Diversion of cannabis

(a) In general (1) Violations of cannabis laws or regulations; penalties and injunctions (A) Definition In this paragraph, the term common or contract carrier means a carrier holding a certificate of convenience and necessity, a permit for contract carrier by motor vehicle, or other valid operating authority under subtitle IV of title 49, United States Code, or under equivalent operating authority from a regulatory agency of the United States or of any State. (B) Cannabis diversion (i) In general Except as provided in clause (ii), it shall be unlawful to— (I) knowingly grow, manufacture, ship, transport, receive, possess, sell, or distribute or purchase 10 pounds or more of cannabis without authorization under a State law or pursuant to a permit issued under section 301 of the Federal Alcohol Administration Act, as added by section 511 of this Act; (II) knowingly possess 10 pounds or more of cannabis that bears no evidence of the payment of applicable State or local cannabis taxes in the State or locality where the cannabis is found, if— (aa) the State or local government requires a stamp, impression, or other indication to be placed on packages or other containers of cannabis to evidence payment of cannabis taxes; and (bb) the cannabis is in the possession of any person other than a person holding a permit under section 301 of the Federal Alcohol Administration Act, as added by section 511 of this Act; (III) knowingly grow, manufacture, ship, transport, receive, possess, sell, or distribute or purchase 20 pounds or more of cannabis without authorization under a State law or pursuant to a permit issued under section 301 of the Federal Alcohol Administration Act, as added by section 511 of this Act; or (IV) knowingly possess 20 pounds or more of cannabis that bears no evidence of the payment of applicable State or local cannabis taxes in the State or locality where the cannabis is found, if— (aa) the State or local government requires a stamp, impression, or other indication to be placed on packages or other containers of cannabis to evidence payment of cannabis taxes; and (bb) the cannabis is in the possession of any person other than a person holding a permit under section 301 of the Federal Alcohol Administration Act, as added by section 511 of this Act. (ii) Exceptions Clause (i) shall not apply to— (I) a common or contract carrier transporting the cannabis involved under a proper bill of lading or freight bill which states the quantity, source, and destination of the cannabis; (II) a person— (aa) who is licensed or otherwise authorized by the State where the cannabis is found to account for and pay cannabis taxes imposed by such State; and (bb) who has complied with the accounting and payment requirements relating to such license or authorization with respect to the cannabis involved; (III) an officer, employee, or other agent of the United States, an Indian Tribe, or a State, or any department, agency, or instrumentality of the United States, an Indian Tribe, or a State (including any political subdivision of an Indian Tribe or a State) having possession of the cannabis in connection with the performance of official duties; or (IV) a person— (aa) involved in the manufacture, marketing, or distribution of a drug containing cannabis that is otherwise in compliance with State and Federal law; and (bb) who possesses cannabis in connection with the lawful activities described in item (aa). (iii) Penalty Any person who violates— (I) subclause (I) or (II) of clause (i) shall be imprisoned not more than 1 year, fined not more than $50,000, or both; or (II) subclause (III) or (IV) of clause (i) shall be imprisoned not more than 5 years, fined not more than $100,000, or both. (2) Fines The penalty provided for in this subsection may be recovered by the Secretary of the Treasury or by an action brought by the Attorney General in any court of competent jurisdiction. (3) Enforcement It shall be the duty of the Attorney General upon the request of the Secretary of the Treasury to bring an action for an injunction against any person who violates, disobeys or disregards any term or provision of this subtitle or of any lawful notice, order or regulation pursuant thereto; provided, however, that the Secretary of the Treasury shall furnish the Attorney General with such material, evidentiary matter or proof as may be requested by the Attorney General for the prosecution of such an action. (b) Tracking and tracing regulations (1) Issuance of tracking and tracing regulations (A) In general Not later than 1 year after the date of enactment of this Act, the Secretary of the Treasury (referred to in this section as the Secretary), acting through the Administrator of the Alcohol, Tobacco, and Cannabis Tax and Trade Bureau and in coordination with the Secretary of Health and Human Services, shall issue regulations relating to the tracking and tracing of cannabis products pursuant to paragraph (2). (B) Good faith consultation with Indian Tribes In issuing regulations under subparagraph (A), the Secretary, acting through the Administrator of the Alcohol, Tobacco, and Cannabis Tax and Trade Bureau and in coordination with the Secretary of Health and Human Services, shall conduct good faith, meaningful, and timely consultations with Indian Tribes. (2) Regulations concerning recordkeeping for tracking and tracing (A) In general The Secretary shall promulgate regulations regarding the establishment and maintenance of records by any person who manufactures, processes, transports, distributes, receives, packages, holds, exports, or imports cannabis products. (B) Inspection In promulgating the regulations described in subparagraph (A), the Secretary shall consider which records are needed for inspection to monitor the movement of cannabis products from the point of production through distribution to retail outlets to assist in investigating potential illicit trade, smuggling, or counterfeiting of cannabis products. (C) Codes The Secretary may require codes on the labels of cannabis products or other designs or devices for the purpose of tracking or tracing the cannabis product through the distribution system. (D) Size of business The Secretary shall take into account the size of a business in promulgating regulations under this section. (E) Recordkeeping by retailers The Secretary shall not require any retailer to maintain records relating to individual purchasers of cannabis products for personal consumption. (3) Records inspection (A) In general If the Secretary has a reasonable belief that a cannabis product is part of an illicit trade or smuggling or is a counterfeit product, each person who manufactures, processes, transports, distributes, receives, holds, packages, exports, or imports cannabis products shall, at the request of an officer or employee duly designated by the Secretary, permit such officer or employee, at reasonable times and within reasonable limits and in a reasonable manner, upon the presentation of appropriate credentials and a written notice to such person, to have access to and copy all records (including financial records) relating to such article that are needed to assist the Secretary in investigating potential illicit trade, smuggling, or counterfeiting of cannabis products. The Secretary shall not authorize an officer or employee of the government of any of the several States to exercise authority under the preceding sentence on Indian country without the express written consent of the Indian Tribe involved. (B) Failure to comply (i) Compel inspections The district courts of the United States shall have the authority, pursuant to a civil action brought by the Secretary, to compel access by any officer or employee duly designated by the Secretary to any relevant records described in subparagraph (A). (ii) Penalty Any person who— (I) denies access to any relevant records described in subparagraph (A) to any officer or employee duly designated by the Secretary; or (II) fails to comply with an order issued by a district court pursuant to clause (i), shall be fined not more than $10,000. (4) Knowledge of illegal transaction (A) Notification If the manufacturer or distributor of a cannabis product has knowledge which reasonably supports the conclusion that a cannabis product manufactured or distributed by such manufacturer or distributor that has left the control of such person may be or has been— (i) imported, exported, distributed, or offered for sale in interstate commerce by a person without paying duties or taxes required by Federal, Tribal, or State law; or (ii) imported, exported, distributed, or diverted for possible illicit marketing, the manufacturer or distributor shall promptly notify the Attorney General and the Secretary of such knowledge. (B) Knowledge defined For purposes of this paragraph, the term knowledge as applied to a manufacturer or distributor means— (i) the actual knowledge that the manufacturer or distributor had; or (ii) the knowledge which a reasonable person would have had under like circumstances or which would have been obtained upon the exercise of due care. (5) Consultation In carrying out this subsection, the Secretary shall consult with the Attorney General and the Commissioner of Food and Drugs, as appropriate. (6) Consideration of state and other precedent In promulgating the regulations described in this subsection, the Secretary shall consider— (A) recommendations and findings by the Cannabis Products Advisory Committee established under section 1111 of the Federal Food, Drug, and Cosmetic Act; (B) current practices of States regarding cannabis and the practices of other regulated industries; and (C) whether, during the 3-year period described in section 505(b)(1), unique standards for cannabis specified for medical use under State law are necessary or appropriate.