of ,agriculture sampling timetables4 7#d7 ,the feasibility of hemp producer compliance with ,department of ,agriculture reporting requirements4 7#e7 ,the feasibility of hemp producer compliance with a legal maximum #j4c percent tetrahydrocannabinol limitation1 including compliance and losses due to non-compliance1 and a comparison to the feasibility of a legal maximum #a4j percent tetrahydrocannabinol limitation4 7#f7 ,the maximum tetrahydrocannabinol level for the crop to have no psychotropic effect or intoxicating potential4 7#g7 ,the ability for ,united ,states hemp producers to compete globally with other countries that have a maximum #a4j percent tetrahydrocannabinol limitation4 7#h7 ,identifying market challenges and opportunities for a craft and small hemp producers to remain competitive in the ,united ,states and global hemp marketplace4 7#i7 ,the nutritional value and benefits of foods1 drinks1 and supplements produced from hemp-based products1 and the potential benefits of including hemp-based food1 drink1 supplements1 and protein to certain public school meal programs4 7#aj7 ,which items procured by the ,federal ,government1 or items used by contractors or subcontractors of the ,federal ,government at any tier1 can be substituted by a hemp-based product4 7#aa7 ,identify potential opportunities for hemp to be used as a renewable energy source4