Marijuana Opportunity Reinvestment and Expungement Act of 2019
Summary
This is House Report 116-604, Part 1, of the 116th Congress, 2d Session, titled Marijuana Opportunity Reinvestment and Expungement Act of 2019, a report of the Committee on the Judiciary on H.R. 3884, together with minority views, referred to the House Calendar and ordered to be printed November 27, 2020. Mr. Nadler reports on H.R. 3884, to decriminalize and deschedule cannabis, provide for reinvestment in persons adversely impacted by the War on Drugs, and provide for expungement of certain cannabis offenses, which the Committee reports favorably with an amendment and recommends that the bill as amended do pass. The amendment text includes findings by Congress, for example that communities most harmed by cannabis prohibition are benefiting the least from the legal marijuana marketplace.
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“Marijuana Opportunity Reinvestment and Expungement Act of 2019.”
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1
116TH CONGRESS REPT. 116–604
" HOUSE OF REPRESENTATIVES !
2d Session Part 1
MARIJUANA OPPORTUNITY REINVESTMENT
AND EXPUNGEMENT ACT OF 2019
R E P O R T
OF THE
COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES
ON
H.R. 3884
TOGETHER WITH
MINORITY VIEWS
NOVEMBER 27, 2020.—Referred to the House Calendar and
ordered to be printed
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MARIJUANA OPPORTUNITY REINVESTMENT AND EXPUNGEMENT ACT OF 2019
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116TH CONGRESS REPT. 116–604
" HOUSE OF REPRESENTATIVES !
2d Session Part 1
MARIJUANA OPPORTUNITY REINVESTMENT
AND EXPUNGEMENT ACT OF 2019
R E P O R T
OF THE
COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES
ON
H.R. 3884
TOGETHER WITH
MINORITY VIEWS
NOVEMBER 27, 2020.—Referred to the House Calendar and
ordered to be printed
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U.S. GOVERNMENT PUBLISHING OFFICE
42–437 WASHINGTON : 2020
E:\Seals\Congress.#13
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116TH CONGRESS REPT. 116–604
" HOUSE OF REPRESENTATIVES !
2d Session Part 1
MARIJUANA OPPORTUNITY REINVESTMENT AND
EXPUNGEMENT ACT OF 2019
NOVEMBER 27, 2020.—Ordered to be printed
Mr. NADLER, from the Committee on the Judiciary,
submitted the following
R E P O R T
together with
MINORITY VIEWS
[To accompany H.R. 3884]
The Committee on the Judiciary, to whom was referred the bill
(H.R. 3884) to decriminalize and deschedule cannabis, to provide
for reinvestment in certain persons adversely impacted by the War
on Drugs, to provide for expungement of certain cannabis offenses,
and for other purposes, having considered the same, reports favor-
ably thereon with an amendment and recommends that the bill as
amended do pass.
CONTENTS
Page
Purpose and Summary ............................................................................................ 11
Background and Need for the Legislation ............................................................. 12
Hearings ................................................................................................................... 20
Committee Consideration ........................................................................................ 20
Committee Votes ...................................................................................................... 20
Committee Oversight Findings ............................................................................... 22
New Budget Authority and Tax Expenditures and Congressional Budget Of-
fice Cost Estimate ................................................................................................ 22
Duplication of Federal Programs ............................................................................ 22
Performance Goals and Objectives ......................................................................... 22
Advisory on Earmarks ............................................................................................. 22
Section-by-Section Analysis .................................................................................... 22
Changes in Existing Law Made by the Bill, as Reported ..................................... 27
Committee Correspondence .................................................................................... 337
Minority Views ......................................................................................................... 346
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The amendment is as follows:
Strike all after the enacting clause and insert the following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Marijuana Opportunity Reinvestment and
Expungement Act of 2019’’ or the ‘‘MORE Act of 2019’’.
SEC. 2. FINDINGS.
The Congress finds as follows:
(1) The communities that have been most harmed by cannabis prohibition are
benefiting the least from the legal marijuana marketplace.
(2) A legacy of racial and ethnic injustices, compounded by the dispropor-
tionate collateral consequences of 80 years of cannabis prohibition enforcement,
now limits participation in the industry.
(3) 33 States, the District of Columbia, Puerto Rico, and Guam have adopted
laws allowing legal access to cannabis, and 11 States, the District of Columbia,
and the Commonwealth of the Northern Mariana Islands have adopted laws le-
galizing cannabis for adult recreational use.
(4) A total of 47 States have reformed their laws pertaining to cannabis de-
spite the Schedule I status of marijuana and its Federal criminalization.
(5) Legal cannabis sales totaled $9.5 billion in 2017 and are projected to reach
$23 billion by 2022.
(6) According to the American Civil Liberties Union (ACLU), enforcing can-
nabis prohibition laws costs taxpayers approximately $3.6 billion a year.
(7) The continued enforcement of cannabis prohibition laws results in over
600,000 arrests annually, disproportionately impacting people of color who are
almost 4 times more likely to be arrested for cannabis possession than their
White counterparts, despite equal rates of use across populations.
(8) People of color have been historically targeted by discriminatory sen-
tencing practices resulting in Black men receiving drug sentences that are 13.1
percent longer than sentences imposed for White men and Latinos being nearly
6.5 times more likely to receive a Federal sentence for cannabis possession than
non-Hispanic Whites.
(9) In 2013, simple cannabis possession was the fourth most common cause
of deportation for any offense and the most common cause of deportation for
drug law violations.
(10) Fewer than one-fifth of cannabis business owners identify as minorities
and only approximately 4 percent are black.
(11) Applicants for cannabis licenses are limited by numerous laws, regula-
tions, and exorbitant permit applications, licensing fees, and costs in these
States, which can require more than $700,000.
(12) Historically disproportionate arrest and conviction rates make it particu-
larly difficult for people of color to enter the legal cannabis marketplace, as
most States bar these individuals from participating.
(13) Federal law severely limits access to loans and capital for cannabis busi-
nesses, disproportionately impacting minority small business owners.
(14) Some States and municipalities have taken proactive steps to mitigate
inequalities in the legal cannabis marketplace and ensure equal participation
in the industry.
SEC. 3. DECRIMINALIZATION OF CANNABIS.
(a) CANNABIS REMOVED FROM SCHEDULE OF CONTROLLED SUBSTANCES.—
(1) REMOVAL IN STATUTE.—Subsection (c) of schedule I of section 202(c) of the
Controlled Substances Act (21 U.S.C. 812) is amended—
(A) by striking ‘‘(10) Marihuana.’’; and
(B) by striking ‘‘(17) Tetrahydrocannabinols, except for
tetrahydrocannabinols in hemp (as defined in section 297A of the Agricul-
tural Marketing Act of 1946).’’.
(2) REMOVAL FROM SCHEDULE.—Not later than 180 days after the date of the
enactment of this Act, the Attorney General shall finalize a rulemaking under
section 201(a)(2) removing marihuana and tetrahydrocannabinols from the
schedules of controlled substances. Marihuana and tetrahydrocannabinols shall
each be deemed to be a drug or other substance that does not meet the require-
ments for inclusion in any schedule. A rulemaking under this paragraph shall
be considered to have taken effect as of the date of enactment of this Act for
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purposes of any offense committed, case pending, conviction entered, and, in the
case of a juvenile, any offense committed, case pending, and adjudication of ju-
venile delinquency entered before, on, or after the date of enactment of this Act.
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(b) CONFORMING AMENDMENTS TO CONTROLLED SUBSTANCES ACT.—The Controlled
Substances Act (21 U.S.C. 801 et seq.) is amended—
(1) in section 102(44) (21 U.S.C. 802(44)), by striking ‘‘marihuana,’’;
(2) in section 401(b) (21 U.S.C. 841(b))—
(A) in paragraph (1)—
(i) in subparagraph (A)—
(I) in clause (vi), by inserting ‘‘or’’ after the semicolon;
(II) by striking clause (vii); and
(III) by redesignating clause (viii) as clause (vii);
(ii) in subparagraph (B)—
(I) in clause (vi), by inserting ‘‘or’’ after the semicolon;
(II) by striking clause (vii); and
(III) by redesignating clause (viii) as clause (vii);
(iii) in subparagraph (C), in the first sentence, by striking ‘‘subpara-
graphs (A), (B), and (D)’’ and inserting ‘‘subparagraphs (A) and (B)’’;
(iv) by striking subparagraph (D);
(v) by redesignating subparagraph (E) as subparagraph (D); and
(vi) in subparagraph (D)(i), as so redesignated, by striking ‘‘subpara-
graphs (C) and (D)’’ and inserting ‘‘subparagraph (C)’’;
(B) by striking paragraph (4); and
(C) by redesignating paragraphs (5), (6), and (7) as paragraphs (4), (5),
and (6), respectively;
(3) in section 402(c)(2)(B) (21 U.S.C. 842(c)(2)(B)), by striking ‘‘, marihuana,’’;
(4) in section 403(d)(1) (21 U.S.C. 843(d)(1)), by striking ‘‘, marihuana,’’;
(5) in section 418(a) (21 U.S.C. 859(a)), by striking the last sentence;
(6) in section 419(a) (21 U.S.C. 860(a)), by striking the last sentence;
(7) in section 422(d) (21 U.S.C. 863(d))—
(A) in the matter preceding paragraph (1), by striking ‘‘marijuana,’’; and
(B) in paragraph (5), by striking ‘‘, such as a marihuana cigarette,’’; and
(8) in section 516(d) (21 U.S.C. 886(d)), by striking ‘‘section 401(b)(6)’’ each
place the term appears and inserting ‘‘section 401(b)(5)’’.
(c) OTHER CONFORMING AMENDMENTS.—
(1) NATIONAL FOREST SYSTEM DRUG CONTROL ACT OF 1986.—The National For-
est System Drug Control Act of 1986 (16 U.S.C. 559b et seq.) is amended—
(A) in section 15002(a) (16 U.S.C. 559b(a)) by striking ‘‘marijuana and
other’’;
(B) in section 15003(2) (16 U.S.C. 559c(2)) by striking ‘‘marijuana and
other’’; and
(C) in section 15004(2) (16 U.S.C. 559d(2)) by striking ‘‘marijuana and
other’’.
(2) INTERCEPTION OF COMMUNICATIONS.—Section 2516 of title 18, United
States Code, is amended—
(A) in subsection (1)(e), by striking ‘‘marihuana,’’; and
(B) in subsection (2) by striking ‘‘marihuana’’.
(d) RETROACTIVITY.—The amendments made by this section to the Controlled Sub-
stances Act (21 U.S.C. 801 et seq.) are retroactive and shall apply to any offense
committed, case pending, conviction entered, and, in the case of a juvenile, any of-
fense committed, case pending, or adjudication of juvenile delinquency entered be-
fore, on, or after the date of enactment of this Act.
SEC. 4. DEMOGRAPHIC DATA OF CANNABIS BUSINESS OWNERS AND EMPLOYEES.
(a) IN GENERAL.—The Bureau of Labor Statistics shall regularly compile, main-
tain, and make public data on the demographics of—
(1) individuals who are business owners in the cannabis industry; and
(2) individuals who are employed in the cannabis industry.
(b) DEMOGRAPHIC DATA.—The data collected under subsection (a) shall include
data regarding—
(1) age;
(2) certifications and licenses;
(3) disability status;
(4) educational attainment;
(5) family and marital status;
(6) nativity;
(7) race and Hispanic ethnicity;
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(8) school enrollment;
(9) veteran status; and
(10) sex.
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(c) CONFIDENTIALITY.—The name, address, and other identifying information of in-
dividuals employed in the cannabis industry shall be kept confidential by the Bu-
reau and not be made available to the public.
(d) DEFINITIONS.—In this section:
(1) CANNABIS.—The term ‘‘cannabis’’ means either marijuana or cannabis as
defined under the State law authorizing the sale or use of cannabis in which
the individual or entity is located.
(2) CANNABIS INDUSTRY.—The term ‘‘cannabis industry’’ means an individual
or entity that is licensed or permitted under a State or local law to engage in
commercial cannabis-related activity.
(3) OWNER.—The term ‘‘owner’’ means an individual or entity that is defined
as an owner under the State or local law where the individual or business is
licensed or permitted.
SEC. 5. CREATION OF OPPORTUNITY TRUST FUND AND IMPOSITION OF TAX ON CANNABIS
PRODUCTS.
(a) TRUST FUND.—
(1) ESTABLISHMENT.—Subchapter A of chapter 98 of the Internal Revenue
Code of 1986 is amended by adding at the end the following new section:
‘‘SEC. 9512. OPPORTUNITY TRUST FUND.
‘‘(a) CREATION OF TRUST FUND.—There is established in the Treasury of the
United States a trust fund to be known as the ‘Opportunity Trust Fund’ (referred
to in this section as the ‘Trust Fund’), consisting of such amounts as may be appro-
priated or credited to such fund as provided in this section or section 9602(b).
‘‘(b) TRANSFERS TO TRUST FUND.—There are hereby appropriated to the Trust
Fund amounts equivalent to the net revenues received in the Treasury from the tax
imposed by section 5701(h).
‘‘(c) EXPENDITURES.—Amounts in the Trust Fund shall be available, without fur-
ther appropriation, only as follows:
‘‘(1) 50 percent to the Attorney General to carry out section 3052(a) of part
OO of the Omnibus Crime Control and Safe Streets Act of 1968.
‘‘(2) 10 percent to the Attorney General to carry out section 3052(b) of part
OO of the Omnibus Crime Control and Safe Streets Act of 1968.
‘‘(3) 20 percent to the Administrator of the Small Business Administration to
carry out section 6(b)(1) of the Marijuana Opportunity Reinvestment and
Expungement Act of 2019.
‘‘(4) 20 percent to the Administrator of the Small Business Administration to
carry out section 6(b)(2) of the Marijuana Opportunity Reinvestment and
Expungement Act of 2019.’’.
(2) CLERICAL AMENDMENT.—The table of sections for subchapter A of chapter
98 of such Code is amended by adding at the end the following new item:
‘‘Sec. 9512. Opportunity trust fund.’’.
(b) IMPOSITION OF TAX.—
(1) IN GENERAL.—Section 5701 of the Internal Revenue Code of 1986 is
amended by redesignating subsection (h) as subsection (i) and by inserting after
subsection (g) the following new subsection:
‘‘(h) CANNABIS PRODUCTS.—On cannabis products, manufactured in or imported
into the United States, there shall be imposed a tax equal to 5 percent of the price
for which sold.’’.
(2) CANNABIS PRODUCT DEFINED.—Section 5702 of such Code is amended by
adding at the end the following new subsection:
‘‘(q) CANNABIS PRODUCT.—
‘‘(1) IN GENERAL.—Except as provided in paragraph (2), the term ‘cannabis
product’ means any cannabis or any article which contains cannabis or any de-
rivative thereof.
‘‘(2) EXCEPTION.—The term ‘cannabis product’ shall not include any medicine
or drug that is a prescribed drug (as such term is defined in section 213(d)(3)).
‘‘(3) CANNABIS.—The term ‘cannabis’—
‘‘(A) means all parts of the plant Cannabis sativa L., whether growing or
not; the seeds thereof; the resin extracted from any part of such plant; and
every compound, manufacture, salt, derivative, mixture, or preparation of
such plant, its seeds or resin; and
‘‘(B) does not include—
‘‘(i) hemp, as defined in section 297A of the Agricultural Marketing
Act of 1946; or
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‘‘(ii) the mature stalks of such plant, fiber produced from such stalks,
oil or cake made from the seeds of such plant, any other compound,
manufacture, salt, derivative, mixture, or preparation of such mature
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stalks (except the resin extracted therefrom), fiber, oil, or cake, or the
sterilized seed of such plant which is incapable of germination.’’.
(3) CANNABIS PRODUCTS TREATED AS TOBACCO PRODUCTS.—Section 5702(c) of
such Code is amended by striking ‘‘and roll-your-own tobacco’’ and inserting
‘‘roll-your-own tobacco, and cannabis products’’.
(4) MANUFACTURER OF CANNABIS PRODUCTS TREATED AS MANUFACTURER OF
TOBACCO PRODUCTS.—Section 5702 of such Code is amended by adding at the
end the following new subsection:
‘‘(r) MANUFACTURER OF CANNABIS PRODUCTS.—
‘‘(1) IN GENERAL.—Any person who plants, cultivates, harvests, produces,
manufactures, compounds, converts, processes, prepares, or packages any can-
nabis product shall be treated as a manufacturer of cannabis products (and as
manufacturing such cannabis product).
‘‘(2) EXCEPTION.—Paragraph (1) shall not apply with respect to any cannabis
product which is for such person’s own personal consumption or use.
‘‘(3) APPLICATION OF RULES RELATED TO MANUFACTURERS OF TOBACCO PROD-
UCTS.—Any reference to a manufacturer of tobacco products, or to manufac-
turing tobacco products, shall be treated as including a reference to a manufac-
turer of cannabis products, or to manufacturing cannabis products, respec-
tively.’’.
(5) APPLICATION OF CERTAIN RULES FOR DETERMINING PRICE.—Section 5702(l)
of such Code is amended—
(A) by striking ‘‘section 5701(a)(2)’’ and inserting ‘‘subsections (a)(2) and
(h) of section 5701’’; and
(B) by inserting ‘‘AND CANNABIS PRODUCTS’’ after ‘‘CIGARS’’ in the heading
thereof.
(6) CONFORMING AMENDMENT.—Section 5702(j) of such Code is amended by
adding at the end the following new sentence: ‘‘In the case of a cannabis prod-
uct, the previous sentence shall be applied by substituting ‘from a facility of a
manufacturer required to file a bond under section 5711’ for ‘from the factory
or from internal revenue bond under section 5704’.’’.
(c) EFFECTIVE DATE.—
(1) IN GENERAL.—Except as otherwise provided in this subsection, the amend-
ments made by this section shall apply to articles manufactured or imported in
calendar quarters beginning more than one year after the date of the enactment
of this Act.
(2) TRUST FUND.—The amendments made by subsection (a) shall take effect
on the date of the enactment of this Act.
SEC. 6. OPPORTUNITY TRUST FUND PROGRAMS.
(a) CANNABIS JUSTICE OFFICE; COMMUNITY REINVESTMENT GRANT PROGRAM.—
(1) CANNABIS JUSTICE OFFICE.—Part A of title I of the Omnibus Crime Control
and Safe Streets Act of 1968 (34 U.S.C. 10101 et seq.) is amended by inserting
after section 109 the following:
‘‘SEC. 110. CANNABIS JUSTICE OFFICE.
‘‘(a) ESTABLISHMENT.—There is established within the Office of Justice Programs
a Cannabis Justice Office.
‘‘(b) DIRECTOR.—The Cannabis Justice Office shall be headed by a Director who
shall be appointed by the Assistant Attorney General for the Office of Justice Pro-
grams. The Director shall report to the Assistant Attorney General for the Office
of Justice Programs. The Director shall award grants and may enter into compacts,
cooperative agreements, and contracts on behalf of the Cannabis Justice Office. The
Director may not engage in any employment other than that of serving as the Direc-
tor, nor may the Director hold any office in, or act in any capacity for, any organiza-
tion, agency, or institution with which the Office makes any contract or other ar-
rangement.
‘‘(c) EMPLOYEES.—
‘‘(1) IN GENERAL.—The Director shall employ as many full-time employees as
are needed to carry out the duties and functions of the Cannabis Justice Office
under subsection (d). Such employees shall be exclusively assigned to the Can-
nabis Justice Office.
‘‘(2) INITIAL HIRES.—Not later than 6 months after the date of enactment of
this section, the Director shall—
‘‘(A) hire no less than one-third of the total number of employees of the
Cannabis Justice Office; and
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‘‘(B) no more than one-half of the employees assigned to the Cannabis
Justice Office by term appointment that may after 2 years be converted to
career appointment.
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‘‘(3) LEGAL COUNSEL.—At least one employee hired for the Cannabis Justice
Office shall serve as legal counsel to the Director and shall provide counsel to
the Cannabis Justice Office.
‘‘(d) DUTIES AND FUNCTIONS.—The Cannabis Justice Office is authorized to—
‘‘(1) administer the Community Reinvestment Grant Program; and
‘‘(2) perform such other functions as the Assistant Attorney General for the
Office of Justice Programs may delegate, that are consistent with the statutory
obligations of this section.’’.
(2) COMMUNITY REINVESTMENT GRANT PROGRAM.—Title I of the Omnibus
Crime Control and Safe Streets Act of 1968 (34 U.S.C. et seq.) is amended by
adding at the end the following:
‘‘PART OO—COMMUNITY REINVESTMENT GRANT
PROGRAM
‘‘SEC. 3052. AUTHORIZATION.
‘‘(a) IN GENERAL.—The Director of the Cannabis Justice Office shall establish and
carry out a grant program, known as the ‘Community Reinvestment Grant Pro-
gram’, to provide eligible entities with funds to administer services for individuals
most adversely impacted by the War on Drugs, including—
‘‘(1) job training;
‘‘(2) reentry services;
‘‘(3) legal aid for civil and criminal cases, including expungement of cannabis
convictions;
‘‘(4) literacy programs;
‘‘(5) youth recreation or mentoring programs;
‘‘(6) health education programs; and
‘‘(7) services to address any collateral consequences that individuals or com-
munities face as a result of the War on Drugs.
‘‘(b) SUBSTANCE USE TREATMENT SERVICES.—The Community Reinvestment Grant
Program established in subsection (a) shall provide eligible entities with funds to
administer substance use treatment services for individuals most adversely im-
pacted by the War on Drugs.
‘‘SEC. 3053. FUNDING FROM OPPORTUNITY TRUST FUND.
‘‘The Director shall carry out the program under this part using funds made avail-
able under section 9512(c)(1) and (2) of the Internal Revenue Code.
‘‘SEC. 3054. DEFINITIONS.
‘‘In this part:
‘‘(1) The term ‘cannabis conviction’ means a conviction, or adjudication of juve-
nile delinquency, for a cannabis offense (as such term is defined in section 13
of the Marijuana Opportunity Reinvestment and Expungement Act of 2019).
‘‘(2) The term ‘substance use treatment’ means an evidence-based, profes-
sionally directed, deliberate, and planned regimen including evaluation, obser-
vation, medical monitoring, harm reduction, and rehabilitative services and
interventions such as pharmacotherapy, mental health services, and individual
and group counseling, on an inpatient or outpatient basis, to help patients with
substance use disorder reach remission and maintain recovery.
‘‘(3) The term ‘eligible entity’ means a nonprofit organization, as defined in
section 501(c)(3) of the Internal Revenue Code, that is representative of a com-
munity or a significant segment of a community with experience in providing
relevant services to individuals most adversely impacted by the War on Drugs
in that community.
‘‘(4) The term ‘individuals most adversely impacted by the War on Drugs’ has
the meaning given that term in section 6 of the Marijuana Opportunity Rein-
vestment and Expungement Act of 2019.’’.
(b) CANNABIS OPPORTUNITY PROGRAM; EQUITABLE LICENSING GRANT PROGRAM.—
(1) CANNABIS OPPORTUNITY PROGRAM.—The Administrator of the Small Busi-
ness Administration shall establish and carry out a program, to be known as
the ‘‘Cannabis Opportunity Program’’ to provide any eligible State or locality
funds to make loans under section 7(m) of the Small Business Act (15 U.S.C.
363(m)) to assist small business concerns owned and controlled by socially and
economically disadvantaged individuals, as defined in section 8(d)(3)(C) of the
Small Business Act (15 U.S.C. 637(d)(3)(C)) that operate in the cannabis indus-
try.
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(2) EQUITABLE LICENSING GRANT PROGRAM.—The Administrator of the Small
Business Administration shall establish and carry out a grant program, to be
known as the ‘‘Equitable Licensing Grant Program’’, to provide any eligible
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State of locality funds to develop and implement equitable cannabis licensing
programs that minimize barriers to cannabis licensing and employment for indi-
viduals most adversely impacted by the War on Drugs, provided that each
grantee includes in its cannabis licensing program at least four of the following:
(A) A waiver of cannabis license application fees for individuals who have
had an income below 250 percent of the Federal Poverty Level for at least
5 of the past 10 years who are first-time applicants.
(B) A prohibition on the denial of a cannabis license based on a conviction
for a cannabis offense that took place prior to State legalization of cannabis
or the date of enactment of this Act, as appropriate.
(C) A prohibition on criminal conviction restrictions for licensing except
with respect to a conviction related to owning and operating a business.
(D) A prohibition on cannabis license holders engaging in suspicionless
cannabis drug testing of their prospective or current employees, except with
respect to drug testing for safety-sensitive positions, as defined under the
Omnibus Transportation Testing Act of 1991.
(E) The establishment of a cannabis licensing board that is reflective of
the racial, ethnic, economic, and gender composition of the State or locality,
to serve as an oversight body of the equitable licensing program.
(3) DEFINITIONS.—In this subsection:
(A) The term ‘‘individual most adversely impacted by the War on Drugs’’
means an individual—
(i) who has had an income below 250 percent of the Federal Poverty
Level for at least 5 of the past 10 years; and
(ii) has been arrested for or convicted of the sale, possession, use,
manufacture, or cultivation of cannabis or a controlled substance (ex-
cept for a conviction involving distribution to a minor), or whose parent,
sibling, spouse, or child has been arrested for or convicted of such an
offense.
(B) The term ‘‘eligible State or locality’’ means a State or locality that has
taken steps to—
(i) create an automatic process, at no cost to the individual, for the
expungement, destruction, or sealing of criminal records for cannabis
offenses; and
(ii) eliminate violations or other penalties for persons under parole,
probation, pre-trial, or other State or local criminal supervision for a
cannabis offense.
(C) The term ‘‘State’’ means each of the several States, the District of Co-
lumbia, Puerto Rico, any territory or possession of the United States, and
any Indian Tribe (as defined in section 201 of Public Law 90–294 (25 U.S.C.
1301) (commonly known as the ‘‘Indian Civil Rights Act of 1968’’)).
SEC. 7. AVAILABILITY OF SMALL BUSINESS ADMINISTRATION PROGRAMS AND SERVICES TO
CANNABIS-RELATED LEGITIMATE BUSINESSES AND SERVICE PROVIDERS.
(a) DEFINITIONS RELATING TO CANNABIS-RELATED LEGITIMATE BUSINESSES AND
SERVICE PROVIDERS.—Section 3 of the Small Business Act (15 U.S.C. 632) is amend-
ed by adding at the end the following new subsection:
‘‘(ff) CANNABIS-RELATED LEGITIMATE BUSINESSES AND SERVICE PROVIDERS.—In
this Act:
‘‘(1) CANNABIS.—The term ‘cannabis’—
‘‘(A) means all parts of the plant Cannabis sativa L., whether growing or
not; the seeds thereof; the resin extracted from any part of such plant; and
every compound, manufacture, salt, derivative, mixture, or preparation of
such plant, its seeds or resin; and
‘‘(B) does not include—
‘‘(i) hemp, as defined in section 297A of the Agricultural Marketing
Act of 1946; or
‘‘(ii) the mature stalks of such plant, fiber produced from such stalks,
oil or cake made from the seeds of such plant, any other compound,
manufacture, salt, derivative, mixture, or preparation of such mature
stalks (except the resin extracted therefrom), fiber, oil, or cake, or the
sterilized seed of such plant which is incapable of germination.
‘‘(2) CANNABIS-RELATED LEGITIMATE BUSINESS.—The term ‘cannabis-related le-
gitimate business’ means a manufacturer, producer, or any person or company
that is a small business concern and that—
‘‘(A) engages in any activity described in subparagraph (B) pursuant to
a law established by a State or a political subdivision of a State, as deter-
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mined by such State or political sub-division; and
‘‘(B) participates in any business or organized activity that involves han-
dling cannabis or cannabis products, including cultivating, producing, man-
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8
ufacturing, selling, transporting, displaying, dispensing, distributing, or
purchasing cannabis or cannabis products.
‘‘(3) SERVICE PROVIDER.—The term ‘service provider’—
‘‘(A) means a business, organization, or other person that—
‘‘(i) sells goods or services to a cannabis-related legitimate business;
or
‘‘(ii) provides any business services, including the sale or lease of real
or any other property, legal or other licensed services, or any other an-
cillary service, relating to cannabis; and
‘‘(B) does not include a business, organization, or other person that par-
ticipates in any business or organized activity that involves handling can-
nabis or cannabis products, including cultivating, producing, manufac-
turing, selling, transporting, displaying, dispensing, distributing, or pur-
chasing cannabis or cannabis products.’’.
(b) SMALL BUSINESS DEVELOPMENT CENTERS.—Section 21(c) of the Small Business
Act (15 U.S.C. 648(c)) is amended by adding at the end the following new para-
graph:
‘‘(9) SERVICES FOR CANNABIS-RELATED LEGITIMATE BUSINESSES AND SERVICE
PROVIDERS.—A small business development center may not decline to provide
services to an otherwise eligible small business concern under this section solely
because such concern is a cannabis-related legitimate business or service pro-
vider.’’.
(c) WOMEN’S BUSINESS CENTERS.—Section 29 of the Small Business Act (15 U.S.C.
656) is amended by adding at the end the following new subsection:
‘‘(p) SERVICES FOR CANNABIS-RELATED LEGITIMATE BUSINESSES AND SERVICE PRO-
VIDERS.—A women’s business center may not decline to provide services to an other-
wise eligible small business concern under this section solely because such concern
is a cannabis-related legitimate business or service provider.’’.
(d) SCORE.—Section 8(b)(1)(B) of the Small Business Act (15 U.S.C. 637(b)(1)(B))
is amended by adding at the end the following new sentence: ‘‘The head of the
SCORE program established under this subparagraph may not decline to provide
services to an otherwise eligible small business concern solely because such concern
is a cannabis-related legitimate business or service provider.’’.
(e) VETERAN BUSINESS OUTREACH CENTERS.—Section 32 of the Small Business Act
(15 U.S.C. 657b) is amended by adding at the end the following new subsection:
‘‘(h) SERVICES FOR CANNABIS-RELATED LEGITIMATE BUSINESSES AND SERVICE PRO-
VIDERS.—A Veteran Business Outreach Center may not decline to provide services
to an otherwise eligible small business concern under this section solely because
such concern is a cannabis-related legitimate business or service provider.’’.
(f) 7(a) LOANS.—Section 7(a) of the Small Business Act (15 U.S.C. 636(a)) is
amended by adding at the end the following new paragraph:
‘‘(36) LOANS TO CANNABIS-RELATED LEGITIMATE BUSINESSES AND SERVICE PRO-
VIDERS.—The Administrator may not decline to provide a guarantee for a loan
under this subsection to an otherwise eligible small business concern solely be-
cause such concern is a cannabis-related legitimate business or service pro-
vider.’’.
(g) DISASTER LOANS.—Section 7(b) of the Small Business Act (15 U.S.C. 636(b))
is amended by inserting after paragraph (15) the following new paragraph:
‘‘(16) ASSISTANCE TO CANNABIS-RELATED LEGITIMATE BUSINESSES AND SERVICE
PROVIDERS.—The Administrator may not decline to provide assistance under
this subsection to an otherwise eligible borrower solely because such borrower
is a cannabis-related legitimate business or service provider.’’.
(h) MICROLOANS.—Section 7(m) of the Small Business Act (15 U.S.C. 636(m)) is
amended by adding at the end the following new paragraph:
‘‘(14) ASSISTANCE TO CANNABIS-RELATED LEGITIMATE BUSINESSES AND SERVICE
PROVIDERS.—An eligible intermediary may not decline to provide assistance
under this subsection to an otherwise eligible borrower solely because such bor-
rower is a cannabis-related legitimate business or service provider.’’.
(i) STATE OR LOCAL DEVELOPMENT COMPANY LOANS.—Title V of the Small Busi-
ness Investment Act of 1958 (15 U.S.C. 695 et seq.) is amended by adding at the
end the following new section:
‘‘SEC. 511. LOANS TO CANNABIS-RELATED LEGITIMATE BUSINESSES AND SERVICE PRO-
VIDERS.
‘‘The Administrator may not decline to provide a guarantee for a loan under this
title to an otherwise eligible State or local development company solely because such
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State or local development company provides financing to an entity that is a can-
nabis-related legitimate business or service provider (as defined in section 3(ff) of
the Small Business Act).’’.
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9
SEC. 8. NO DISCRIMINATION IN THE PROVISION OF A FEDERAL PUBLIC BENEFIT ON THE
BASIS OF CANNABIS.
(a) IN GENERAL.—No person may be denied any Federal public benefit (as such
term is defined in section 401(c) of the Personal Responsibility and Work Oppor-
tunity Reconciliation Act of 1996 (8 U.S.C. 1611(c))) on the basis of any use or pos-
session of cannabis, or on the basis of a conviction or adjudication of juvenile delin-
quency for a cannabis offense, by that person.
(b) SECURITY CLEARANCES.—Federal agencies may not use past or present can-
nabis or marijuana use as criteria for granting, denying, or rescinding a security
clearance.
SEC. 9. NO ADVERSE EFFECT FOR PURPOSES OF THE IMMIGRATION LAWS.
(a) IN GENERAL.—For purposes of the immigration laws (as such term is defined
in section 101 of the Immigration and Nationality Act), cannabis may not be consid-
ered a controlled substance, and an alien may not be denied any benefit or protec-
tion under the immigration laws based on any event, including conduct, a finding,
an admission, addiction or abuse, an arrest, a juvenile adjudication, or a conviction,
relating to cannabis, regardless of whether the event occurred before, on, or after
the effective date of this Act.
(b) CANNABIS DEFINED.—The term ‘‘cannabis’’—
(1) means all parts of the plant Cannabis sativa L., whether growing or not;
the seeds thereof; the resin extracted from any part of such plant; and every
compound, manufacture, salt, derivative, mixture, or preparation of such plant,
its seeds or resin; and
(2) does not include—
(A) hemp, as defined in section 297A of the Agricultural Marketing Act
of 1946; or
(B) the mature stalks of such plant, fiber produced from such stalks, oil
or cake made from the seeds of such plant, any other compound, manufac-
ture, salt, derivative, mixture, or preparation of such mature stalks (except
the resin extracted therefrom), fiber, oil, or cake, or the sterilized seed of
such plant which is incapable of germination.
(c) CONFORMING AMENDMENTS TO IMMIGRATION AND NATIONALITY ACT.—The Im-
migration and Nationality Act (8 U.S.C. 1101 et seq.) is amended—
(1) in section 212(h), by striking ‘‘and subparagraph (A)(i)(II) of such sub-
section insofar as it relates to a single offense of simple possession of 30 grams
or less of marijuana’’;
(2) in section 237(a)(2)(B)(i), by striking ‘‘other than a single offense involving
possession for one’s own use of 30 grams or less of marijuana’’;
(3) in section 101(f)(3), by striking ‘‘(except as such paragraph relates to a sin-
gle offense of simple possession of 30 grams or less of marihuana)’’;
(4) in section 244(c)(2)(A)(iii)(II) by striking ‘‘except for so much of such para-
graph as relates to a single offense of simple possession of 30 grams or less of
marijuana’’;
(5) in section 245(h)(2)(B) by striking ‘‘(except for so much of such paragraph
as related to a single offense of simple possession of 30 grams or less of mari-
juana)’’;
(6) in section 210(c)(2)(B)(ii)(III) by striking ‘‘, except for so much of such
paragraph as relates to a single offense of simple possession of 30 grams or less
of marihuana’’; and
(7) in section 245A(d)(2)(B)(ii)(II) by striking ‘‘, except for so much of such
paragraph as relates to a single offense of simple possession of 30 grams or less
of marihuana’’.
SEC. 10. RESENTENCING AND EXPUNGEMENT.
(a) EXPUNGEMENT OF FEDERAL CANNABIS OFFENSE CONVICTIONS FOR INDIVIDUALS
NOT UNDER A CRIMINAL JUSTICE SENTENCE.—
(1) IN GENERAL.—Not later than 1 year after the date of the enactment of this
Act, each Federal district shall conduct a comprehensive review and issue an
order expunging each conviction or adjudication of juvenile delinquency for a
Federal cannabis offense entered by each Federal court in the district before the
date of enactment of this Act and on or after May 1, 1971. Each Federal court
shall also issue an order expunging any arrests associated with each expunged
conviction or adjudication of juvenile delinquency.
(2) NOTIFICATION.—To the extent practicable, each Federal district shall no-
tify each individual whose arrest, conviction, or adjudication of delinquency has
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been expunged pursuant to this subsection that their arrest, conviction, or adju-
dication of juvenile delinquency has been expunged, and the effect of such
expungement.
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10
(3) RIGHT TO PETITION COURT FOR EXPUNGEMENT.—At any point after the date
of enactment of this Act, any individual with a prior conviction or adjudication
of juvenile delinquency for a Federal cannabis offense, who is not under a crimi-
nal justice sentence, may file a motion for expungement. If the expungement of
such a conviction or adjudication of juvenile delinquency is required pursuant
to this Act, the court shall expunge the conviction or adjudication, and any asso-
ciated arrests. If the individual is indigent, counsel shall be appointed to rep-
resent the individual in any proceedings under this subsection.
(4) SEALED RECORD.—The court shall seal all records related to a conviction
or adjudication of juvenile delinquency that has been expunged under this sub-
section. Such records may only be made available by further order of the court.
(b) SENTENCING REVIEW FOR INDIVIDUALS UNDER A CRIMINAL JUSTICE SEN-
TENCE.—
(1) IN GENERAL.—For any individual who is under a criminal justice sentence
for a Federal cannabis offense, the court that imposed the sentence shall, on
motion of the individual, the Director of the Bureau of Prisons, the attorney for
the Government, or the court, conduct a sentencing review hearing. If the indi-
vidual is indigent, counsel shall be appointed to represent the individual in any
sentencing review proceedings under this subsection.
(2) POTENTIAL REDUCED RESENTENCING.—After a sentencing hearing under
paragraph (1), a court shall—
(A) expunge each conviction or adjudication of juvenile delinquency for a
Federal cannabis offense entered by the court before the date of enactment
of this Act, and any associated arrest;
(B) vacate the existing sentence or disposition of juvenile delinquency
and, if applicable, impose any remaining sentence or disposition of juvenile
delinquency on the individual as if this Act, and the amendments made by
this Act, were in effect at the time the offense was committed; and
(C) order that all records related to a conviction or adjudication of juve-
nile delinquency that has been expunged or a sentence or disposition of ju-
venile delinquency that has been vacated under this Act be sealed and only
be made available by further order of the court.
(c) EFFECT OF EXPUNGEMENT.—An individual who has had an arrest, a conviction,
or juvenile delinquency adjudication expunged under this section—
(1) may treat the arrest, conviction, or adjudication as if it never occurred;
and
(2) shall be immune from any civil or criminal penalties related to perjury,
false swearing, or false statements, for a failure to disclose such arrest, convic-
tion, or adjudication.
(d) DEFINITIONS.—In this section:
(1) The term ‘‘Federal cannabis offense’’ means an offense that is no longer
punishable pursuant to this Act or the amendments made under this Act.
(2) The term ‘‘expunge’’ means, with respect to an arrest, a conviction, or a
juvenile delinquency adjudication, the removal of the record of such arrest, con-
viction, or adjudication from each official index or public record.
(3) The term ‘‘under a criminal justice sentence’’ means, with respect to an
individual, that the individual is serving a term of probation, parole, supervised
release, imprisonment, official detention, pre-release custody, or work release,
pursuant to a sentence or disposition of juvenile delinquency imposed on or
after the effective date of the Controlled Substances Act (May 1, 1971).
(e) STUDY.—The Comptroller General of the United States, in consultation with
the National Institute on Drug Abuse, shall conduct a demographic study of individ-
uals convicted of a Federal cannabis offense. Such study shall include information
about the age, race, ethnicity, sex, and gender identity of those individuals, the type
of community such users dwell in, and such other demographic information as the
Comptroller General determines should be included.
(f) REPORT.—Not later than 2 years after the date of the enactment of this Act,
the Comptroller General of the United States shall report to Congress the results
of the study conducted under subsection (e).
SEC. 11. REFERENCES IN EXISTING LAW TO MARIJUANA OR MARIHUANA.
Wherever, in the statutes of the United States or in the rulings, regulations, or
interpretations of various administrative bureaus and agencies of the United
States—
(1) there appears or may appear the term ‘‘marihuana’’ or ‘‘marijuana’’, that
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term shall be struck and the term ‘‘cannabis’’ shall be inserted; and
(2) there appears or may appear the term ‘‘Marihuana’’ or ‘‘Marijuana’’, that
term shall be struck and the term ‘‘Cannabis’’ shall be inserted.
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SEC. 12. SEVERABILITY.
If any provision of this Act or an amendment made by this Act, or any application
of such provision to any person or circumstance, is held to be unconstitutional, the
remainder of this Act, the amendments made by this Act, and the application of this
Act and the amendments made by this Act to any other person or circumstance
shall not be affected.
SEC. 13. CANNABIS OFFENSE DEFINED.
For purposes of this Act, the term ‘‘cannabis offense’’ means a criminal offense re-
lated to cannabis—
(1) that, under Federal law, is no longer punishable pursuant to this Act or
the amendments made under this Act; or
(2) that, under State law, is no longer an offense or that was designated a
lesser offense or for which the penalty was reduced under State law pursuant
to or following the adoption of a State law authorizing the sale or use of can-
nabis.
SEC. 14. RULEMAKING.
Unless otherwise provided in this Act, not later than 1 year after the date of en-
actment of this Act, the Department of the Treasury, the Department of Justice, and
the Small Business Administration shall issue or amend any rules, standard oper-
ating procedures, and other legal or policy guidance necessary to carry out imple-
mentation of this Act. After the 1-year period, any publicly issued sub-regulatory
guidance, including any compliance guides, manuals, advisories and notices, may
not be issued without 60-day notice to appropriate congressional committees. Notice
shall include a description and justification for additional guidance.
SEC. 15. SOCIETAL IMPACT OF MARIJUANA LEGALIZATION STUDY.
The Comptroller General of the United States shall, not later than 2 years after
the date of enactment of this Act, provide to Congress a study that addresses the
societal impact of the legalization of recreational cannabis by States, including—
(1) sick days reported to employers;
(2) workers compensations claims;
(3) tax revenue remitted to States resulting from legal marijuana sales;
(4) changes in government spending related to enforcement actions and court
proceedings;
(5) Federal welfare assistance applications;
(6) rate of arrests related to methamphetamine possession;
(7) hospitalization rates related to methamphetamine and narcotics use;
(8) uses of marijuana and its byproducts for medical purposes;
(9) arrest rates of individuals driving under the influence or driving while in-
toxicated by marijuana;
(10) traffic-related deaths and injuries where the driver is impaired by mari-
juana;
(11) arrest of minors for marijuana-related charges;
(12) violent crime rates;
(13) school suspensions, expulsions, and law enforcement referrals that are
marijuana-related;
(14) high school dropout rates;
(15) changes in district-wide and State-wide standardized test scores;
(16) marijuana-related hospital admissions and poison control calls;
(17) marijuana-related juvenile admittances into substance rehabilitation fa-
cilities and mental health clinics;
(18) diversion of marijuana into neighboring States and drug seizures in
neighboring States;
(19) marijuana plants grown on public lands in contravention to Federal and
State laws; and
(20) court filings under a State’s organized crime statutes.
Purpose and Summary
H.R. 3884, the ‘‘Marijuana Opportunity Reinvestment and
Expungement Act of 2019,’’ or ‘‘MORE Act of 2019’’ would (1) re-
move marijuana, or cannabis, from the list of substances controlled
under the Controlled Substances Act (CSA); (2) create an Oppor-
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tunity Trust Fund to be funded through an excise tax on the sale
of cannabis products; (3) create a Cannabis Justice Office within
the Department of Justice (DOJ) to administer a Community Rein-
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12
vestment Grant Program to fund nonprofits that provide services
to individuals most adversely impacted by the War on Drugs; (4)
create a Cannabis Opportunity Program within the Small Business
Administration (SBA) to provide eligible states and localities with
funds for loans to business concerns owned and controlled by so-
cially and economically disadvantaged individuals and an Equi-
table Licensing Program, also within SBA, to provide funds to eligi-
ble states and localities for developing cannabis licensing programs
that minimize barriers to cannabis licensing and employment for
individuals most adversely impacted by the War on Drugs; (5) en-
sure that SBA programs and services are made available to can-
nabis-related legitimate businesses and service providers; (6) pro-
vide for the expungement of Federal cannabis arrests and offenses,
vacatur and sealing of cannabis offenses and for resentencing hear-
ings, where appropriate; (7) protect individuals from discrimination
in the provision of public benefits on the basis of use, possession,
or convictions or juvenile adjudications for cannabis offenses; and
(8) prohibit consideration of cannabis as a controlled substance for
purposes of the immigration laws.
Background and Need for the Legislation
1. OVERVIEW
Marijuana (or cannabis), as defined in the Controlled Substances
Act (CSA),1 includes ‘‘all parts of the plant Cannabis sativa L.,
whether growing or not; the seeds thereof; the resin extracted from
any part of such plant; and every compound, manufacture, salt, de-
rivative, mixture, or preparation of such plant, its seeds or resin.’’ 2
The CSA definition of marijuana exempts cannabis plant material
that falls into four categories—mature stalks, fiber produced from
mature stalks, oil or cake made from seeds, and seeds incapable of
germination—as well as ‘‘any other compound, manufacture, salt,
derivative, mixture, or preparation’’ of the exempt plant material.3
In addition, the Agriculture Improvement Act of 2018 4 explicitly
exempted hemp from the definition of marijuana under the CSA.5
Cannabis is a complex plant, consisting of two major compounds,
delta-9-tetrahydrocannabinol (commonly known as THC) and
cannabidiol (commonly known as CBD), which produce opposing ef-
fects on individuals.6 THC is the main psychoactive ingredient in
cannabis 7 and is the component that produces the feeling of being
‘‘high.’’ THC can account for as much as 40% of the total
cannabinoid content in marijuana.8 Hemp, by contrast is defined in
the CSA as cannabis and cannabis derivatives with very low con-
centrations (no more than 0.3% on a dry weight basis) of THC.9
1 21 U.S.C. §§ 801 et seq. (2019).
2 21 U.S.C. § 802(16)(A) (2019). In different parts of the U.S. Code, including the CSA, mari-
juana is referred to as ‘‘marihuana.’’
3 21 U.S.C. § 802(16)(B)(ii) (2019).
4 Pub. L. No. 115–334, 132 Stat. 4490 (2018).
5 21 U.S.C. § 802(16)(B)(i) (2019).
6 Zerrin Atakan, Cannabis, a Complex Plant: Different Compounds and Different Effects on In-
dividuals, THERAPEUTIC ADVANCES IN PSYCHOPHARMACOLOGY (Dec. 2012), at 241, https://
www.ncbi.nlm.nih.gov/pmc/articles/PMC3736954/.
7 Id. at 245.
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8 Timothy Williams, CBD is Wildly Popular. Disputes Over Its Legality Are a Growing Source
of Legal Tension, N.Y. TIMES (May 6, 2019), https://www.nytimes.com/2019/05/06/us/cbd-
cannabis-marijuana-hemp.html.
9 7 U.S.C. § 1639o (2019).
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13
Hemp is rich in CBD and generally contains only 0.3% of THC or
less.10
The current federal statutory scheme relative to marijuana
comes from the CSA. The CSA makes it unlawful to manufacture,
import, possess, use, and distribute the substances it regulates, in-
cluding marijuana. States have also historically prohibited mari-
juana use, although in the last two decades there has been a trend
towards state legalization. In 1996, California became the first
state to legalize medical cannabis with the approval of Proposition
215.11 At the present time, 33 states and the District of Columbia
have legalized medical cannabis.12 In 2012, Colorado and Wash-
ington became the first two states to legalize the recreational use
of cannabis, following the passage of Amendment 64 and Initiative
502, respectively.13 At this time, 11 states and the District of Co-
lumbia have legalized cannabis for adult recreational use.14 In ad-
dition, the U.S. territories of Guam,15 the Northern Mariana Is-
lands,16 Puerto Rico,17 and the U.S. Virgin Islands 18 have legalized
marijuana for medical or recreational purposes. The legalization of
cannabis at the state level, whether for medical or recreational use,
has in many instances put state laws in apparent conflict with fed-
eral statutes that broadly proscribe the possession or use of mari-
juana.
The CSA is Title II of the Comprehensive Drug Abuse Prevention
and Control Act.19 At the time of its passage, in 1970, President
Nixon sent a message to Congress declaring drug abuse ‘‘public
enemy number one’’ and announcing a ‘‘new, all-out offensive.’’ 20
This offensive came to be known as the ‘‘War on Drugs.’’
The CSA directed the President to establish a Commission on
Marijuana and Drug Abuse and issue a study report.21 Among
other things, the Commission’s first report concluded that criminal-
ization was ‘‘too harsh a tool to apply to personal possession even
in the effort to discourage use,’’ and that ‘‘the actual and potential
harm of use of the drug is not great enough to justify intrusion by
the criminal law into private behavior, a step which our society
10 Williams, supra note 8.
11 John Balzar, Voters Approve Measure to Use Pot as Medicine, L.A. TIMES (Nov. 6, 1996),
available at https://www.latimes.com/archives/la-xpm-1996-11-06-mn-62740-story.html.
12 The 33 states are: Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware,
Florida, Hawaii, Illinois, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota,
Missouri, Montana, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Da-
kota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, Utah, Vermont, Washington, and
West Virginia.
13 Keith Coffman & Nicole Neroulias, Colorado, Washington first states to legalize recreational
pot, REUTERS (Nov. 6, 2012), https://www.reuters.com/article/us-usa-marijuana-legalization/
colorado-washington-first-states-to-legalize-recreational-pot-idUSBRE8A602D20121107.
14 The 11 states are: Alaska, California, Colorado, Illinois, Maine, Massachusetts, Michigan,
Nevada, Oregon, Vermont, and Washington.
15 See Christopher Ingraham, Medical Marijuana Advocates Notch an Early Victory in Guam,
WASH. POST (Nov. 4, 2014), https://www.washingtonpost.com/news/wonk/wp/2014/11/04/medical-
marijuana-advocates-notch-an-early-victory-in-guam/.
16 See Tom Angell, Governor Signs Marijuana Legalization Bill, Making History in U.S. Terri-
tory, FORBES (Sep. 21, 2018), https://www.forbes.com/sites/tomangell/2018/09/21/governor-signs-
marijuana-legalization-bill-making-history-in-us-territory/#1709d6dc27ea.
17 Alexandra Sifferlin, Puerto Rico Governor Signs Executive Order to Legalize Medical Mari-
juana, TIME (May 4, 2015), https://time.com/3845638/puerto-rico-medical-marijuana/.
18 Kyle Jaeger, Governor Signs Bill Legalizing Medical Marijuana in the U.S. Virgin Islands,
MARIJUANA MOMENT (Jan. 19, 2019), https://www.marijuanamoment.net/governor-signs-bill-
legalizing-medical-marijuana-in-the-u-s-virgin-islands/.
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19 See Pub. L. No. 91–513, 84 Stat. 1242 (1970).
20 Conor Friedersdorf, The War on Drugs Turns 40, THE ATLANTIC (June 15, 2011), https://
www.theatlantic.com/politics/archive/2011/06/the-war-on-drugs-turns-40/240472/.
21 See Pub. L. No. 91–513, 84 Stat. 1280–81, § 601 (1970).
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14
takes only with the greatest reluctance.’’ 22 Although the Nixon Ad-
ministration dismissed these recommendations at the federal level,
during the mid-1970s virtually all states softened their penalties
for marijuana possession.23 Despite some relaxation at the state
level, in 1973, President Nixon created the Drug Enforcement
Agency, within the Department of Justice, to establish a single fed-
eral agency to enforce federal drug laws and to consolidate and co-
ordinate the government’s drug control activities.24
The CSA established a ‘‘scheduling’’ system, through which the
federal government regulates the lawful production, possession and
distribution of controlled substances. Placement on each of the five
schedules is based upon the substance’s medical use, potential for
abuse, and safety or dependence liability. Marijuana was initially
placed, and today remains, on Schedule I.25 THC is also on Sched-
ule I.26 By virtue of their placement on Schedule I, marijuana and
THC have been deemed by the federal government to have: (1) a
high potential for abuse; (2) no currently accepted medical use in
treatment in the United States; and (3) a lack of accepted safety
for use under medical supervision.27 Because of this, Schedule I
substances may not be dispensed under a prescription, and such
substances may only be used for bona fide, federal government-ap-
proved research studies.28
Individuals who want to conduct research on marijuana must do
so in accordance with the CSA and other federal laws. If avail-
ability of a controlled substance is sought for purposes of research,
the researcher must obtain a registration issued by the DEA.29
There are strict storage requirements with which all registrants
are expected to comply.30 Since passage of the CSA, the DEA has
issued only one license for the cultivation of marijuana for re-
search, to the University of Mississippi.31 The University of Mis-
sissippi’s application was renewed in 2015,32 but no other applica-
tions have been approved by the DEA, despite a stalled effort to-
wards the end of the Obama Administration to increase the num-
ber of suppliers of marijuana for research purposes.33
22 NATIONAL COMMISSION ON MARIHUANA AND DRUG ABUSE, MARIHUANA: A SIGNAL OF MIS-
UNDERSTANDING—THE OFFICIAL REPORT OF THE NATIONAL COMMISSION ON MARIHUANA AND
DRUG ABUSE 176 (1972).
23 Brent Staples, The Federal Marijuana Ban is Rooted in Myth and Xenophobia, N.Y. TIMES
(July 29, 2014), https://www.nytimes.com/2014/07/30/opinion/high-time-federal-marijuana-ban-is-
rooted-in-myth.html.
24 See https://www.dea.gov/history.
25 See 21 U.S.C. § 812(c)(c)(10) (2019).
26 21 U.S.C. § 812(c)(c)(17) (2019).
27 21 U.S.C. § 812(b)(1) (2019).
28 21 U.S.C. § 823(f) (2019). Under the CSA, only DEA-licensed doctors are allowed to prescribe
controlled substances listed in Schedules II–V to patients. See 21 C.F.R. § 1306.03 (persons enti-
tled to issue prescriptions). Federal regulations stipulate that a lawful prescription for a con-
trolled substance may only be ‘‘issued for a legitimate medical purpose by an individual practi-
tioner acting in the usual course of his professional practice.’’ 21 C.F.R. § 1306.04.
29 See 21 U.S.C. § 822; see also 21 C.F.R. § 1301.11(a) (‘‘Every person who manufactures, dis-
tributes, dispenses, imports, or exports any controlled substance or who proposes to engage in
the manufacture, distribution, dispensing, importation or exportation of any controlled sub-
stance shall obtain a registration unless exempted by law or pursuant to §§ 1301.22 through
1301.26.’’).
30 All applicants and registrants must ‘‘provide effective controls and procedures to guard
against theft and diversion of controlled substances.’’ 21 C.F.R. § 1301.71.
31 National Institute on Drug Abuse, NIDA’s Role in Providing Marijuana for Research, avail-
able at https://www.drugabuse.gov/drugs-abuse/marijuana/nidas-role-in-providing-marijuana-
research.
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32 Id.
33 Andrew Joseph, DEA Solicited Applications to Grow Marijuana for Research. It Hasn’t Ap-
proved One, STAT (July 24, 2017), https://www.statnews.com/2017/07/24/dea-marijuana-licenses-
research/. In August of 2016, the DEA had announced the adoption of a new policy ‘‘designed
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15
During the 1980s, Congress and President Ronald Reagan en-
acted many mandatory minimum penalties and increased the
length of existing penalties, particularly for drug and violent felo-
nies.34 The Reagan Administration also launched the ‘‘Just Say No’’
campaign against drug use and enforced a ‘‘zero tolerance’’ policy
in relation to drugs.35 Congress created the U.S. Sentencing Com-
mission during this time period, as part of the Sentencing Reform
Act provisions of the Comprehensive Crime Control Act of 1984,36
to establish sentencing policies and practices for the federal courts,
‘‘including guidelines to be consulted regarding the appropriate
form and severity of punishment for offenders convicted of federal
crimes.’’ 37 The Sentencing Commission began to develop Guide-
lines that operated by establishing a mandatory minimum term of
imprisonment where none had existed before,38 but Congress also
began to reenact mandatory minimums, many of which were put
in place through the Anti-Drug Abuse Act of 1986.39
The Anti-Drug Abuse Act of 1986 set forth the basic framework
of mandatory minimum penalties for federal drug trafficking of-
fenses. The Act established quantities that triggered those manda-
tory minimum penalties, which ranged from five years to life im-
prisonment, and differed for various drugs.40 Congress expedited
passage of the Act after an uptick in the incidence of drug use and
trafficking, as well as the June 1986 overdose death of the Boston
Celtics’ first-round pick, Len Bias.41 Because of heightened concern
and the national sense of urgency, Congress bypassed much of its
usual deliberative process in relation to the Anti-Drug Abuse Act;
Congress held no committee hearings and produced no reports.42
The Anti-Drug Abuse Act established mandatory minimums of
ten years for possessing with intent to distribute, importing, or ex-
porting 1000 kilograms or more of a mixture or substance con-
taining a detectable amount of marijuana, and five years for pos-
sessing with intent to distribute, importing, or exporting 100 kilo-
grams or more of a mixture or substance containing a detectable
amount of marijuana.43 In addition, the Act established that a per-
to increase the number of entities registered under the Controlled Substances Act (CSA) to grow
(manufacture) marijuana to supply legitimate researchers in the United States.’’ Applications
to Become Registered Under the Controlled Substances Act to Manufacture Marijuana to Supply
Researchers in the United Sates, 81 Fed. Reg. 53,846 (Aug. 12, 2016) (codified at 21 C.F.R. pt.
1301).
34 See U.S. SENTENCING COMM’N, 2011 REPORT TO THE CONGRESS: MANDATORY MINIMUM PEN-
ALTIES IN THE CRIMINAL JUSTICE SYSTEM 23 (2011).
35 See Michael McGrath, Nancy Reagan and the Negative Impact of the ‘Just Say No’ Anti-
Drug Campaign, THE GUARDIAN (Mar. 8, 2016), https://www.theguardian.com/society/2016/mar/
08/nancy-reagan-drugs-just-say-no-dare-program-opioid-epidemic.
36 Pub. L. No. 98–473, 98 Stat. 1837, 1987 (1984).
37 U.S. Sentencing Comm’n, Mission, available at https://www.ussc.gov/about-page.
38 See 18 U.S.C. § 3553(b)(1) (provision severed and excised by United States v. Booker, 543
U.S. 220 (2005)).
39 Pub. L. No. 99–570, 100 Stat. 3207 (1986). The Act established mandatory minimums in
21 U.S.C. §§ 841 (possession with intent to distribute controlled substances); 844 (simple posses-
sion); 845 (distribution to a person under 21 years of age); 845a (distribution near a school);
845b (use of a child in a drug operation); 960 (controlled substance import or export offenses);
and in 18 U.S.C. § 924(e) (adding drug offenses to the Armed Career Criminal Act’s predicate
offense list).
40 Pub. L. No. 99–570, 100 Stat. 3207–2 (1984).
41 2011 REPORT TO THE CONGRESS, supra, note 34, at 23.
42 Id. at 23–24; see, e.g., 132 CONG. REC. 26,436 (Sep. 26, 1986) (statement of Sen. Hawkins)
(‘‘Drugs pose a clear and present danger to America’s national security. If for no other reason
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we should be addressing this on an emergency basis.’’).
43 Pub. L. No. 99–570, 100 Stat. 3207–2 and 3207–15 (1986). The Act established additional
mandatory minimums of 10 years, 20 years and life imprisonment depending on whether death
Continued
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16
son convicted of possessing with intent to distribute, importing, or
exporting a controlled substance in Schedule I (including mari-
juana) could be sentenced to up to 20 years in prison.44
The current federal statutory scheme prohibits the cultivation or
distribution of marijuana, or the possession of marijuana with the
intent to distribute, as well as the importation and exportation of
marijuana.45 Marijuana offenses involve some of the same manda-
tory minimums as were mandated by Congress in the Anti-Drug
Abuse Act (ten years 46 and five years,47 depending on the amount
at issue, and higher mandatory minimums ranging from 15 years
to life in prison, depending on recidivism and whether death or se-
rious bodily injury resulted).48
The mere possession of marijuana, without intent to distribute,
is generally a misdemeanor subject to up to one year of imprison-
ment.49 A violation of this federal ‘‘simple possession’’ statute after
a single prior conviction under any federal or state drug law trig-
gers a mandatory minimum imprisonment term of 15 days (up to
a maximum of two years) and this increases to a minimum of 90
days (and a maximum of three years) with multiple prior drug con-
victions.50 In a case concerning less than 50 kilograms of mari-
juana, a person can be subject to up to five years of imprison-
ment.51
Pursuant to the CSA, the federal government prosecutes a large
number of drug trafficking offenses. In fiscal year 2018, there were
69,425 cases reported to the United States Sentencing Commis-
sion.52 Of these, 18,964 cases involved drug trafficking, and 11.5%
of the cases involving drug trafficking involved marijuana.53 In fis-
cal year 2018, there were 2,190 marijuana trafficking offenders,
which represents a decrease of 44.9% from the 3,973 offenders in
fiscal year 2014.54 The vast majority of marijuana trafficking of-
fenders were men, at 86.8%, in fiscal year 2018.55 Over half
(53.3%) were United States citizens.56 Almost three-quarters of
marijuana trafficking offenders prosecuted in federal court in fiscal
year 2018 were Hispanic, or Latino (71.9%), and 11.5% were White,
12.3% were Black, and 4.3% were offenders from other races.57
or serious bodily injury resulted from use of the drug or whether the offense was committed
following a prior felony drug conviction. See id.
44 Pub. L. No. 99–570, 100 Stat. 3207–4 and 3207–17 (1986). With a drug prior, the maximum
sentence increased to 30 years. Id. If death or bodily injury resulted from use of the substance,
the Act mandated a mandatory minimum term of 20 years, and, with a drug prior, a sentence
of life in prison. Id.
45 See 21 U.S.C. §§ 841(b)(1)(A)–(D) and 960(b)(1)–(4) (2019).
46 This mandatory minimum now includes the possession of ‘‘1,000 or more marihuana plants,
regardless of weight.’’ See 21 U.S.C. § 841(b)(1)(A)(vii) (2019).
47 This mandatory minimum now includes the possession of ‘‘100 or more marihuana plants,
regardless of weight.’’ See 21 U.S.C. § 841(b)(1)(B)(vii) (2019).
48 See 21 U.S.C. §§ 841(b)(1)(A)–(B); 960(b)(1)–(2) (2019); see also 21 U.S.C. § 851 (2019) (pro-
vides a procedure for a government filing seeking an enhanced penalty for a drug offender pre-
viously convicted of a ‘‘felony drug offense’’).
49 21 U.S.C. § 844(a) (2019).
50 Id.
51 21 U.S.C. § 841(b)(1)(D) (2019).
52 U.S. Sentencing Comm’n, Quick Facts: Marijuana Trafficking Offenses, at 1, https://
www.ussc.gov/sites/default/files/pdf/research-and-publications/quick-facts/Marijuana_FY18.pdf.
In fiscal year 2017, the federal government prosecuted 776 drug-possession cases; 571 of these
cases were marijuana-possession prosecutions. U.S. Sentencing Comm’n, 2018 Fiscal Year
Datafiles, USSCFY18.
53 2017 Quick Facts, at 1.
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54 Id.
55 Id.
56 Id.
57 Id.
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Ninety-one percent of offenders (91.1%) were sentenced to prison,
with the average sentence being 29 months.58 Almost thirty-two
percent (31.8%) of marijuana trafficking offenders were convicted of
an offense carrying a mandatory minimum, although 63.64% were
not subject to a mandatory minimum because either they were eli-
gible for a ‘‘safety valve’’ reduction, they gave substantial assist-
ance to the government, or both.59 This represents a one-year in-
crease of over six percentage points; in fiscal year 2017, the per-
centage of marijuana trafficking offenders convicted of an offense
carrying a mandatory minimum penalty was 25.6%.60
The Federal Bureau of Investigation reports that in 2018 there
were a total of 1,654,282 arrests for all drug offenses reported in
the United States,61 of which 13.6% were for the sale or manufac-
ture of any drug and, of these, 3.3%—or approximately 7,424 ar-
rests—were for marijuana.62 In 2018, the percentage of drug pos-
session arrests relative to arrests for all drug offenses was 86.4%;
of these, 36.8%—or approximately 525,982 arrests—were for mari-
juana.63
At the same time as the federal government continues to main-
tain marijuana’s placement as a controlled substance on Schedule
I, the majority of states and the District of Columbia have estab-
lished laws and policies authorizing the medical or recreational use
of marijuana, as noted above.64
The possession, cultivation, or distribution of marijuana, how-
ever, remains a federal crime within every state that has legalized
it. As a result, a person who grows, possesses, uses, sells, trans-
ports, or distributes marijuana, even if done in a way that is con-
sistent with state law or authorized by a state license, is nonethe-
less in violation of the CSA and remains subject to federal prosecu-
tion. In addition, because marijuana is still a federally-controlled
substance, the application of various money laundering and bank-
ing laws has hampered the ability of commercial marijuana estab-
lishments to obtain the necessary financing and financial services
to establish and grow their businesses.65
2. IMPACT ON MINORITY COMMUNITIES
As noted above, cannabis policies with a disproportionate impact
on minority communities began to be implemented in the early
part of the 20th century. Beginning in the 1960s, national policies
emphasized a law enforcement-focused approach that exacerbated
58 Id.
59 Id.
60 U.S. Sentencing Comm’n, Quick Facts: Marijuana Trafficking Offenses, at 1, https://
www.ussc.gov/sites/default/files/pdf/research-and-publications/quick-facts/Marijuana_FY17.pdf.
61 See Federal Bureau of Investigation, Uniform Crime Report, 2018 Crime in the United
States, Estimated Number of Arrests, United States, 2018 (Table 29), https://ucr.fbi.gov/crime-
in-the-u.s/2018/crime-in-the-u.s.-2018/tables/table-29.
62 See id., Arrests for Drug Abuse Violations, Percent Distribution by Region, 2018 (Arrest
Table), Federal Bureau of Investigation, Uniform Crime Report, 2018 Crime in the United
States, https://ucr.fbi.gov/crime-in-the-u.s/2018/crime-in-the-u.s.-2018/tables/arrest-table.xls.
63 See id.
64 See supra notes 11–18.
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65 See generally Easier Pot Policy Won’t Relieve Dispensaries’ Banking Woes, REUTERS (Sep. 5,
2013), https://www.cnbc.com/id/101011966; Serge F. Kovaleski, Banks Say No to Marijuana
Money, Legal or Not, N.Y. TIMES (Jan. 11, 2014), https://www.nytimes.com/2014/01/12/us/banks-
say-no-to-marijuana-money-legal-or-not.html.
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18
problems in cities throughout the country.66 The War on Drugs am-
plified these problems by distorting the statistics that tied drug ad-
diction to instances of crime.67 The national conversation thus
shifted away from eradicating the causes of crime and focused it on
punishing the criminal.68 This had the dual effect of exonerating
the white middle class from responsibility for the drug-related vio-
lence being experienced in the inner city and transforming the pub-
lic image of the drug user into a dangerous threat.69 ‘‘Shifting pub-
lic perception in this way ultimately served to reinforce the ‘neces-
sity’ of Nixon’s drug war. Once addicts were no longer seen as sick
victims of a society that systematically excluded them, no one
would mind when they were simply locked up. In fact, incarcer-
ation was for the nation’s own good.’’ 70 This ‘‘lock them up’’ men-
tality continued through the 1980s and 1990s.71
Enforcement of marijuana laws has been a key driver of mass
criminalization in the United States. As noted above, in 2018, there
were over 533,400 marijuana-related arrests.72 Of these, almost
526,000 were arrests for marijuana possession.73 The drug war has
produced profoundly unequal outcomes across racial groups, mani-
fested through significant racial disparities throughout the criminal
justice system.
The higher arrest and incarceration rates for communities of
color do not reflect a greater prevalence of drug use, but rather the
focus on law enforcement on urban areas, lower income commu-
nities, and communities of color.74 In fact, nearly 80% of people in
federal prison and almost 60% of people in state prison for drug of-
fenses are black or Latino.75 In its seminal 2013 report, ‘‘The War
on Marijuana in Black and White,’’ the American Civil Liberties
Union found:
[O]n average, a Black person is 3.73 times more likely
to be arrested for marijuana possession than a white per-
son, even though Blacks and whites use marijuana at simi-
lar rates. Such racial disparities in marijuana possession
arrests exist in all regions of the country, in counties large
and small, urban and rural, wealthy and poor, and with
large and small Black populations. Indeed, in over 96% of
counties with more than 30,000 people in which at least
2% of the residents are Black, Blacks are arrested at high-
er rates than whites for marijuana possession.76
66 See Emily Dufton, The War on Drugs: How President Nixon Tied Addiction to Crime, THE
ATLANTIC (Mar. 26, 2012), https://www.theatlantic.com/health/archive/2012/03/the-war-on-drugs-
how-president-nixon-tied-addiction-to-crime/254319/.
67 Id.
68 See id.
69 See id.
70 Id. (emphasis in original).
71 Matthew Yglesias, The Real Reason Mass Incarceration Happened, VOX (Apr. 11, 2016),
https://www.vox.com/2016/4/11/11399870/mass-incarceration-cause.
72 See supra notes 62 and 63.
73 See supra note 63.
74 See Drug Policy Alliance, Race and the Drug War, http://www.drugpolicy.org/issues/race-
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and-drug-war.
75 See id.
76 Amer. Civil Liberties Union, THE WAR ON MARIJUANA IN BLACK AND WHITE (June 2013),
at 4.
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3. COLLATERAL CONSEQUENCES
The collateral consequences of even an arrest for marijuana pos-
session can be devastating, especially if a felony conviction results.
Those arrested can be saddled with a criminal conviction that can
make it difficult or impossible to vote, obtain educational loans, get
a job, maintain a professional license, secure housing, secure gov-
ernment assistance, or even adopt a child.77 These exclusions cre-
ate an often-permanent second-class status for millions of Ameri-
cans. Like drug war enforcement itself, these consequences fall dis-
proportionately on people of color. For non-citizens, a conviction can
trigger deportation, sometimes with almost no possibility of discre-
tionary relief.78 In fact, simple marijuana possession was the
fourth most common cause of deportation for any crime in 2013.79
More than 13,000 people were deported in 2012 and 2013 just for
personal marijuana possession.80
Today, overcriminalized communities continue to suffer the con-
sequences of failed drug policies, even in states that have legalized
marijuana, where arrests have dropped for marijuana crimes.81 Le-
galization has not generated a reduction of the rate at which Black
and Latino people are arrested in these states.82 In fact, many
states have seen an even steeper rise in the percentage of African-
Americans and Latinos having their lives impacted by a marijuana
arrest.83 Two years after decriminalization in Washington, DC, a
Black person was 11 times more likely than a white person to be
arrested for public use of marijuana.84
Public support for making marijuana legal has increased over the
past two decades.85 The resulting trend in state-level legalization
of marijuana has placed states in apparent conflict with federal law
and, as a result, the Justice Department has struggled with how
to continue to uphold federal law in this context. Meanwhile, nu-
merous difficulties have arisen as states seek to develop a frame-
work for a legal cannabis industry without easy access to banking
and credit. Because marijuana is still a controlled substance under
the CSA, the specter of prosecution for participation in the can-
nabis industry looms large, even though medicinal or recreational
marijuana is legal in 33 states and the District of Columbia.
In addition, the collateral consequences suffered by those with
marijuana convictions are numerous and vast. Many criminal jus-
tice advocates argue that expunging marijuana convictions is a nec-
77 See Drug Policy Alliance, Just a Slap on the Wrist?: The Life-Changing Consequences of a
Marijuana Arrest (Feb. 2016), at http://www.drugpolicy.org/sites/default/files/
DPA_Fact%20sheet_Harms%20of%20Marijuana%20Criminalization_%28Feb.%202016%29.pdf.
78 See Jason Cade, The Plea Bargain Crisis for Noncitizens in Misdemeanor Court, 34
CARDOZO L. REV. 1754 (2013).
79 See Drug Policy Alliance, supra note 77, at 1.
80 See id.
81 See German Lopez, After Legalization, Black People Are Still Arrested at Higher Rates for
Marijuana than White People, VOX (Jan. 29, 2018), https://www.vox.com/policy-and-politics/2018/
1/29/16936908/marijuana-legalization-racial-disparities-arrests.
82 See id.
83 See id.
84 Drug Policy Alliance, FROM PROHIBITION TO PROGRESS: A STATUS REPORT ON MARIJUANA
LEGALIZATION (Jan. 2018), at 31, http://www.drugpolicy.org/sites/default/files/
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dpa_marijuana_legalization_report_feb14_2018_0.pdf.
85 See Hannah Hartig & A.W. Geiger, About Six-in-Ten Americans Support Marijuana Legal-
ization, PEW RESEARCH CENTER (Oct. 8, 2018), https://www.pewresearch.org/fact-tank/2018/10/
08/americans-support-marijuana-legalization/.
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20
essary addition to any legalization measure.86 Moreover, they be-
lieve that people who have been harmed by marijuana enforcement
should have a place in the burgeoning marketplace created by le-
galization.87 They further argue that reform efforts should enable
people who have struggled to find employment due to drug convic-
tions to participate meaningfully in the marijuana industry.88 They
contend that excluding people directly impacted by criminalization
from the marijuana industry further entrenches the outsized im-
pact that the War on Drugs has had on communities of color.89
Hearings
On July 10, 2019, the Subcommittee on Crime, Terrorism, and
Homeland Security held a hearing titled, ‘‘Marijuana Laws in
America: Racial Justice and the Need for Reform,’’ which assisted
in the development of the substance of the MORE Act.
Committee Consideration
On November 20, 2019, the Committee met in open session and
ordered the bill, H.R. 3884, favorably reported as an amendment
in the nature of a substitute, by a vote of 24 to 10.
Committee Votes
In compliance with clause 3(b) of rule XIII of the Rules of the
House of Representatives, the Committee advises that the following
votes occurred during the Committee’s consideration of H.R. 3884.
1. Motion to report H.R. 3884, as amended, favorably was agreed
to by a rollcall vote of 24 to 10.
86 See Sophie Quinton, In These States, Past Marijuana Crimes Can Go Away, PEW CHARI-
TABLE TRUSTS (Nov. 20, 2017), https://www.pewtrusts.org/en/research-and-analysis/blogs/
stateline/2017/11/20/in-these-states-past-marijuana-crimes-can-go-away; Charlotte Resing, Mari-
juana Legalization is a Racial Justice Issue, AMER. CIVIL LIBERTIES UNION (Apr. 20, 2019),
https://www.aclu.org/blog/criminal-law-reform/drug-law-reform/marijuana-legalization-racial-
justice-issue; Margaret Stevenson, Expungement: A Gateway to Work, SARGENT SHRIVER NA-
TIONAL CENTER ON POVERTY LAW (Apr. 2015), https://www.povertylaw.org/clearinghouse/articles/
expungement.
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87 See Jenni Avins, In the Age of Luxury Cannabis, It’s Time to Talk About Drug War Repara-
tions, QUARTZ (Jan. 25, 2019), https://qz.com/1482349/weed-and-reparations/.
88 See id.
89 See Resing, supra note 86.
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Committee Oversight Findings
In compliance with clause 3(c)(1) of rule XIII of the Rules of the
House of Representatives, the Committee advises that the findings
and recommendations of the Committee, based on oversight activi-
ties under clause 2(b)(1) of rule X of the Rules of the House of Rep-
resentatives, are incorporated in the descriptive portions of this re-
port.
New Budget Authority and Tax Expenditures and
Congressional Budget Office Cost Estimate
With respect to the requirements of clause 3(c)(2) of rule XIII of
the Rules of the House of Representatives and section 308(a) of the
Congressional Budget Act of 1974 and with respect to requirements
of clause (3)(c)(3) of rule XIII of the Rules of the House of Rep-
resentatives and section 402 of the Congressional Budget Act of
1974, the Committee has requested but not received a cost estimate
for this bill from the Director of Congressional Budget Office
(CBO). The Committee has requested but not received from the Di-
rector of the CBO a statement as to whether this bill contains any
new budget authority, spending authority, credit authority, or an
increase or decrease in revenues or tax expenditures.
Duplication of Federal Programs
No provision of H.R. 3884 establishes or reauthorizes a program
of the Federal government known to be duplicative of another fed-
eral program, a program that was included in any report from the
Government Accountability Office to Congress pursuant to section
21 of Public Law 111–139, or a program related to a program iden-
tified in the most recent Catalog of Federal Domestic Assistance.
Performance Goals and Objectives
The Committee states that pursuant to clause 3(c)(4) of rule XIII
of the Rules of the House of Representatives, H.R. 3884 would be
consistent with its general goals and objectives by federally de-
criminalizing marijuana by removing marijuana from the schedule
of controlled substances, expunging federal marijuana-related con-
victions, and creating programs within the Department of Justice
and the Small Business Administration to ensure the benefits of
the excise tax on sales of marijuana products imposed pursuant to
H.R. 3884 are made available for individuals and communities
most adversely impacted by the War on Drugs.
Advisory on Earmarks
In accordance with clause 9 of rule XXI of the Rules of the House
of Representatives, H.R. 3884 does not contain any congressional
earmarks, limited tax benefits, or limited tariff benefits as defined
in clause 9(d), 9(e), or 9(f) of rule XXI.
Section-by-Section Analysis
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The following discussion describes the bill as reported by the
Committee.
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Sec. 1. Short Title. The title of this Act is the ‘‘Marijuana Oppor-
tunity Reinvestment and Expungement Act of 2019’’ or the ‘‘MORE
Act of 2019.’’
Sec. 2. Findings. Section 2, added in Committee markup, sets
forth a number of findings pertaining to the purpose of the legisla-
tion.
Sec. 3. Decriminalization of Cannabis. Section 3 would decrimi-
nalize cannabis by removing two items—marihuana and
tetrahydrocannabinols—from Schedule I of the Controlled Sub-
stances Act (CSA) and would make a series of conforming amend-
ments. This section would make the descheduling of cannabis ret-
roactive, including in cases involving juvenile adjudications. Section
3 would also direct the Attorney General to finalize a rulemaking,
not later than 180 days after enactment of the MORE Act, remov-
ing marihuana and tetrahydrocannabinols from the schedules of
controlled substances.
Sec. 4. Demographic Data of Cannabis Business Owners and Em-
ployees. Section 4 would direct the Bureau of Labor Statistics to
regularly compile, maintain, and make public data on the demo-
graphics (i.e., age, race and ethnicity, sex, etc.) of the individuals
who are business owners in the cannabis industry and individuals
who are employed in the cannabis industry. Section 4 would pre-
serve confidentiality by ensuring that no names, addresses, or
other identifying information collected under this section are made
available to the public.
Sec. 5. Creation of Opportunity Trust Fund and Imposition of Tax
on Cannabis Products. Section 5 would establish an Opportunity
Trust Fund within the Treasury consisting of such amounts as
would be appropriated or credited to the fund. The Opportunity
Trust Fund would have appropriated to it amounts equivalent to
the net revenue received in the Treasury from a 5% excise tax on
sales of cannabis products manufactured in, or imported into, the
United States.
Section 5 would amend the Internal Revenue Code to treat can-
nabis products in the same manner as tobacco products and manu-
facturers of cannabis products in the same manner as manufactur-
ers of tobacco products. (‘‘Cannabis products’’’ would not include
prescribed drugs and a ‘‘manufacturer’’ would not include someone
who is manufacturing a cannabis product for their own personal
consumption or use.) Manufacturers of cannabis products would be
required to register with the Treasury Department, file a surety
bond relating to tax liability for their cannabis products, and pay
an annual occupational tax. The cannabis excise tax would gen-
erally be determined when a cannabis product is ‘‘removed’’ from
a bonded facility’s premises. If a cannabis product moves between
bonded facilities and the receiving facility assumes the tax liability
from the transferor, no tax would be collected on that transfer. In
general, the Internal Revenue Code amendments establishing a
cannabis excise tax and those governing the operation of a manu-
facturer of cannabis products would be effective for calendar quar-
ters beginning one year after enactment of the MORE Act. Amend-
ments establishing the Opportunity Trust Fund would be effective
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upon enactment of the MORE Act.
The Opportunity Trust Fund would make funds available, with-
out further appropriation, as follows: (1) 50% to the Attorney Gen-
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24
eral for eligible non-profit community organizations to administer
services to individuals most adversely impacted by the War on
Drugs; (2) 10% to the Attorney General for eligible non-profit com-
munity organizations to administer substance use treatment serv-
ices for individuals most adversely impacted by the War on Drugs;
(3) 20% to the Small Business Administration for eligible States or
localities to make loans to assist small business concerns owned
and controlled by socially and economically disadvantaged individ-
uals that operate in the cannabis industry; and (4) 20% to the
Small Business Administration for funds to States and localities to
develop and implement equitable licensing programs that minimize
barriers to cannabis licensing and employment for individuals most
adversely impacted by the War on Drugs.
Sec. 6. Opportunity Trust Fund Grant Programs. Section 6 would
establish programs in the Department of Justice and the Small
Business Administration (SBA) to be funded from the Opportunity
Trust Fund established in Section 5 of the bill.
Subsection 6(a)—Department of Justice Program. Subsection 6(a)
would create a Cannabis Justice Office (CJO), with a Director (ap-
pointed by, and who would report to, the Assistant Attorney Gen-
eral for the Office of Justice Programs). The Director would be ex-
clusively assigned to the CJO. The CJO would administer the Com-
munity Reinvestment Grant Program.
The Community Reinvestment Grant Program would fund eligi-
ble non-profit community organizations to provide a variety of serv-
ices for individuals most adversely impacted by the War on Drugs,
to include job training, reentry services, legal aid for civil and
criminal cases (including for expungement of cannabis convictions),
among others. The Community Reinvestment Grant Program
would separately fund eligible non-profit community organizations
to administer substance use treatment services for individuals most
adversely impacted by the War on Drugs.
Subsection 6(b)—Small Business Administration Programs. Sub-
section 6(b) would direct the SBA to establish and carry out a Can-
nabis Opportunity Program and an Equitable Licensing Grant Pro-
gram. Eligible entities under these two SBA programs would be
States and localities that (1) have taken steps to create an auto-
matic process for the expungement, destruction, or sealing of crimi-
nal records for cannabis offenses and (2) have taken steps to elimi-
nate violations or other penalties for persons still under State or
local criminal supervision for a cannabis-related offense or violation
for conduct now lawful under State or local law.
Under the Cannabis Opportunity Program, funds would be made
available to eligible States and localities to make loans to assist
small business concerns that operate in the cannabis industry that
are owned and controlled by socially and economically disadvan-
taged individuals. Under the Equitable Licensing Grant Program,
funds would be made available to eligible States and localities to
develop and implement equitable cannabis licensing programs that
minimize barriers to cannabis licensing and employment for indi-
viduals most adversely impacted by the War on Drugs.
Sec. 7. Availability of Small Business Administration Programs
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and Services to Cannabis-Related Legitimate Businesses and Serv-
ice Providers. Section 7 would ensure cannabis-related legitimate
businesses and service providers are not prohibited from having ac-
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25
cess to: (1) services from Small Business Development Centers; (2)
services from Women’s Business Centers; (3) services from the
SCORE program; (4) services from Veteran Business Outreach
Centers; (5) loan guarantees under the Loan Guaranty Program in
section 7(a) of the Small Business Act; (6) assistance under SBA’s
Disaster Assistance Program; or (7) assistance under SBA’s
Microloan program from intermediaries participating in SBA’s
Microloan program. Section 7 would also prohibit the SBA from de-
clining to provide a loan guarantee under the 504/Certified Devel-
opment Company to an otherwise eligible State or local develop-
ment company solely because such State or local development com-
pany provides financing to an entity that is a cannabis-related le-
gitimate business or service provider.
Sec. 8. No Discrimination in the Provision of a Federal Public
Benefit on the Basis of Cannabis. Section 8 would make clear that
no person may be denied a Federal public benefit on the basis of
any use or possession of cannabis, or on the basis of a conviction
or adjudication of juvenile delinquency for a cannabis offense. In
addition, Federal agencies would be precluded from using past or
present cannabis or marijuana use as criteria for granting, deny-
ing, or rescinding a security clearance.
Sec. 9. No Adverse Effect for Purposes of the Immigration Laws.
Section 9 would ensure that cannabis is not considered a controlled
substance for purposes of the immigration laws, and it would estab-
lish that no alien may be denied any benefit or protection under
the immigration laws, regardless of whether the conduct, finding,
admission, addiction or abuse, arrest, conviction, or juvenile adju-
dication relating to cannabis occurred before, on, or after the effec-
tive date of the MORE Act. Section 9 would make a series of con-
forming amendments striking marihuana from the Immigration
and Nationality Act.
Sec. 10. Resentencing and Expungement. Section 10 has different
expungement and sentencing review procedures for individuals (1)
who have completed their Federal sentences or adjudications of ju-
venile delinquency and are no longer under court supervision (i.e.,
‘‘not under a criminal justice sentence’’) and (2) who are still serv-
ing their Federal sentences or adjudications or are otherwise under
court supervision (i.e., ‘‘under a criminal justice sentence’’). Section
10 would ensure the appointment of counsel for indigent individ-
uals seeking expungement or sentencing review.
Subsection 10(a)—Expungement for Individuals Not Under a
Criminal Justice Sentence. For individuals not under a criminal
justice sentence, subsection 10(a) would direct each Federal dis-
trict, not later than one year after enactment of the MORE Act, to
order the expungement of each conviction and juvenile adjudication
for a cannabis offense entered by each court in the district, retro-
active to the effective date of the Controlled Substances Act (May
1, 1971). However, any individual ‘‘not under a criminal justice sen-
tence’’ would have a right to petition the court for expungement at
any point after the enactment of the MORE Act (e.g., if any such
individual would need or desire expungement earlier than one year
after enactment, or if a court fails to pursue expungement where
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an individual believes they are eligible). Subsection 10(a) would
also direct the court to order the expungement of any associated ar-
rests. Records expunged under subsection 10(a) would be sealed
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26
and could only be made available by further order of the court. Fi-
nally, subsection 10(a) would direct that each Federal district, to
the extent practicable, notify each individual whose conviction or
juvenile adjudication has been expunged about such expungement
and the effect of the expungement.
Subsection 10(b)—Sentencing Review for Individuals Under a
Criminal Justice Sentence. For individuals still under a criminal
justice sentence, subsection 10(b) would direct the district court
that imposed the sentence or disposition to hold a sentencing re-
view hearing. Sentencing review could be initiated by the indi-
vidual, the Director of the Bureau of Prisons, the attorney for the
Government, or the court. Subsection 10(b) would direct courts to
expunge each conviction or adjudication of juvenile delinquency and
any associated arrests; vacate any existing sentence or disposition
of juvenile delinquency and, if applicable, impose any remaining
sentence as if the MORE Act (and its amendments) were in effect
at the time the offense was committed; and order all records that
have been expunged or vacated under subsection 10(b) be sealed
and only be made available by further order of the court.
Subsection 10(c)—Effect of Expungement. In the case of an
expungement under subsection 10(a) or 10(b), the effect of the
expungement would be the same: an individual may treat an ex-
punged arrest, conviction, or juvenile delinquency adjudication as
if it never occurred and the individual would be immune from civil
or criminal penalties for perjury, false swearing, or false state-
ments, for failing to disclose the expunged arrest, conviction, or ju-
venile delinquency adjudication.
Sec. 11. References in Existing Law to Marijuana or Marihuana.
Section 11 inserts the term ‘‘cannabis’’ wherever the term ‘‘mari-
juana’’ (or ‘‘marihuana’’) appears in existing law.
Sec. 12. Severability. Section 12 provides that if any provision of
the MORE Act is held to be unconstitutional, the remainder of the
Act and its application to any other person or circumstances will
not be affected.
Sec. 13. Cannabis Offense Defined. Section 13 defines a ‘‘cannabis
offense’’ as a criminal offense related to cannabis that (1) under
Federal law, is no longer punishable pursuant to the MORE Act (or
its amendments) and (2) under State law, is no longer an offense
or was designated a lesser offense, or whose penalty was reduced
under State law pursuant to or following the adoption of a State
law authorizing the sale or use of cannabis.
Sec. 14. Rulemaking. Section 14 would direct the Department of
the Treasury, the Department of Justice, and the Small Business
Administration, not later than one year after the enactment of the
MORE Act, to issue or amend any rules, standard operating proce-
dures, and other legal or policy guidance necessary to carry out im-
plementation of the MORE Act. After the one-year period, Section
14 would prohibit the issuance of sub-regulatory guidance without
60-day notice to the appropriate Congressional committee.
Sec. 15. Societal Impact of Marijuana Legalization Study. Section
15, added in Committee markup, would direct the Comptroller
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General to conduct a study and report to Congress concerning the
societal impacts of the legalization of recreational cannabis by
States.
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27
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of the
House of Representatives, changes in existing law made by the bill,
as reported, are shown as follows (existing law proposed to be omit-
ted is enclosed in black brackets, new matter is printed in italics,
and existing law in which no change is proposed is shown in
roman):
CONTROLLED SUBSTANCES ACT
* * * * * * *
TITLE II—CONTROL AND ENFORCEMENT
* * * * * * *
PART A—SHORT TITLE; FINDINGS AND DECLARATION; DEFINITIONS
* * * * * * *
DEFINITIONS
SEC. 102. As used in this title:
(1) The term ‘‘addict’’ means any individual who habitually uses
any narcotic drug so as to endanger the public morals, health, safe-
ty, or welfare, or who is so far addicted to the use of narcotic drugs
as to have lost the power of self-control with reference to his addic-
tion.
(2) The term ‘‘administer’’ refers to the direct application of a
controlled substance to the body of a patient or research subject
by—
(A) a practitioner (or, in his presence, by his authorized
agent), or
(B) the patient or research subject at the direction and in the
presence of the practitioner,
whether such application be by injection, inhalation, ingestion, or
any other means.
(3) The term ‘‘agent’’ means an authorized person who acts on be-
half of or at the direction of a manufacturer, distributor, or dis-
penser; except that such term does not include a common or con-
tract carrier, public warehouseman, or employee of the carrier or
warehouseman, when acting in the usual and lawful course of the
carrier’s or warehouseman’s business.
(4) The term ‘‘Drug Enforcement Administration’’ means the
Drug Enforcement Administration in the Department of Justice.
(5) The term ‘‘control’’ means to add a drug or other substance,
or immediate precursor, to a schedule under part B of this title,
whether by transfer from another schedule or otherwise.
(6) The term ‘‘controlled substance’’ means a drug or other sub-
stance, or immediate precursor, included in schedule I, II, III, IV,
or V of part B of this title. The term does not include distilled spir-
its, wine, malt beverages, or tobacco, as those terms are defined or
used in subtitle E of the Internal Revenue Code of 1954.
(7) The term ‘‘counterfeit substance’’ means a controlled sub-
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stance which, or the container or labeling of which, without author-
ization, bears the trademark, trade name, or other identifying
mark, imprint, number, or device, or any likeness thereof, of a
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28
manufacturer, distributor, or dispenser other than the person or
persons who in fact manufactured, distributed, or dispensed such
substance and which thereby falsely purports or is represented to
be the product of, or to have been distributed by, such other manu-
facturer, distributor, or dispenser.
(8) The terms ‘‘deliver’’ or ‘‘delivery’’ mean the actual, construc-
tive, or attempted transfer of a controlled substance or a listed
chemical, whether or not there exists an agency relationship.
(9) The term ‘‘depressant or stimulant substance’’ means—
(A) a drug which contains any quantity of barbituric acid or
any of the salts of barbituric acid; or
(B) a drug which contains any quantity of (i) amphetamine
or any of its optical isomers; (ii) any salt of amphetamine or
any salt of an optical isomer of amphetamine; or (iii) any sub-
stance which the Attorney General, after investigation, has
found to be, and by regulation designated as, habit forming be-
cause of its stimulant effect on the central nervous system; or
(C) lysergic acid diethylamide; or
(D) any drug which contains any quantity of a substance
which the Attorney General, after investigation, has found to
have, and by regulation designated as having, a potential for
abuse because of its depressant or stimulant effect on the cen-
tral nervous system or its hallucinogenic effect.
(10) The term ‘‘dispense’’ means to deliver a controlled substance
to an ultimate user or research subject by, or pursuant to the law-
ful order of, a practitioner, including the prescribing and admin-
istering of a controlled substance and the packaging, labeling, or
compounding necessary to prepare the substance for such delivery.
The term ‘‘dispenser’’ means a practitioner who so delivers a con-
trolled substance to an ultimate user or research subject.
(11) The term ‘‘distribute’’ means to deliver (other than by ad-
ministering or dispensing) a controlled substance or a listed chem-
ical. The term ‘‘distributor’’ means a person who so delivers a con-
trolled substance or a listed chemical.
(12) The term ‘‘drug’’ has the meaning given that term by section
201(g)(1) of the Federal Food, Drug, and Cosmetic Act.
(13) The term ‘‘felony’’ means any Federal or State offense classi-
fied by applicable Federal or State law as a felony.
(14) The term ‘‘isomer’’ means the optical isomer, except as used
in schedule I(c) and schedule II(a)(4). As used in schedule I(c), the
term ‘‘isomer’’ means any optical, positional, or geometric isomer.
As used in schedule II(a)(4), the term ‘‘isomer’’ means any optical
or geometric isomer.
(15) The term ‘‘manufacture’’ means the production, preparation,
propagation, compounding, or processing of a drug or other sub-
stance, either directly or indirectly or by extraction from sub-
stances of natural origin, or independently by means of chemical
synthesis or by a combination of extraction and chemical synthesis,
and includes any packaging or repackaging of such substance or la-
beling or relabeling of its container; except that such term does not
include the preparation, compounding, packaging, or labeling of a
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drug or other substance in conformity with applicable State or local
law by a practitioner as an incident to his administration or dis-
pensing of such drug or substance in the course of his professional
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29
practice. The term ‘‘manufacturer’’ means a person who manufac-
tures a drug or other substance.
(16)(A) Subject to subparagraph (B), the term ‘‘marihuana’’
means all parts of the plant Cannabis sativa L., whether growing
or not; the seeds thereof; the resin extracted from any part of such
plant; and every compound, manufacture, salt, derivative, mixture,
or preparation of such plant, its seeds or resin.
(B) The term marihuana does not include—
(i) hemp, as defined in section 297A of the Agricultural Mar-
keting Act of 1946; or
(ii) the mature stalks of such plant, fiber produced from such
stalks, oil or cake made from the seeds of such plant, any other
compound, manufacture, salt, derivative, mixture, or prepara-
tion of such mature stalks (except the resin extracted there-
from), fiber, oil, or cake, or the sterilized seed of such plant
which is incapable of germination.
(17) The term ‘‘narcotic drug’’ means any of the following wheth-
er produced directly or indirectly by extraction from substances of
vegetable origin, or independently by means of chemical synthesis,
or by a combination of extraction and chemical synthesis:
(A) Opium, opiates, derivatives of opium and opiates, includ-
ing their isomers, esters, whenever the existence of such iso-
mers, esters, ethers, and salts is possible within the specific
chemical designation. Such term does not include the
isoquinoline alkaloids of opium.
(B) Poppy straw and concentrate of poppy straw.
(C) Coca leaves, except coca leaves and extracts of coca
leaves from which cocaine, ecgonine, and derivatives of ecgo-
nine or their salts have been removed.
(D) Cocaine, its salts, optical and geometric isomers, and
salts of isomers.
(E) Ecgonine, its derivatives, their salts, isomers, and salts
of isomers.
(F) Any compound, mixture, or preparation which contains
any quantity of any of the substances referred to in subpara-
graphs (A) through (E).
(18) The term ‘‘opiate’’or ‘‘opioid’’ means any drug or other sub-
stance having an addiction-forming or addiction-sustaining liability
similar to morphine or being capable of conversion into a drug hav-
ing such addiction-forming or addiction-sustaining liability.
(19) The term ‘‘opium poppy’’ means the plant of the species
Papaver somniferum L., except the seed thereof.
(20) The term ‘‘poppy straw’’ means all parts, except the seeds,
of the opium poppy, after mowing.
(21) The term ‘‘practitioner’’ means a physician, dentist, veteri-
narian, scientific investigator, pharmacy, hospital, or other person
licensed, registered, or otherwise permitted, by the United States
or the jurisdiction in which he practices or does research, to dis-
tribute, dispense, conduct research with respect to, administer, or
use in teaching or chemical analysis, a controlled substance in the
course of professional practice or research.
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(22) The term ‘‘production’’ includes the manufacture, planting,
cultivation, growing, or harvesting of a controlled substance.
(23) The term ‘‘immediate precursor’’ means a substance—
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30
(A) which the Attorney General has found to be and by regu-
lation designated as being the principal compound used, or pro-
duced primarily for use, in the manufacture of a controlled
substance;
(B) which is an immediate chemical intermediary used or
likely to be used in the manufacture of such controlled sub-
stance; and
(C) the control of which is necessary to prevent, curtail, or
limit the manufacture of such controlled substance.
(24) The term ‘‘Secretary’’, unless the context otherwise indicates,
means the Secretary of Health and Human Services.
(25) The term ‘‘serious bodily injury’’ means bodily injury which
involves—
(A) a substantial risk of death;
(B) protracted and obvious disfigurement; or
(C) protracted loss or impairment of the function of a bodily
member, or organ, or mental faculty.
(26) The term ‘‘State’’ means a State of the United States,
the District of Columbia, and any commonwealth, territory, or
possession of the United States.
(27) The term ‘‘ultimate user’’ means a person who has lawfully
obtained, and who possesses, a controlled substance for his own use
or for the use of a member of his household or for an animal owned
by him or by a member of his household.
(28) The term ‘‘United States’’, when used in a geographic sense,
means all places and waters, continental or insular, subject to the
jurisdiction of the United States.
(29) The term ‘‘maintenance treatment’’ means the dispensing,
for a period in excess of twenty-one days, of a narcotic drug in the
treatment of an individual for dependence upon heroin or other
morphine-like drugs.
(30) The term ‘‘detoxification treatment’’ means the dispensing,
for a period not in excess of one hundred and eighty days, of a nar-
cotic drug in decreasing doses to an individual in order to alleviate
adverse physiological or psychological effects incident to with-
drawal from the continuous or sustained use of a narcotic drug and
as a method of bringing the individual to a narcotic drug-free state
within such period.
(31) The term ‘‘Convention on Psychotropic Substances’’ means
the Convention on Psychotropic Substances signed at Vienna, Aus-
tria, on February 21, 1971; and the term ‘‘Single Convention on
Narcotic Drugs’’ means the Single Convention on Narcotic Drugs
signed at New York, New York, on March 30, 1961.
(32)(A) Except as provided in subparagraph (C), the term ‘‘con-
trolled substance analogue’’ means a substance—
(i) the chemical structure of which is substantially similar to
the chemical structure of a controlled substance in schedule I
or II;
(ii) which has a stimulant, depressant, or hallucinogenic ef-
fect on the central nervous system that is substantially similar
to or greater than the stimulant, depressant, or hallucinogenic
effect on the central nervous system of a controlled substance
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in schedule I or II; or
(iii) with respect to a particular person, which such person
represents or intends to have a stimulant, depressant, or hallu-
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31
cinogenic effect on the central nervous system that is substan-
tially similar to or greater than the stimulant, depressant, or
hallucinogenic effect on the central nervous system of a con-
trolled substance in schedule I or II.
(B) The designation of gamma butyrolactone or any other chem-
ical as a listed chemical pursuant to paragraph (34) or (35) does
not preclude a finding pursuant to subparagraph (A) of this para-
graph that the chemical is a controlled substance analogue.
(C) Such term does not include—
(i) a controlled substance;
(ii) any substance for which there is an approved new drug
application;
(iii) with respect to a particular person any substance, if an
exemption is in effect for investigational use, for that person,
under section 505 of the Federal Food, Drug, and Cosmetic Act
(21 U.S.C. 355) to the extent conduct with respect to such sub-
stance is pursuant to such exemption; or
(iv) any substance to the extent not intended for human con-
sumption before such an exemption takes effect with respect to
that substance.
(33) The term ‘‘listed chemical’’ means any list I chemical or any
list II chemical.
(34) The term ‘‘list I chemical’’ means a chemical specified by reg-
ulation to the Attorney General as a chemical that is used in man-
ufacturing a controlled substance in violation of this title and is im-
portant to the manufacture of the controlled substances, and such
term includes (until otherwise specified by regulation of the Attor-
ney General, as considered appropriate by the Attorney General or
upon petition to the Attorney General by any person) the following:
(A) Anthranilic acid, its esters, and its salts.
(B) Benzyl cyanide.
(C) Ephedrine, its salts, optical isomers, and salts of optical
isomers.
(D) Ergonovine and its salts.
(E) Ergotamine and its salts.
(F) N-Acetylanthranilic acid, its esters, and its salts.
(G) Norpseudoephedrine, its salts, optical isomers, and salts
of
(H) Phenylacetic acid, its esters, and its salts.
(I) Phenylpropanolamine, its salts, optical isomers, and salts
of optical isomers.
(J) Piperidine and its salts.
(K) Pseudoephedrine, its salts, optical isomers, and salts of
optical isomers.
(L) 3,4-Methylenedioxyphenyl-2-propanone.
(M) Methylamine.
(N) Ethylamine.
(O) Propionic anhydride.
(P) Isosafrole.
(Q) Safrole.
(R) Piperonal.
(S) N-Methylephedrine.
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(T) N-methylpseudoephedrine.
(U) Hydriodic acid.
(V) Benzaldehyde.
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32
(W) Nitroethane.
(X) Gamma butyrolactone.
(Y) Any salt, optical isomer, or salt of an optical isomer of
the chemicals listed in subparagraphs (M) through (U) of this
paragraph.
(35) The term ‘‘list II chemical’’ means a chemical (other than a
list I chemical) specified by regulation of the Attorney General as
a chemical that is used in manufacturing a controlled substance in
violation of this title, and such term includes (until otherwise speci-
fied by regulation of the Attorney General, as considered appro-
priate by the Attorney General or upon petition to the Attorney
General by any person) the following chemicals:
(A) Acetic anhydride.
(B) Acetone.
(C) Benzyl chloride.
(D) Ethyl ether.
(F) Potassium permanaganate.
(G) 2-Butanone (or Methyl Ethyl Ketone).
(H) Toluene.
(I) Iodine.
(J) Hydrochloric gas.
(36) The term ‘‘regular customer’’ means, with respect to a regu-
lated person, a customer with whom the regulated person has an
established business relationship that is reported to the Attorney
General.
(37) The term ‘‘regular importer’’ means, with respect to a listed
chemical, a person that has an established record as an importer
of that listed chemical that is reported to the Attorney General.
(38) The term ‘‘regulated person’’ means a person who manufac-
tures, distributes, imports, or exports a listed chemical, a tableting
machine, or an encapsulating machine or who acts as a broker or
trader for an international transaction involving a listed chemical,
a tableting machine, or an encapsulating machine.
(39) The term ‘‘regulated transaction’’ means—
(A) a distribution, receipt, sale, importation, or exportation
of, or an international transaction involving shipment of, a list-
ed chemical, or if the Attorney General establishes a threshold
amount for a specific listed chemical, a threshold amount, in-
cluding a cumulative threshold amount for multiple trans-
actions (as determined by the Attorney General, in consulta-
tion with the chemical industry and taking into consideration
the quantities normally used for lawful purposes), of a listed
chemical, except that such term does not include—
(i) a domestic lawful distribution in the usual course of
business between agents or employees of a single regulated
person;
(ii) a delivery of a listed chemical to or by a common or
contract carrier for carriage in the lawful and usual course
of the business of the common or contract carrier, or to or
by a warehouseman for storage in the lawful and usual
course of the business of the warehouseman, except that if
the carriage or storage is in connection with the distribu-
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tion, importation, or exportation of a listed chemical to a
third person, this clause does not relieve a distributor, im-
porter, or exporter from compliance with section 310;
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33
(iii) any category of transaction or any category of trans-
action for a specific listed chemical or chemicals specified
by regulation of the Attorney General as excluded from
this definition as unnecessary for enforcement of this title
or title III;
(iv) any transaction in a listed chemical that is con-
tained in a drug that may be marketed or distributed law-
fully in the United States under the Federal Food, Drug,
and Cosmetic Act, subject to clause (v), unless—
(I) the Attorney General has determined under sec-
tion 204 that the drug or group of drugs is being di-
verted to obtain the listed chemical for use in the il-
licit production of a controlled substance; and
(II) the quantity of the listed chemical contained in
the drug included in the transaction or multiple trans-
actions equals or exceeds the threshold established for
that chemical by the Attorney General;
(v) any transaction in a scheduled listed chemical prod-
uct that is a sale at retail by a regulated seller or a dis-
tributor required to submit reports under section 310(b)(3);
or
(vi) any transaction in a chemical mixture which the At-
torney General has by regulation designated as exempt
from the application of this title and title III based on a
finding that the mixture is formulated in such a way that
it cannot be easily used in the illicit production of a con-
trolled substance and that the listed chemical or chemicals
contained in the mixture cannot be readily recovered; and
(B) a distribution, importation, or exportation of a tableting
machine or encapsulating machine.
(40) The term ‘‘chemical mixture’’ means a combination of two or
more chemical substances, at least one of which is not a list I
chemical or a list II chemical, except that such term does not in-
clude any combination of a list I chemical or a list II chemical with
another chemical that is present solely as an impurity.
(41)(A) The term ‘‘anabolic steroid’’ means any drug or hormonal
substance, chemically and pharmacologically related to testosterone
(other than estrogens, progestins, corticosteroids, and
dehydroepiandrosterone), and includes—
(i) androstanediol—
(I) 3β,17β-dihydroxy-5α-androstane; and
(II) 3α,17β-dihydroxy-5α-androstane;
(ii) androstanedione (5α-androstan-3,17-dione);
(iii) androstenediol—
(I) 1-androstenediol (3β,17β-dihydroxy-5α-androst-1-ene);
(II) 1-androstenediol (3α,17β-dihydroxy-5α-androst-1-
ene);
(III) 4-androstenediol (3β,17β-dihydroxy-androst-4-ene);
and
(IV) 5-androstenediol (3β,17β-dihydroxy-androst-5-ene);
(iv) androstenedione—
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(I) 1-androstenedione ([5α]-androst-1-en-3,17-dione);
(II) 4-androstenedione (androst-4-en-3,17-dione); and
(III) 5-androstenedione (androst-5-en-3,17-dione);
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34
(v) bolasterone (7α,17α-dimethyl-17β-hydroxyandrost-4-en-3-
one);
(vi) boldenone (17β-hydroxyandrost-1,4,-diene-3-one);
(vii) calusterone (7β,17α-dimethyl-17β-hydroxyandrost-4-en-
3-one);
(viii) clostebol (4-chloro-17β-hydroxyandrost-4-en-3-one);
(ix) dehydrochloromethyltestosterone (4-chloro-17β-hydroxy-
17α-methyl-androst-1,4-dien-3-one);
(x) >1-dihydrotestosterone (a.k.a. ‘‘1-testosterone’’) (17β-hy-
droxy-5α-androst-1-en-3-one);
(xi) 4-dihydrotestosterone (17β-hydroxy-androstan-3-one);
(xii) drostanolone (17β-hydroxy-2α-methyl-5α-androstan-3-
one);
(xiii) ethylestrenol (17α-ethyl-17β-hydroxyestr-4-ene);
(xiv) fluoxymesterone (9-fluoro-17α-methyl-11β,17β-
dihydroxyandrost-4-en-3-one);
(xv) formebolone (2-formyl-17α-methyl-11α,17β-
dihydroxyandrost-1,4-dien-3-one);
(xvi) furazabol (17α-methyl-17β-hydroxyandrostano[2,3-c]-
furazan);
(xvii) 13β-ethyl-17β-hydroxygon-4-en-3-one;
(xviii) 4-hydroxytestosterone (4,17β-dihydroxy-androst-4-en-
3-one);
(xix) 4-hydroxy-19-nortestosterone (4,17β-dihydroxy-estr-4-
en-3-one);
(xx) mestanolone (17α-methyl-17β-hydroxy-5α-androstan-3-
one);
(xxi) mesterolone (1α-methyl-17β-hydroxy-[5α]-androstan-3-
one);
(xxii) methandienone (17α-methyl-17β-hydroxyandrost-1,4-
dien-3-one);
(xxiii) methandriol (17α-methyl-3β,17β-dihydroxyandrost-5-
ene);
(xxiv) methenolone (1-methyl-17β-hydroxy-5α-androst-1-en-3-
one);
(xxv) 17α-methyl-3β, 17β-dihydroxy-5α-androstane;
(xxvi) 17α-methyl-3α,17β-dihydroxy-5α-androstane;
(xxvii) 17α-methyl-3β,17β-dihydroxyandrost-4-ene.
(xxviii) 17α-methyl-4-hydroxynandrolone (17α-methyl-4-hy-
droxy-17β-hydroxyestr-4-en-3-one);
(xxix) methyldienolone (17α-methyl-17β-hydroxyestra-
4,9(10)-dien-3-one);
(xxx) methyltrienolone (17α-methyl-17β-hydroxyestra-4,9-11-
trien-3-one);
(xxxi) methyltestosterone (17α-methyl-17β-hydroxyandrost-4-
en-3-one);
(xxxii) mibolerone (7α,17α-dimethyl-17β-hydroxyestr-4-en-3-
one);
(xxxiii) 17α-methyl-Δ1-dihydrotestosterone (17β-hydroxy-17α-
methyl-5α-androst-1-en-3-one) (a.k.a. ‘‘17-α-methyl-1-testos-
terone’’);
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(xxxiv) nandrolone (17β-hydroxyestr-4-en-3-one);
(xxxv) norandrostenediol—
(I) 19-nor-4-androstenediol (3β, 17β-dihydroxyestr-4-ene);
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35
(II) 19-nor-4-androstenediol (3α, 17β-dihydroxyestr-4-
ene);
(III) 19-nor-5-androstenediol (3β, 17β-dihydroxyestr-5-
ene); and
(IV) 19-nor-5-androstenediol (3α, 17β-dihydroxyestr-5-
ene);
(xxxvi) norandrostenedione—
(I) 19-nor-4-androstenedione (estr-4-en-3,17-dione); and
(II) 19-nor-5-androstenedione (estr-5-en-3,17-dione;
(xxxvii) norbolethone (13β,17α-diethyl-17β-hydroxygon-4-en-
3-one);
(xxxviii) norclostebol (4-chloro-17β-hydroxyestr-4-en-3-one);
(xxxix) norethandrolone (17α-ethyl-17β-hydroxyestr-4-en-3-
one);
(xl) normethandrolone (17α-methyl-17β-hydroxyestr-4-en-3-
one);
(xli) oxandrolone (17α-methyl-17β-hydroxy-2-oxa-[5α]-
androstan-3-one);
(xlii) oxymesterone (17α-methyl-4,17β-dihydroxyandrost-4-
en-3-one);
(xliii) oxymetholone (17α-methyl-2-hydroxymethylene-17β-hy-
droxy-[5α]-androstan-3-one);
(xliv) stanozolol (17α-methyl-17β-hydroxy-[5α]-androst-2-
eno[3,2-c]-pyrazole);
(xlv) stenbolone (17β-hydroxy-2-methyl-[5α]-androst-1-en-3-
one);
(xlvi) testolactone (13-hydroxy-3-oxo-13,17-secoandrosta-1,4-
dien-17-oic acid lactone);
(xlvii) testosterone (17β-hydroxyandrost-4-en-3-one);
(xlviii) tetrahydrogestrinone (13β,17α-diethyl-17β-
hydroxygon-4,9,11-trien-3-one);
(xlix) trenbolone (17β-hydroxyestr-4,9,11-trien-3-one);
(l) 5α-Androstan-3,6,17-trione;
(li) 6-bromo-androstan-3,17-dione;
(lii) 6-bromo-androsta-1,4-diene-3,17-dione;
(liii) 4-chloro-17α-methyl-androsta-1,4-diene-3,17β-diol;
(liv) 4-chloro-17α-methyl-androst-4-ene-3β,17β-diol;
(lv) 4-chloro-17α-methyl-17β-hydroxy-androst-4-en-3-one;
(lvi) 4-chloro-17α-methyl-17β-hydroxy-androst-4-ene-3,11-
dione;
(lvii) 4-chloro-17α-methyl-androsta-1,4-diene-3,17β-diol;
(lviii) 2α,17α-dimethyl-17β-hydroxy-5α-androstan-3-one;
(lix) 2α,17α-dimethyl-17β-hydroxy-5β-androstan-3-one;
(lx) 2α,3α-epithio-17α-methyl-5α-androstan-17β-ol;
(lxi) [3,2-c]-furazan-5α-androstan-17β-ol;
(lxii) 3β-hydroxy-estra-4,9,11-trien-17-one;
(lxiii) 17α-methyl-androst-2-ene-3,17β-diol;
(lxiv) 17α-methyl-androsta-1,4-diene-3,17β-diol;
(lxv) Estra-4,9,11-triene-3,17-dione;
(lxvi) 18a-Homo-3-hydroxy-estra-2,5(10)-dien-17-one;
(lxvii) 6α-Methyl-androst-4-ene-3,17-dione;
(lxviii) 17α-Methyl-androstan-3-hydroxyimine-17β-ol;
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(lxix) 17α-Methyl-5α-androstan-17β-ol;
(lxx) 17β-Hydroxy-androstano[2,3-d]isoxazole;
(lxxi) 17β-Hydroxy-androstano[3,2-c]isoxazole;
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36
(lxxii) 4-Hydroxy-androst-4-ene-3,17-dione[3,2-c]pyrazole-5α-
androstan-17β-ol;
(lxxiii) [3,2-c]pyrazole-androst-4-en-17β-ol;
(lxxiv) [3,2-c]pyrazole-5α-androstan-17β-ol; and
(lxxv) any salt, ester, or ether of a drug or substance de-
scribed in this paragraph.
The substances excluded under this subparagraph may at any time
be scheduled by the Attorney General in accordance with the au-
thority and requirements of subsections (a) through (c) of section
201.
(B)(i) Except as provided in clause (ii), such term does not in-
clude an anabolic steroid which is expressly intended for ad-
ministration through implants to cattle or other nonhuman
species and which has been approved by the Secretary of
Health and Human Services for such administration.
(ii) If any person prescribes, dispenses, or distributes such
steroid for human use, such person shall be considered to have
prescribed, dispensed, or distributed an anabolic steroid within
the meaning of subparagraph (A).
(C)(i) Subject to clause (ii), a drug or hormonal substance (other
than estrogens, progestins, corticosteroids, and
dehydroepiandrosterone) that is not listed in subparagraph (A) and
is derived from, or has a chemical structure substantially similar
to, 1 or more anabolic steroids listed in subparagraph (A) shall be
considered to be an anabolic steroid for purposes of this Act if—
(I) the drug or substance has been created or manufactured
with the intent of producing a drug or other substance that ei-
ther—
(aa) promotes muscle growth; or
(bb) otherwise causes a pharmacological effect similar to
that of testosterone; or
(II) the drug or substance has been, or is intended to be,
marketed or otherwise promoted in any manner suggesting
that consuming it will promote muscle growth or any other
pharmacological effect similar to that of testosterone.
(ii) A substance shall not be considered to be a drug or hormonal
substance for purposes of this subparagraph if it—
(I) is—
(aa) an herb or other botanical;
(bb) a concentrate, metabolite, or extract of, or a con-
stituent isolated directly from, an herb or other botanical;
or
(cc) a combination of 2 or more substances described in
item (aa) or (bb);
(II) is a dietary ingredient for purposes of the Federal Food,
Drug, and Cosmetic Act (21 U.S.C. 301 et seq.); and
(III) is not anabolic or androgenic.
(iii) In accordance with section 515(a), any person claiming the
benefit of an exemption or exception under clause (ii) shall bear the
burden of going forward with the evidence with respect to such ex-
emption or exception.
(42) The term ‘‘international transaction’’ means a transaction in-
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volving the shipment of a listed chemical across an international
border (other than a United States border) in which a broker or
trader located in the United States participates.
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37
(43) The terms ‘‘broker’’ and ‘‘trader’’ mean a person that assists
in arranging an international transaction in a listed chemical by—
(A) negotiating contracts;
(B) serving as an agent or intermediary; or
(C) bringing together a buyer and seller, a buyer and trans-
porter, or a seller and transporter.
(44) The term ‘‘felony drug offense’’ means an offense that is pun-
ishable by imprisonment for more than one year under any law of
the United States or of a State or foreign country that prohibits or
restricts conduct relating to narcotic drugs, ømarihuana,¿ anabolic
steroids, or depressant or stimulant substances.
(45)(A) The term ‘‘scheduled listed chemical product’’ means, sub-
ject to subparagraph (B), a product that—
(i) contains ephedrine, pseudoephedrine, or phenylpropanola-
mine; and
(ii) may be marketed or distributed lawfully in the United
States under the Federal, Food, Drug, and Cosmetic Act as a
nonprescription drug.
Each reference in clause (i) to ephedrine, pseudoephedrine, or
phenylpropanolamine includes each of the salts, optical isomers,
and salts of optical isomers of such chemical.
(B) Such term does not include a product described in subpara-
graph (A) if the product contains a chemical specified in such sub-
paragraph that the Attorney General has under section 201(a)
added to any of the schedules under section 202(c). In the absence
of such scheduling by the Attorney General, a chemical specified in
such subparagraph may not be considered to be a controlled sub-
stance.
(46) The term ‘‘regulated seller’’ means a retail distributor (in-
cluding a pharmacy or a mobile retail vendor), except that such
term does not include an employee or agent of such distributor.
(47) The term ‘‘mobile retail vendor’’ means a person or entity
that makes sales at retail from a stand that is intended to be tem-
porary, or is capable of being moved from one location to another,
whether the stand is located within or on the premises of a fixed
facility (such as a kiosk at a shopping center or an airport) or
whether the stand is located on unimproved real estate (such as a
lot or field leased for retail purposes).
(48) The term ‘‘at retail’’, with respect to the sale or purchase of
a scheduled listed chemical product, means a sale or purchase for
personal use, respectively.
(49)(A) The term ‘‘retail distributor’’ means a grocery store,
general merchandise store, drug store, or other entity or per-
son whose activities as a distributor relating to ephedrine,
pseudoephedrine, or phenylpropanolamine products are limited
almost exclusively to sales for personal use, both in number of
sales and volume of sales, either directly to walk-in customers
or in face-to-face transactions by direct sales.
(B) For purposes of this paragraph, entities are defined by
reference to the Standard Industrial Classification (SIC) code,
as follows:
(i) A grocery store is an entity within SIC code 5411.
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(ii) A general merchandise store is an entity within SIC
codes 5300 through 5399 and 5499.
(iii) A drug store is an entity within SIC code 5912.
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38
(50) The term ‘‘Internet’’ means collectively the myriad of com-
puter and telecommunications facilities, including equipment and
operating software, which comprise the interconnected worldwide
network of networks that employ the Transmission Control Pro-
tocol/Internet Protocol, or any predecessor or successor protocol to
such protocol, to communicate information of all kinds by wire or
radio.
(51) The term ‘‘deliver, distribute, or dispense by means of the
Internet’’ refers, respectively, to any delivery, distribution, or dis-
pensing of a controlled substance that is caused or facilitated by
means of the Internet.
(52) The term ‘‘online pharmacy’’—
(A) means a person, entity, or Internet site, whether in the
United States or abroad, that knowingly or intentionally deliv-
ers, distributes, or dispenses, or offers or attempts to deliver,
distribute, or dispense, a controlled substance by means of the
Internet; and
(B) does not include—
(i) manufacturers or distributors registered under sub-
section (a), (b), (d), or (e) of section 303 who do not dis-
pense controlled substances to an unregistered individual
or entity;
(ii) nonpharmacy practitioners who are registered under
section 303(f) and whose activities are authorized by that
registration;
(iii) any hospital or other medical facility that is oper-
ated by an agency of the United States (including the
Armed Forces), provided such hospital or other facility is
registered under section 303(f);
(iv) a health care facility owned or operated by an Indian
tribe or tribal organization, only to the extent such facility
is carrying out a contract or compact under the Indian
Self-Determination and Education Assistance Act;
(v) any agent or employee of any hospital or facility re-
ferred to in clause (iii) or (iv), provided such agent or em-
ployee is lawfully acting in the usual course of business or
employment, and within the scope of the official duties of
such agent or employee, with such hospital or facility, and,
with respect to agents or employees of health care facilities
specified in clause (iv), only to the extent such individuals
are furnishing services pursuant to the contracts or com-
pacts described in such clause;
(vi) mere advertisements that do not attempt to facili-
tate an actual transaction involving a controlled substance;
(vii) a person, entity, or Internet site that is not in the
United States and does not facilitate the delivery, distribu-
tion, or dispensing of a controlled substance by means of
the Internet to any person in the United States;
(viii) a pharmacy registered under section 303(f) whose
dispensing of controlled substances via the Internet con-
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sists solely of—
(I) refilling prescriptions for controlled substances in
schedule III, IV, or V, as defined in paragraph (55); or
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39
(II) filling new prescriptions for controlled sub-
stances in schedule III, IV, or V, as defined in para-
graph (56); or
(ix) any other persons for whom the Attorney General
and the Secretary have jointly, by regulation, found it to
be consistent with effective controls against diversion and
otherwise consistent with the public health and safety to
exempt from the definition of an ‘‘online pharmacy’’.
(53) The term ‘‘homepage’’ means the opening or main page or
screen of the website of an online pharmacy that is viewable on the
Internet.
(54) The term ‘‘practice of telemedicine’’ means, for purposes of
this title, the practice of medicine in accordance with applicable
Federal and State laws by a practitioner (other than a pharmacist)
who is at a location remote from the patient and is communicating
with the patient, or health care professional who is treating the pa-
tient, using a telecommunications system referred to in section
1834(m) of the Social Security Act, which practice—
(A) is being conducted—
(i) while the patient is being treated by, and physically
located in, a hospital or clinic registered under section
303(f); and
(ii) by a practitioner—
(I) acting in the usual course of professional prac-
tice;
(II) acting in accordance with applicable State law;
and
(III) registered under section 303(f) in the State in
which the patient is located, unless the practitioner—
(aa) is exempted from such registration in all
States under section 302(d); or
(bb) is—
(AA) an employee or contractor of the De-
partment of Veterans Affairs who is acting in
the scope of such employment or contract; and
(BB) registered under section 303(f) in any
State or is utilizing the registration of a hos-
pital or clinic operated by the Department of
Veterans Affairs registered under section
303(f);
(B) is being conducted while the patient is being treated by,
and in the physical presence of, a practitioner—
(i) acting in the usual course of professional practice;
(ii) acting in accordance with applicable State law; and
(iii) registered under section 303(f) in the State in which
the patient is located, unless the practitioner—
(I) is exempted from such registration in all States
under section 302(d); or
(II) is—
(aa) an employee or contractor of the Depart-
ment of Veterans Affairs who is acting in the
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scope of such employment or contract; and
(bb) registered under section 303(f) in any State
or is using the registration of a hospital or clinic
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40
operated by the Department of Veterans Affairs
registered under section 303(f);
(C) is being conducted by a practitioner—
(i) who is an employee or contractor of the Indian Health
Service, or is working for an Indian tribe or tribal organi-
zation under its contract or compact with the Indian
Health Service under the Indian Self-Determination and
Education Assistance Act;
(ii) acting within the scope of the employment, contract,
or compact described in clause (i); and
(iii) who is designated as an Internet Eligible Controlled
Substances Provider by the Secretary under section
311(g)(2);
(D)(i) is being conducted during a public health emergency
declared by the Secretary under section 319 of the Public
Health Service Act; and
(ii) involves patients located in such areas, and such con-
trolled substances, as the Secretary, with the concurrence of
the Attorney General, designates, provided that such designa-
tion shall not be subject to the procedures prescribed by sub-
chapter II of chapter 5 of title 5, United States Code;
(E) is being conducted by a practitioner who has obtained
from the Attorney General a special registration under section
311(h);
(F) is being conducted—
(i) in a medical emergency situation—
(I) that prevents the patient from being in the phys-
ical presence of a practitioner registered under section
303(f) who is an employee or contractor of the Vet-
erans Health Administration acting in the usual
course of business and employment and within the
scope of the official duties or contract of that employee
or contractor;
(II) that prevents the patient from being physically
present at a hospital or clinic operated by the Depart-
ment of Veterans Affairs registered under section
303(f);
(III) during which the primary care practitioner of
the patient or a practitioner otherwise practicing tele-
medicine within the meaning of this paragraph is un-
able to provide care or consultation; and
(IV) that requires immediate intervention by a
health care practitioner using controlled substances to
prevent what the practitioner reasonably believes in
good faith will be imminent and serious clinical con-
sequences, such as further injury or death; and
(ii) by a practitioner that—
(I) is an employee or contractor of the Veterans
Health Administration acting within the scope of that
employment or contract;
(II) is registered under section 303(f) in any State or
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is utilizing the registration of a hospital or clinic oper-
ated by the Department of Veterans Affairs registered
under section 303(f); and
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41
(III) issues a controlled substance prescription in
this emergency context that is limited to a maximum
of a 5-day supply which may not be extended or re-
filled; or
(G) is being conducted under any other circumstances that
the Attorney General and the Secretary have jointly, by regula-
tion, determined to be consistent with effective controls against
diversion and otherwise consistent with the public health and
safety.
(55) The term ‘‘refilling prescriptions for controlled substances in
schedule III, IV, or V’’—
(A) means the dispensing of a controlled substance in sched-
ule III, IV, or V in accordance with refill instructions issued by
a practitioner as part of a valid prescription that meets the re-
quirements of subsections (b) and (c) of section 309, as appro-
priate; and
(B) does not include the issuance of a new prescription to an
individual for a controlled substance that individual was pre-
viously prescribed.
(56) The term ‘‘filling new prescriptions for controlled substances
in schedule III, IV, or V’’ means filling a prescription for an indi-
vidual for a controlled substance in schedule III, IV, or V, if—
(A) the pharmacy dispensing that prescription has previously
dispensed to the patient a controlled substance other than by
means of the Internet and pursuant to the valid prescription
of a practitioner that meets the applicable requirements of sub-
sections (b) and (c) of section 309 (in this paragraph referred
to as the ‘‘original prescription’’);
(B) the pharmacy contacts the practitioner who issued the
original prescription at the request of that individual to deter-
mine whether the practitioner will authorize the issuance of a
new prescription for that individual for the controlled sub-
stance described in subparagraph (A); and
(C) the practitioner, acting in the usual course of profes-
sional practice, determines there is a legitimate medical pur-
pose for the issuance of the new prescription.
(57) The term ‘‘suspicious order’’ may include, but is not lim-
ited to—
(A) an order of a controlled substance of unusual size;
(B) an order of a controlled substance deviating substan-
tially from a normal pattern; and
(C) orders of controlled substances of unusual frequency.
(57) The term ‘‘serious drug felony’’ means an offense de-
scribed in section 924(e)(2) of title 18, United States Code, for
which—
(A) the offender served a term of imprisonment of more
than 12 months; and
(B) the offender’s release from any term of imprisonment
was within 15 years of the commencement of the instant
offense.
(58) The term ‘‘serious violent felony’’ means—
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(A) an offense described in section 3559(c)(2) of title 18,
United States Code, for which the offender served a term
of imprisonment of more than 12 months; and
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42
(B) any offense that would be a felony violation of sec-
tion 113 of title 18, United States Code, if the offense were
committed in the special maritime and territorial jurisdic-
tion of the United States, for which the offender served a
term of imprisonment of more than 12 months.
PART B—AUTHORITY TO CONTROL; STANDARDS AND SCHEDULES
* * * * * * *
SCHEDULES OF CONTROLLED SUBSTANCES
SEC. 202. (a) There are established five schedules of controlled
substances, to be known as schedules I, II, III, IV, and V. Such
schedules shall initially consist of the substances listed in this sec-
tion. The schedules established by this section shall be updated
and republished on a semiannual basis during the two-year period
beginning one year after the date of enactment of this title and
shall be updated and republished on an annual basis thereafter.
(b) Except where control is required by United States obligations
under an international treaty, convention, or protocol, in effect on
the effective date of this part, and except in the case of an imme-
diate precursor, a drug or other substance may not be placed in
any schedule unless the findings required for such schedule are
made with respect to such drug or other substance. The findings
required for each of the schedules are as follows:
(1) SCHEDULE I.—
(A) The drug or other substance has a high potential for
abuse.
(B) The drug or other substance has no currently accepted
medical use in treatment in the United States.
(C) There is a lack of accepted safety for use of the drug or
other substance under medical supervision.
(2) SCHEDULE II.—
(A) The drug or other substance has a high potential for
abuse.
(B) The drug or other substance has a currently accepted
medical use in treatment in the United States or a currently
accepted medical use with severe restrictions.
(C) Abuse of the drug or other substances may lead to severe
psychological or physical dependence.
(3) SCHEDULE III.—
(A) The drug or other substance has a potential for abuse
less than the drugs or other substances in schedules I and II.
(B) The drug or other substance has a currently accepted
medical use in treatment in the United States.
(C) Abuse of the drug or other substance may lead to mod-
erate or low physical dependence or high psychological depend-
ence.
(4) SCHEDULE IV.—
(A) The drug or other substance has a low potential for
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abuse relative to the drugs or other substances in schedule III.
(B) The drug or other substance has a currently accepted
medical use in treatment in the United States.
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43
(C) Abuse of the drug or other substance may lead to limited
physical dependence or psychological dependence relative to
the drugs or other substances in schedule III.
(5) SCHEDULE V.—
(A) The drug or other substance has a low potential for
abuse relative to the drugs or other substances in schedule IV.
(B) The drug or other substance has a currently accepted
medical use in treatment in the United States.
(C) Abuse of the drug or other substance may lead to limited
physical dependence or psychological dependence relative to
the drugs or other substances in schedule IV.
(c) Schedules I, II, III, IV, and V shall, unless and until amended
pursuant to section 201, consist of the following drugs or other sub-
stances, by whatever official name, common or usual name, chem-
ical name, or brand name designated:
SCHEDULE I
(a) Unless specifically excepted or unless listed in another sched-
ule, any of the following opiates, including their isomers, esters,
ethers, salts, and salts of isomers, esters, and ethers, whenever the
existence of such isomers, esters, ethers, and salts is possible with-
in the specific chemical designation:
(1) Acetylmethadol.
(2) Allylprodine.
(3) Alphacetylmathadol.
(4) Alphameprodine.
(5) Alphamethadol.
(6) Benzethidine.
(7) Betacetylmethadol.
(8) Betameprodine.
(9) Betamethadol.
(10) Betaprodine.
(11) Clonitazene.
(12) Dextromoramide.
(13) Dextrorphan.
(14) Diampromide.
(15) Diethylthiambutene.
(16) Dimenoxadol.
(17) Dimepheptanol.
(18) Dimethylthiambutene.
(19) Dioxaphetyl butyrate.
(20) Dipipanone.
(21) Ethylmethylthiambutene.
(22) Etonitazene.
(23) Etoxeridine.
(24) Furethidine.
(25) Hydroxypethidine.
(26) Ketobemidone.
(27) Levomoramide.
(28) Levophenacylmorphan.
(29) Morpheridine.
(30) Noracymethadol.
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(31) Norlevorphanol.
(32) Normethadone.
(33) Norpipanone.
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44
(34) Phenadoxone.
(35) Phenampromide.
(36) Phenomorphan.
(37) Phenoperidine.
(38) Piritramide.
(39) Proheptazine.
(40) Properidine.
(41) Racemoramide.
(42) Trimeperidine.
(b) Unless specifically excepted or unless listed in another sched-
ule, any of the following opium derivatives, their salts, isomers,
and salts of isomers whenever the existence of such salts, isomers,
and salts of isomers is possible within the specific chemical des-
ignation:
(1) Acetorphine.
(2) Acetyldihydrocodeine.
(3) Benzylmorphine.
(4) Codeine methylbromide.
(5) Codeine-N-Oxide.
(6) Cyprenorphine.
(7) Desomorphine.
(8) Dihydromorphine.
(9) Etorphine.
(10) Heroin.
(11) Hydromorphinol.
(12) Methyldesorphine.
(13) Methylhydromorphine.
(14) Morphine methylbromide.
(15) Morphine methylsulfonate.
(16) Morphine-N-Oxide.
(17) Myrophine.
(18) Nicocodeine.
(19) Nicomorphine.
(20) Normorphine.
(21) Pholcodine.
(22) Thebacon.
(c) Unless specifically excepted or unless listed in another sched-
ule, any material, compound, mixture, or preparation, which con-
tains any quantity of the following hallucinogenic substances, or
which contains any of their salts, isomers, and salts of isomers
whenever the existence of such salts, isomers, and salts of isomers
is possible within the specific chemical designation:
(1) 3,4-methylenedioxy amphetamine.
(2) 5-methoxy-3,4-methylenedioxy amphetamine.
(3) 3,4,5-trimethoxy amphetamine.
(4) Bufotenine.
(5) Diethyltryptamine.
(6) Dimethyltryptamine.
(7) 4-methyl-2,5-dimethoxy amphetamine.
(8) Ibogaine.
(9) Lysergic acid diethylamide.
ø(10) Marihuana.¿
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(11) Mescaline.
(12) Peyote.
(13) N-ethyl-3-piperidyl benzilate.
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45
(14) N-methyl-3-piperidyl benzilate.
(15) Psilocybin.
(16) Psilocyn.
ø(17) Tetrahydrocannabinols, except for
tetrahydrocannabinols in hemp (as defined under section 297A
of the Agricultural Marketing Act of 1946).¿
(18) 4-methylmethcathinone (Mephedrone).
(19) 3,4-methylenedioxypyrovalerone (MDPV).
(20) 2-(2,5-Dimethoxy-4-ethylphenyl)ethanamine (2C–E).
(21) 2-(2,5-Dimethoxy-4-methylphenyl)ethanamine (2C–D).
(22) 2-(4-Chloro-2,5-dimethoxyphenyl)ethanamine (2C–C).
(23) 2-(4-Iodo-2,5-dimethoxyphenyl)ethanamine (2C–I).
(24) 2-[4-(Ethylthio)-2,5-dimethoxyphenyl]ethanamine (2C–
T–2).
(25) 2-[4-(Isopropylthio)-2,5-dimethoxyphenyl]ethanamine
(2C–T–4).
(26) 2-(2,5-Dimethoxyphenyl)ethanamine (2C–H).
(27) 2-(2,5-Dimethoxy-4-nitro-phenyl)ethanamine (2C–N).
(28) 2-(2,5-Dimethoxy-4-(n)-propylphenyl)ethanamine (2C–P).
(d)(1) Unless specifically exempted or unless listed in another
schedule, any material, compound, mixture, or preparation which
contains any quantity of cannabimimetic agents, or which contains
their salts, isomers, and salts of isomers whenever the existence of
such salts, isomers, and salts of isomers is possible within the spe-
cific chemical designation.
(2) In paragraph (1):
(A) The term ‘‘cannabimimetic agents’’ means any substance
that is a cannabinoid receptor type 1 (CB1 receptor) agonist as
demonstrated by binding studies and functional assays within
any of the following structural classes:
(i) 2-(3-hydroxycyclohexyl)phenol with substitution at
the 5-position of the phenolic ring by alkyl or alkenyl,
whether or not substituted on the cyclohexyl ring to any
extent.
(ii) 3-(1-naphthoyl)indole or 3-(1-naphthylmethane)indole
by substitution at the nitrogen atom of the indole ring,
whether or not further substituted on the indole ring to
any extent, whether or not substituted on the naphthoyl or
naphthyl ring to any extent.
(iii) 3-(1-naphthoyl)pyrrole by substitution at the nitro-
gen atom of the pyrrole ring, whether or not further sub-
stituted in the pyrrole ring to any extent, whether or not
substituted on the naphthoyl ring to any extent.
(iv) 1-(1-naphthylmethylene)indene by substitution of
the 3-position of the indene ring, whether or not further
substituted in the indene ring to any extent, whether or
not substituted on the naphthyl ring to any extent.
(v) 3-phenylacetylindole or 3-benzoylindole by substi-
tution at the nitrogen atom of the indole ring, whether or
not further substituted in the indole ring to any extent,
whether or not substituted on the phenyl ring to any ex-
tent.
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(B) Such term includes—
(i) 5-(1,1-dimethylheptyl)-2-[(1R,3S)-3-
hydroxycyclohexyl]-phenol (CP–47,497);
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46
(ii) 5-(1,1-dimethyloctyl)-2-[(1R,3S)-3-hydroxycyclohexyl]-
phenol (cannabicyclohexanol or CP–47,497 C8-homolog);
(iii) 1-pentyl-3-(1-naphthoyl)indole (JWH–018 and
AM678);
(iv) 1-butyl-3-(1-naphthoyl)indole (JWH–073);
(v) 1-hexyl-3-(1-naphthoyl)indole (JWH–019);
(vi) 1-[2-(4-morpholinyl)ethyl]-3-(1-naphthoyl)indole
(JWH–200);
(vii) 1-pentyl-3-(2-methoxyphenylacetyl)indole (JWH–
250);
(viii) 1-pentyl-3-[1-(4-methoxynaphthoyl)]indole (JWH–
081);
(ix) 1-pentyl-3-(4-methyl-1-naphthoyl)indole (JWH–122);
(x) 1-pentyl-3-(4-chloro-1-naphthoyl)indole (JWH–398);
(xi) 1-(5-fluoropentyl)-3-(1-naphthoyl)indole (AM2201);
(xii) 1-(5-fluoropentyl)-3-(2-iodobenzoyl)indole (AM694);
(xiii) 1-pentyl-3-[(4-methoxy)-benzoyl]indole (SR–19 and
RCS–4);
(xiv) 1-cyclohexylethyl-3-(2-methoxyphenylacetyl)indole
(SR–18 and RCS–8); and
(xv) 1-pentyl-3-(2-chlorophenylacetyl)indole (JWH–203).
* * * * * * *
PART D—OFFENSES AND PENALTIES
PROHIBITED ACTS A—PENALTIES
SEC. 401. (a) Except as authorized by this title, it shall be unlaw-
ful for any person knowingly or intentionally—
(1) to manufacture, distribute, or dispense, or possess with
intent to manufacture, distribute, or dispense, a controlled sub-
stance; or
(2) to create, distribute, or dispense, or possess with intent
to distribute or dispense, a counterfeit substance.
(b) Except as otherwise provided in section 409, 418, 419, or 420
any person who violates subsection (a) of this section shall be sen-
tenced as follows:
(1)(A) In the case of a violation of subsection (a) of this section
involving—
(i) 1 kilogram or more of a mixture or substance containing
a detectable amount of heroin;
(ii) 5 kilograms or more of a mixture or substance containing
a detectable amount of—
(I) coca leaves, except coca leaves and extracts of coca
leaves from which cocaine, ecgonine, and derivatives of ec-
gonine or their salts have been removed;
(II) cocaine, its salts, optical and geometric isomers, and
salts of isomers;
(III) ecgonine, its derivatives, their salts, isomers, and
salts of isomers; or
(IV) any compound, mixture, or preparation which con-
tains any quantity of any of the substances referred to in
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subclauses (I) through (III);
(iii) 280 grams or more of a mixture or substance described
in clause (ii) which contains cocaine base;
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47
(iv) 100 grams or more of phencyclidine (PCP) or 1 kilogram
or more of a mixture or substance containing a detectable
amount of phencyclidine (PCP);
(v) 10 grams or more of a mixture or substance containing
a detectable amount of lysergic acid diethylamide (LSD);
(vi) 400 grams or more of a mixture or substance containing
a detectable amount of N-phenyl-N-[1-(2-phenylethyl)-4-
piperidinyl] propanamide or 100 grams or more of a mixture or
substance containing a detectable amount of any analogue of
N-phenyl-N-[1-(2-phenylethyl)-4-piperidinyl] propanamide; or
ø(vii) 1000 kilograms or more of a mixture or substance con-
taining a detectable amount of marihuana, or 1,000 or more
marihuana plants regardless of weight; or¿
ø(viii)¿ (vii) 50 grams or more of methamphetamine, its
salts, isomers, and salts of its isomers or 500 grams or more
of a mixture or substance containing a detectable amount of
methamphetamine, its salts, isomers, or salts of its isomers;
such person shall be sentenced to a term of imprisonment which
may not be less than 10 years or more than life and if death or
serious bodily injury results from the use of such substance shall
be not less than 20 years or more than life, a fine not to exceed
the greater of that authorized in accordance with the provisions of
title 18, United States Code, or $10,000,000 if the defendant is an
individual or $50,000,000 if the defendant is other than an indi-
vidual, or both. If any person commits such a violation after a prior
conviction for a serious drug felony or serious violent felony has be-
come final, such person shall be sentenced to a term of imprison-
ment of not less than 15 years and not more than life imprison-
ment and if death or serious bodily injury results from the use of
such substance shall be sentenced to life imprisonment, a fine not
to exceed the greater of twice that authorized in accordance with
the provisions of title 18, United States Code, or $20,000,000 if the
defendant is an individual or $75,000,000 if the defendant is other
than an individual, or both. If any person commits a violation of
this subparagraph or of section 409, 418, 419, or 420 after 2 or
more prior convictions for a serious drug felony or serious violent
felony have become final, such person shall be sentenced to a term
of imprisonment of not less than 25 years and fined in accordance
with the preceding sentence. Notwithstanding section 3583 of title
18, any sentence under this subparagraph shall, in the absence of
such a prior conviction, impose a term of supervised release of at
least 5 years in addition to such term of imprisonment and shall,
if there was such a prior conviction, impose a term of supervised
release of at least 10 years in addition to such term of imprison-
ment. Notwithstanding any other provision of law, the court shall
not place on probation or suspend the sentence of any person sen-
tenced under this subparagraph. No person sentenced under this
subparagraph shall be eligible for parole during the term of impris-
onment imposed therein.
(B) In the case of a violation of subsection (a) of this section in-
volving—
(i) 100 grams or more of a mixture or substance containing
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a detectable amount of heroin;
(ii) 500 grams or more of a mixture or substance containing
a detectable amount of—
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48
(I) coca leaves, except coca leaves and extracts of coca
leaves from which cocaine, ecgonine, and derivatives of ec-
gonine or their salts have been removed;
(II) cocaine, its salts, optical and geometric isomers, and
salts of isomers;
(III) ecgonine, its derivatives, their salts, isomers, and
salts of isomers; or
(IV) any compound, mixture, or preparation which con-
tains any quantity of any of the substances referred to in
subclauses (I) through (III);
(iii) 28 grams or more of a mixture or substance described
in clause (ii) which contains cocaine base;
(iv) 10 grams or more of phencyclidine (PCP) or 100 grams
or more of a mixture or substance containing a detectable
amount of phencyclidine (PCP);
(v) 1 gram or more of a mixture or substance containing a
detectable amount of lysergic acid diethylamide (LSD);
(vi) 40 grams or more of a mixture or substance containing
a detectable amount of N-phenyl-N-[1-(2-phenylethyl)-4-
piperidinyl] propanamide or 10 grams or more of a mixture or
substance containing a detectable amount of any analogue of
N-phenyl-N-[1-(2-phenylethyl)-4-piperidinyl] propanamide; or
ø(vii) 100 kilograms or more of a mixture or substance con-
taining a detectable amount of marihuana, or 100 or more
marihuana plants regardless of weight; or¿
ø(viii)¿ (vii) 5 grams or more of methamphetamine, its salts,
isomers, and salts of its isomers or 50 grams or more of a mix-
ture or substance containing a detectable amount of meth-
amphetamine, its salts, isomers, or salts of its isomers;
such person shall be sentenced to a term of imprisonment which
may not be less than 5 years and not more than 40 years and if
death or serious bodily injury results from the use of such sub-
stance shall be not less than 20 years or more than life, a fine not
to exceed the greater of that authorized in accordance with the pro-
visions of title 18, United States Code, or $5,000,000 if the defend-
ant is an individual or $25,000,000 if the defendant is other than
an individual, or both. If any person commits such a violation after
a prior conviction for a serious drug felony or serious violent felony
has become final, such person shall be sentenced to a term of im-
prisonment which may not be less than 10 years and not more
than life imprisonment and if death or serious bodily injury results
from the use of such substance shall be sentenced to life imprison-
ment, a fine not to exceed the greater of twice that authorized in
accordance with the provisions of title 18, United States Code, or
$8,000,000 if the defendant is an individual or $50,000,000 if the
defendant is other than an individual, or both. Notwithstanding
section 3583 of title 18, any sentence under this subparagraph
shall, in the absence of such a prior conviction, include a term of
supervised release of at least 4 years in addition to such term of
imprisonment and shall, if there was such a prior conviction, in-
clude a term of supervised release of at least 8 years in addition
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to such term of imprisonment. Notwithstanding any other provision
of law, the court shall not place on probation or suspend the sen-
tence of any person sentenced under this subparagraph. No person
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49
sentenced under this subparagraph shall be eligible for parole dur-
ing the term of imprisonment imposed therein.
(C) In the case of a controlled substance in schedule I or II,
gamma hydroxybutyric acid (including when scheduled as an ap-
proved drug product for purposes of section 3(a)(1)(B) of the Hillory
J. Farias and Samantha Reid Date-Rape Drug Prohibition Act of
2000), or 1 gram of flunitrazepam, except as provided in øsubpara-
graphs (A), (B), and (D)¿ subparagraphs (A) and (B), such person
shall be sentenced to a term of imprisonment of not more than 20
years and if death or serious bodily injury results from the use of
such substance shall be sentenced to a term of imprisonment of not
less than twenty years or more than life, a fine not to exceed the
greater of that authorized in accordance with the provisions of title
18, United States Code, or $1,000,000 if the defendant is an indi-
vidual or $5,000,000 if the defendant is other than an individual,
or both. If any person commits such a violation after a prior convic-
tion for a felony drug offense has become final, such person shall
be sentenced to a term of imprisonment of not more than 30 years
and if death or serious bodily injury results from the use of such
substance shall be sentenced to life imprisonment, a fine not to ex-
ceed the greater of twice that authorized in accordance with the
provisions of title 18, United States Code, or $2,000,000 if the de-
fendant is an individual or $10,000,000 if the defendant is other
than an individual, or both. Notwithstanding section 3583 of title
18, any sentence imposing a term of imprisonment under this para-
graph shall, in the absence of such a prior conviction, impose a
term of supervised release of at least 3 years in addition to such
term of imprisonment and shall, if there was such a prior convic-
tion, impose a term of supervised release of at least 6 years in ad-
dition to such term of imprisonment. Notwithstanding any other
provision of law, the court shall not place on probation or suspend
the sentence of any person sentenced under the provisions of this
subparagraph which provide for a mandatory term of imprisonment
if death or serious bodily injury results, nor shall a person so sen-
tenced be eligible for parole during the term of such a sentence.
ø(D) In the case of less than 50 kilograms of marihuana, except
in the case of 50 or more marihuana plants regardless of weight,
10 kilograms of hashish, or one kilogram of hashish oil, such per-
son shall, except as provided in paragraphs (4) and (5) of this sub-
section, be sentenced to a term of imprisonment of not more than
5 years, a fine not to exceed the greater of that authorized in ac-
cordance with the provisions of title 18, United States Code, or
$250,000 if the defendant is an individual or $1,000,000 if the de-
fendant is other than an individual, or both. If any person commits
such a violation after a prior conviction for a felony drug offense
has become final, such person shall be sentenced to a term of im-
prisonment of not more than 10 years, a fine not to exceed the
greater of twice that authorized in accordance with the provisions
of title 18, United State Code, or $500,000 if the defendant is an
individual or $2,000,000 if the defendant is other than an indi-
vidual, or both. Notwithstanding section 3583 of title 18, any sen-
tence imposing a term of imprisonment under this paragraph shall,
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in the absence of such a prior conviction, impose a special parole
term of at least 2 years in addition to such term of imprisonment
and shall, if there was such a prior conviction, impose a term of
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50
supervised release of at least 4 years in addition to such term of
imprisonment.¿
ø(E)¿ (D)(i) Except as provided in øsubparagraphs (C) and (D)¿
subparagraph (C), in the case of any controlled substance in sched-
ule III, such person shall be sentenced to a term of imprisonment
of not more than 10 years and if death or serious bodily injury re-
sults from the use of such substance shall be sentenced to a term
of imprisonment of not more than 15 years, a fine not to exceed the
greater of that authorized in accordance with the provisions of title
18, United States Code, or $500,000 if the defendant is an indi-
vidual or $2,500,000 if the defendant is other than an individual,
or both.
(ii) If any person commits such a violation after a prior conviction
for a felony drug offense has become final, such person shall be
sentenced to a term of imprisonment of not more than 20 years and
if death or serious bodily injury results from the use of such sub-
stance shall be sentenced to a term of imprisonment of not more
than 30 years, a fine not to exceed the greater of twice that author-
ized in accordance with the provisions of title 18, United States
Code, or $1,000,000 if the defendant is an individual or $5,000,000
if the defendant is other than an individual, or both.
(iii) Any sentence imposing a term of imprisonment under this
subparagraph shall, in the absence of such a prior conviction, im-
pose a term of supervised release of at least 2 years in addition to
such term of imprisonment and shall, if there was such a prior con-
viction, impose a term of supervised release of at least 4 years in
addition to such term of imprisonment.
(2) In the case of a controlled substance in schedule IV, such per-
son shall be sentenced to a term of imprisonment of not more than
5 years, a fine not to exceed the greater of that authorized in ac-
cordance with the provisions of title 18, United States Code, or
$250,000 if the defendant is an individual or $1,000,000 if the de-
fendant is other than an individual, or both. If any person commits
such a violation after a prior conviction for a felony drug offense
has become final, such person shall be sentenced to a term of im-
prisonment of not more than 10 years, a fine not to exceed the
greater of twice the authorized in accordance with the provisions
of title 18, United States Code, or $500,000 if the defendant is an
individual or $2,000,000 if the defendant is other than an indi-
vidual, or both. Any sentence imposing a term of imprisonment
under this paragraph shall, in the absence of such a prior convic-
tion, impose a term of supervised release of at least one year in ad-
dition to such term of imprisonment and shall, if there was such
a prior conviction, impose a term of supervised release of at least
2 years in addition to such term of imprisonment.
(3) In the case of a controlled substance in schedule V, such per-
son shall be sentenced to a term of imprisonment of not more than
1 year, a fine not to exceed the greater of that authorized in accord-
ance with the provisions of title 18, United States Code, or
$100,000 if the defendant is an individual or $250,000 if the de-
fendant is other than an individual, or both. If any person commits
such a violation after a prior conviction for a felony drug offense
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has become final, such person shall be sentenced to a term of im-
prisonment of not more than 4 years, a fine not to exceed the provi-
sions of title 18, United States Code, or $200,000 if the defendant
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51
is an individual or $500,000 if the defendant is other than an indi-
vidual, or both. Any sentence imposing a term of imprisonment
under this paragraph may, if there was a prior conviction, impose
a term of supervised release of not more than 1 year, in addition
to such term of imprisonment.
ø(4) Notwithstanding paragraph (1)(D) of this subsection, any
person who violates subsection (a) of this section by distributing a
small amount of marihuana for no remuneration shall be treated
as provided in section 404 and section 3607 of title 18, United
States Code.¿
ø(5)¿ (4) Any person who violates subsection (a) of this section
by cultivating or manufacturing a controlled substance on Federal
property shall be imprisoned as provided in this subsection and
shall be fined any amount not to exceed—
(A) the amount authorized in accordance with this section;
(B) the amount authorized in accordance with the provisions
of title 18, United States Code;
(C) $500,000 if the defendant is an individual; or
(D) $1,000,000 if the defendant is other than an individual;
or both.
ø(6)¿ (5) Any person who violates subsection (a), or attempts to
do so, and knowingly or intentionally uses a poison, chemical, or
other hazardous substance on Federal land, and, by such use—
(A) creates a serious hazard to humans, wildlife, or domestic
animals,
(B) degrades or harms the environment or natural resources,
or
(C) pollutes an aquifer, spring, stream, river, or body of
water,
shall be fined in accordance with title 18, United States Code, or
imprisoned not more than five years, or both.
ø(7)¿ (6) PENALTIES FOR DISTRIBUTION.—
(A) IN GENERAL.—Whoever, with intent to commit a crime of
violence, as defined in section 16 of title 18, United States
Code (including rape), against an individual, violates sub-
section (a) by distributing a controlled substance or controlled
substance analogue to that individual without that individual’s
knowledge, shall be imprisoned not more than 20 years and
fined in accordance with title 18, United States Code.
(B) DEFINITION.—For purposes of this paragraph, the term
‘‘without that individual’s knowledge’’ means that the indi-
vidual is unaware that a substance with the ability to alter
that individual’s ability to appraise conduct or to decline par-
ticipation in or communicate unwillingness to participate in
conduct is administered to the individual.
(c) Any person who knowingly or intentionally—
(1) possesses a listed chemical with intent to manufacture a
controlled substance except as authorized by this title;
(2) possesses or distributes, a listed chemical knowing, or
having reasonable cause to believe, that the listed chemical
will be used to manufacture a controlled substance except as
authorized by this title; or
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(3) with the intent of causing the evasion of the record-
keeping or reporting requirements of section 310, or the regu-
lations issued under that section, receives or distributes a re-
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52
portable amount of any listed chemical in units small enough
so that the making of records or filing of reports under that
section is not required;
shall be fined in accordance with title 18, United States Code, or
imprisoned not more than 20 years in the case of a violation of
paragraph (1) or (2) involving a list I chemical or not more than
10 years in the case of a violation of this subsection other than a
violation of paragraph (1) or (2) involving a list I chemical, or both.
(d)(1) Any person who assembles, maintains, places, or causes to
be placed a boobytrap on Federal property where a controlled sub-
stance is being manufactured, distributed, or dispensed shall be
sentenced to a term of imprisonment for not more than 10 years
or fined under title 18, United States Code, or both.
(2) If any person commits such a violation after 1 or more prior
convictions for an offense punishable under this subsection, such
person shall be sentenced to a term of imprisonment of not more
than 20 years or fined under title 18, United States Code, or both.
(3) For the purposes of this subsection, the term ‘‘boobytrap’’
means any concealed or camouflaged device designed to cause bod-
ily injury when triggered by any action of any unsuspecting person
making contact with the device. Such term includes guns, ammuni-
tion, or explosive devices attached to trip wires or other triggering
mechanisms, sharpened stakes, and lines or wires with hooks at-
tached.
(e) In addition to any other applicable penalty, any person con-
victed of a felony violation of this section relating to the receipt,
distribution, manufacture, exportation, or importation of a listed
chemical may be enjoined from engaging in any transaction involv-
ing a listed chemical for not more than ten years.
(f)(1) Whoever knowingly distributes a listed chemical in viola-
tion of this title (other than in violation of a recordkeeping or re-
porting requirement of section 310) shall, except to the extent that
paragraph (12), (13), or (14) of section 402(a) applies, be fined
under title 18, United States Code, or imprisoned not more than
5 years, or both.
(2) Whoever possesses any listed chemical, with knowledge that
the recordkeeping or reporting requirements of section 310 have
not been adhered to, if, after such knowledge is acquired, such per-
son does not take immediate steps to remedy the violation shall be
fined under title 18, United States Code, or imprisoned not more
than one year, or both.
(g) INTERNET SALES OF DATE RAPE DRUGS.—
(1) Whoever knowingly uses the Internet to distribute a date
rape drug to any person, knowing or with reasonable cause to
believe that—
(A) the drug would be used in the commission of crimi-
nal sexual conduct; or
(B) the person is not an authorized purchaser;
shall be fined under this title or imprisoned not more than 20
years, or both.
(2) As used in this subsection:
(A) The term ‘‘date rape drug’’ means—
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(i) gamma hydroxybutyric acid (GHB) or any con-
trolled substance analogue of GHB, including gamma
butyrolactone (GBL) or 1,4–butanediol;
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53
(ii) ketamine;
(iii) flunitrazepam; or
(iv) any substance which the Attorney General des-
ignates, pursuant to the rulemaking procedures pre-
scribed by section 553 of title 5, United States Code,
to be used in committing rape or sexual assault.
The Attorney General is authorized to remove any sub-
stance from the list of date rape drugs pursuant to the
same rulemaking authority.
(B) The term ‘‘authorized purchaser’’ means any of the
following persons, provided such person has acquired the
controlled substance in accordance with this Act:
(i) A person with a valid prescription that is issued
for a legitimate medical purpose in the usual course of
professional practice that is based upon a qualifying
medical relationship by a practitioner registered by
the Attorney General. A ‘‘qualifying medical relation-
ship’’ means a medical relationship that exists when
the practitioner has conducted at least 1 medical eval-
uation with the authorized purchaser in the physical
presence of the practitioner, without regard to wheth-
er portions of the evaluation are conducted by other
heath professionals. The preceding sentence shall not
be construed to imply that 1 medical evaluation dem-
onstrates that a prescription has been issued for a le-
gitimate medical purpose within the usual course of
professional practice.
(ii) Any practitioner or other registrant who is other-
wise authorized by their registration to dispense, pro-
cure, purchase, manufacture, transfer, distribute, im-
port, or export the substance under this Act.
(iii) A person or entity providing documentation that
establishes the name, address, and business of the
person or entity and which provides a legitimate pur-
pose for using any ‘‘date rape drug’’ for which a pre-
scription is not required.
(3) The Attorney General is authorized to promulgate regula-
tions for record-keeping and reporting by persons handling
1,4–butanediol in order to implement and enforce the provi-
sions of this section. Any record or report required by such reg-
ulations shall be considered a record or report required under
this Act.
(h) OFFENSES INVOLVING DISPENSING OF CONTROLLED SUB-
STANCES BY MEANS OF THE INTERNET.—
(1) IN GENERAL.—It shall be unlawful for any person to
knowingly or intentionally—
(A) deliver, distribute, or dispense a controlled substance
by means of the Internet, except as authorized by this
title; or
(B) aid or abet (as such terms are used in section 2 of
title 18, United States Code) any activity described in sub-
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paragraph (A) that is not authorized by this title.
(2) EXAMPLES.—Examples of activities that violate paragraph
(1) include, but are not limited to, knowingly or intentionally—
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54
(A) delivering, distributing, or dispensing a controlled
substance by means of the Internet by an online pharmacy
that is not validly registered with a modification author-
izing such activity as required by section 303(f) (unless ex-
empt from such registration);
(B) writing a prescription for a controlled substance for
the purpose of delivery, distribution, or dispensation by
means of the Internet in violation of section 309(e);
(C) serving as an agent, intermediary, or other entity
that causes the Internet to be used to bring together a
buyer and seller to engage in the dispensing of a controlled
substance in a manner not authorized by sections 303(f) or
309(e);
(D) offering to fill a prescription for a controlled sub-
stance based solely on a consumer’s completion of an on-
line medical questionnaire; and
(E) making a material false, fictitious, or fraudulent
statement or representation in a notification or declaration
under subsection (d) or (e), respectively, of section 311.
(3) INAPPLICABILITY.—
(A) This subsection does not apply to—
(i) the delivery, distribution, or dispensation of con-
trolled substances by nonpractitioners to the extent
authorized by their registration under this title;
(ii) the placement on the Internet of material that
merely advocates the use of a controlled substance or
includes pricing information without attempting to
propose or facilitate an actual transaction involving a
controlled substance; or
(iii) except as provided in subparagraph (B), any ac-
tivity that is limited to—
(I) the provision of a telecommunications serv-
ice, or of an Internet access service or Internet in-
formation location tool (as those terms are defined
in section 231 of the Communications Act of
1934); or
(II) the transmission, storage, retrieval, hosting,
formatting, or translation (or any combination
thereof) of a communication, without selection or
alteration of the content of the communication, ex-
cept that deletion of a particular communication
or material made by another person in a manner
consistent with section 230(c) of the Communica-
tions Act of 1934 shall not constitute such selec-
tion or alteration of the content of the communica-
tion.
(B) The exceptions under subclauses (I) and (II) of sub-
paragraph (A)(iii) shall not apply to a person acting in con-
cert with a person who violates paragraph (1).
(4) KNOWING OR INTENTIONAL VIOLATION.—Any person who
knowingly or intentionally violates this subsection shall be sen-
tenced in accordance with subsection (b).
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PROHIBITED ACTS B—PENALTIES
SEC. 402. (a) It shall be unlawful for any person—
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55
(1) who is subject to the requirements of part C to distribute
or dispense a controlled substance in violation of section 309;
(2) who is a registrant to distribute or dispense a controlled
substance not authorized by his registration to another reg-
istrant or other authorized person or to manufacture a con-
trolled substance not authorized by his registration;
(3) who is a registrant to distribute a controlled substance in
violation of section 305 of this title;
(4) to remove, alter, or obliterate a symbol or label required
by section 305 of this title;
(5) to refuse or negligently fail to make, keep, or furnish any
record, report, notification, declaration, order or order form,
statement, invoice, or information required under this title or
title III;
(6) to refuse any entry into any premises or inspection au-
thorized by this title or title III;
(7) to remove, break, injure, or deface a seal placed upon con-
trolled substances pursuant to section 304(f) or 511 or to re-
move or dispose of substances so placed under seal;
(8) to use, to his own advantage, or to reveal, other than to
duly authorized officers or employees of the United States, or
to the courts when relevant in any judicial proceeding under
this title or title III, any information acquired in the course of
an inspection authorized by this title concerning any method or
process which as a trade secret is entitled to protection, or to
use to his own advantage or reveal (other than as authorized
by section 310) any information that is confidential under such
section;
(9) who is a regulated person to engage in a regulated trans-
action without obtaining the identification required by
310(a)(3);
(10) negligently to fail to keep a record or make a report
under section 310 or negligently to fail to self-certify as re-
quired under section 310;
(11) to distribute a laboratory supply to a person who uses,
or attempts to use, that laboratory supply to manufacture a
controlled substance or a listed chemical, in violation of this
title or title III, with reckless disregard for the illegal uses to
which such a laboratory supply will be put;
(12) who is a regulated seller, or a distributor required to
submit reports under subsection (b)(3) of section 310—
(A) to sell at retail a scheduled listed chemical product
in violation of paragraph (1) of subsection (d) of such sec-
tion, knowing at the time of the transaction involved (inde-
pendent of consulting the logbook under subsection
(e)(1)(A)(iii) of such section) that the transaction is a viola-
tion; or
(B) to knowingly or recklessly sell at retail such a prod-
uct in violation of paragraph (2) of such subsection (d);
(13) who is a regulated seller to knowingly or recklessly sell
at retail a scheduled listed chemical product in violation of
subsection (e) of such section;
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(14) who is a regulated seller or an employee or agent of
such seller to disclose, in violation of regulations under sub-
paragraph (C) of section 310(e)(1), information in logbooks
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56
under subparagraph (A)(iii) of such section, or to refuse to pro-
vide such a logbook to Federal, State, or local law enforcement
authorities;
(15) to distribute a scheduled listed chemical product to a
regulated seller, or to a regulated person referred to in section
310(b)(3)(B), unless such regulated seller or regulated person
is, at the time of such distribution, currently registered with
the Drug Enforcement Administration, or on the list of persons
referred to under section 310(e)(1)(B)(v);
(16) to violate subsection (e) of section 825 of this title; or
(17) in the case of a registered manufacturer or distributor
of opioids, to fail to review the most recent information, di-
rectly related to the customers of the manufacturer or dis-
tributor, made available by the Attorney General in accordance
with section 307(f).
As used in paragraph (11), the term ‘‘laboratory supply’’ means a
listed chemical or any chemical, substance, or item on a special
surveillance list published by the Attorney General, which contains
chemicals, products, materials, or equipment used in the manufac-
ture of controlled substances and listed chemicals. For purposes of
paragraph (11), there is a rebuttable presumption of reckless dis-
regard at trial if the Attorney General notifies a firm in writing
that a laboratory supply sold by the firm, or any other person or
firm, has been used by a customer of the notified firm, or distrib-
uted further by that customer, for the unlawful production of con-
trolled substances or listed chemicals a firm distributes and 2
weeks or more after the notification the notified firm distributes a
laboratory supply to the customer. For purposes of paragraph (15),
if the distributor is temporarily unable to access the list of persons
referred to under section 310(e)(1)(B)(v), the distributor may rely
on a written, faxed, or electronic copy of a certificate of self-certifi-
cation submitted by the regulated seller or regulated person, pro-
vided the distributor confirms within 7 business days of the dis-
tribution that such regulated seller or regulated person is on the
list referred to under section 310(e)(1)(B)(v).
(b) It shall be unlawful for any person who is a registrant to
manufacture a controlled substance in schedule I or II, or ephed-
rine, pseudoephedrine, or phenylpropanolamine or any of the salts,
optical isomers, or salts of optical isomers of such chemical, which
is—
(1) not expressly authorized by his registration and by a
quota assigned to him pursuant to section 306; or
(2) in excess of a quota assigned to him pursuant to section
306.
(c)(1)(A) Except as provided in subparagraph (B), (C), or (D) of
this paragraph and paragraph (2), any person who violates this sec-
tion shall, with respect to any such violation, be subject to a civil
penalty of not more than $25,000. The district courts of the United
States (or, where there is no such court in the case of any territory
or possession of the United States, then the court in such territory
or possession having the jurisdiction of a district court of the
United States in cases arising under the Constitution and laws of
SSpencer on DSK126QN23PROD with REPORTS
the United States) shall have jurisdiction in accordance with sec-
tion 1355 of title 28 of the United States Code to enforce this para-
graph.
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57
(B)(i) Except as provided in clause (ii), in the case of a violation
of paragraph (5), (10), or (17) of subsection (a), the civil penalty
shall not exceed $10,000.
(ii) In the case of a violation described in clause (i) committed by
a registered manufacturer or distributor of opioids and related to
the reporting of suspicious orders for opioids, failing to maintain ef-
fective controls against diversion of opioids, or failing to review the
most recent information made available by the Attorney General in
accordance with section 307(f), the penalty shall not exceed
$100,000.
(C) In the case of a violation of paragraph (16) of subsection (a)
of this section by an importer, exporter, manufacturer, or dis-
tributor (other than as provided in subparagraph (D)), up to
$500,000 per violation. For purposes of this subparagraph, a viola-
tion is defined as each instance of importation, exportation, manu-
facturing, distribution, or possession with intent to manufacture or
distribute, in violation of paragraph (16) of subsection (a).
(D) In the case of a distribution, dispensing, or possession with
intent to distribute or dispense in violation of paragraph (16) of
subsection (a) of this section at the retail level, up to $1000 per vio-
lation. For purposes of this paragraph, the term ‘‘at the retail level’’
refers to products sold, or held for sale, directly to the consumer
for personal use. Each package, container or other separate unit
containing an anabolic steroid that is distributed, dispensed, or
possessed with intent to distribute or dispense at the retail level
in violation of such paragraph (16) of subsection (a) shall be consid-
ered a separate violation.
(2)(A) If a violation of this section is prosecuted by an informa-
tion or indictment which alleges that the violation was committed
knowingly and the trier of fact specifically finds that the violation
was so committed, such person shall, except as otherwise provided
in subparagraph (B) or (D) of this paragraph, be sentenced to im-
prisonment of not more than one year or a fine under title 18,
United States Code, or both.
(B) If a violation referred to in subparagraph (A) was committed
after one or more prior convictions of the offender for an offense
punishable under this paragraph (2), or for a crime under any
other provision of this title or title III or other law of the United
States relating to narcotic drugsø, marihuana,¿ or depressant or
stimulant substances, have become final, such person shall be sen-
tenced to a term of imprisonment of not more than 2 years, a fine
under title 18, United States Code, or both.
(C) In addition to the penalties set forth elsewhere in this title
or title III, any business that violates paragraph (11) of subsection
(a) shall, with respect to the first such violation, be subject to a
civil penalty of not more than $250,000, but shall not be subject to
criminal penalties under this section, and shall, for any succeeding
violation, be subject to a civil fine of not more than $250,000 or
double the last previously imposed penalty, whichever is greater.
(D) In the case of a violation described in subparagraph (A) that
was a violation of paragraph (5), (10), or (17) of subsection (a) com-
mitted by a registered manufacturer or distributor of opioids that
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relates to the reporting of suspicious orders for opioids, failing to
maintain effective controls against diversion of opioids, or failing to
review the most recent information made available by the Attorney
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58
General in accordance with section 307(f), the criminal fine under
title 18, United States Code, shall not exceed $500,000.
(3) Except under the conditions specified in paragraph (2) of this
subsection, a violation of this section does not constitute a crime,
and a judgment for the United States and imposition of a civil pen-
alty pursuant to paragraph (1) shall not give rise to any disability
or legal disadvantage based on conviction for a criminal offense.
(4)(A) If a regulated seller, or a distributor required to submit re-
ports under section 310(b)(3), violates paragraph (12) of subsection
(a) of this section, or if a regulated seller violates paragraph (13)
of such subsection, the Attorney General may by order prohibit
such seller or distributor (as the case may be) from selling any
scheduled listed chemical product. Any sale of such a product in
violation of such an order is subject to the same penalties as apply
under paragraph (2).
(B) An order under subparagraph (A) may be imposed only
through the same procedures as apply under section 304(c) for an
order to show cause.
PROHIBITED ACTS C—PENALTIES
SEC. 403. (a) It shall be unlawful for any person knowingly or in-
tentionally—
(1) who is a registrant to distribute a controlled substance
classified in schedule I or II, in the course of his legitimate
business, except pursuant to an order or an order form as re-
quired by section 308 of this title;
(2) to use in the course of the manufacture, distribution, or
dispensing of a controlled substance, or to use for the purpose
of acquiring or obtaining a controlled substance, a registration
number which is fictitious, revoked, suspended, expired, or
issued to another person;
(3) to acquire or obtain possession of a controlled substance
by misrepresentation, fraud, forgery, deception, or subterfuge;
(4)(A) to furnish false or fraudulent material information in,
or omit any material information from, any application, report,
record, or other document required to be made, kept, or filed
under this title or title III, or (B) to present false or fraudulent
identification where the person is receiving or purchasing a
listed chemical and the person is required to present identifica-
tion under section 310(a);
(5) to make, distribute, or possess any punch, die, plate,
stone, or other thing designed to print, imprint, or reproduce
the trademark, trade name, or other identifying mark, imprint,
or device of another or any likeness of any of the foregoing
upon any drug or container or labeling thereof so as to render
such drug a counterfeit substance;
(6) to possess any three-neck round-bottom flask, tableting
machine, encapsulating machine, or gelatin capsule, or any
equipment, chemical, product, or material which may be used
to manufacture a controlled substance or listed chemical,
knowing, intending, or having reasonable cause to believe, that
it will be used to manufacture a controlled substance or listed
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chemical in violation of this title or title III;
(7) to manufacture, distribute, export, or import any three-
neck round-bottom flask, tableting machine, encapsulating ma-
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59
chine, or gelatin capsule, or any equipment, chemical, product,
or material which may be used to manufacture a controlled
substance or listed chemical, knowing, intending, or having
reasonable cause to believe, that it will be used to manufacture
a controlled substance or listed chemical in violation of this
title or title III or, in the case of an exportation, in violation
of this title or title III or of the laws of the country to which
it is exported;
(8) to create a chemical mixture for the purpose of evading
a requirement of section 310 or to receive a chemical mixture
created for that purpose; or
(9) to distribute, import, or export a list I chemical without
the registration required by this title or title III.
(b) It shall be unlawful for any person knowingly or intentionally
to use any communication facility in committing or in causing or
facilitating the commission of any act or acts constituting a felony
under any provision of this title or title III. Each separate use of
a communication facility shall be a separate offense under this sub-
section. For purposes of this subsection, the term ‘‘communication
facility’’ means any and all public and private instrumentalities
used or useful in the transmission of writing, signs, signals, pic-
tures, or sounds of all kinds and includes mail, telephone, wire,
radio, and all other means of communication.
(c)(1) It shall be unlawful for any person to place in any news-
paper, magazine, handbill, or other publications, any written ad-
vertisement knowing that it has the purpose of seeking or offering
illegally to receive, buy, or distribute a Schedule I controlled sub-
stance. As used in this section the term ‘‘advertisement’’ includes,
in addition to its ordinary meaning, such advertisements as those
for a catalog of Schedule I controlled substances and any similar
written advertisement that has the purpose of seeking or offering
illegally to receive, buy, or distribute a Schedule I controlled sub-
stance. The term ‘‘advertisement’’ does not include material which
merely advocates the use of a similar material, which advocates a
position or practice, and does not attempt to propose or facilitate
an actual transaction in a Schedule I controlled substance.
(2)(A) It shall be unlawful for any person to knowingly or inten-
tionally use the Internet, or cause the Internet to be used, to adver-
tise the sale of, or to offer to sell, distribute, or dispense, a con-
trolled substance where such sale, distribution, or dispensing is not
authorized by this title or by the Controlled Substances Import and
Export Act.
(B) Examples of activities that violate subparagraph (A) include,
but are not limited to, knowingly or intentionally causing the place-
ment on the Internet of an advertisement that refers to or directs
prospective buyers to Internet sellers of controlled substances who
are not registered with a modification under section 303(f).
(C) Subparagraph (A) does not apply to material that either—
(i) merely advertises the distribution of controlled substances
by nonpractitioners to the extent authorized by their registra-
tion under this title; or
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(ii) merely advocates the use of a controlled substance or in-
cludes pricing information without attempting to facilitate an
actual transaction involving a controlled substance.
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60
(d)(1) Except as provided in paragraph (2), any person who vio-
lates this section shall be sentenced to a term of imprisonment of
not more than 4 years, a fine under title 18, United States Code,
or both; except that if any person commits such a violation after
one or more prior convictions of him for violation of this section, or
for a felony under any other provision of this title or title III or
other law of the United States relating to narcotic drugsø, mari-
huana,¿ or depressant or stimulant substances, have become final,
such person shall be sentenced to a term of imprisonment of not
more than 8 years, a fine under title 18, United States Code, or
both.
(2) Any person who, with the intent to manufacture or to facili-
tate the manufacture of methamphetamine, violates paragraph (6)
or (7) of subsection (a), shall be sentenced to a term of imprison-
ment of not more than 10 years, a fine under title 18, United
States Code, or both; except that if any person commits such a vio-
lation after one or more prior convictions of that person—
(A) for a violation of paragraph (6) or (7) of subsection (a);
(B) for a felony under any other provision of this subchapter
or subchapter II of this chapter; or
(C) under any other law of the United States or any State
relating to controlled substances or listed chemicals,
has become final, such person shall be sentenced to a term of im-
prisonment of not more than 20 years, a fine under title 18, United
States Code, or both.
(e) In addition to any other applicable penalty, any person con-
victed of a felony violation of this section relating to the receipt,
distribution, manufacture, exportation, or importation of a listed
chemical may be enjoined from engaging in any transaction involv-
ing a listed chemical for not more than ten years.
(f) INJUNCTIONS.—(1) In addition to any penalty provided in this
section, the Attorney General is authorized to commence a civil ac-
tion for appropriate declaratory or injunctive relief relating to vio-
lations of this section, section 402, or 416.
(2) Any action under this subsection may be brought in the dis-
trict court of the United States for the district in which the defend-
ant is located or resides or is doing business.
(3) Any order or judgment issued by the court pursuant to this
subsection shall be tailored to restrain violations of this section or
section 402.
(4) The court shall proceed as soon as practicable to the hearing
and determination of such an action. An action under this sub-
section is governed by the Federal Rules of Civil Procedure except
that, if an indictment has been returned against the respondent,
discovery is governed by the Federal Rules of Criminal Procedure.
* * * * * * *
DISTRIBUTION TO PERSONS UNDER AGE TWENTY-ONE
SEC. 418. (a) Except as provided in section 419, any person at
least eighteen years of age who violates section 401(a)(1) by distrib-
uting a controlled substance to a person under twenty-one years of
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age is (except as provided in subsection (b)) subject to (1) twice the
maximum punishment authorized by section 401(b), and (2) at
least twice any term of supervised release authorized by section
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61
401(b), for a first offense involving the same controlled substance
and schedule. Except to the extent a greater minimum sentence is
otherwise provided by section 401(b), a term of imprisonment
under this subsection shall be not less than one year. øThe manda-
tory minimum sentencing provisions of this subsection shall not
apply to offenses involving 5 grams or less of marihuana.¿
(b) Except as provided in section 419, any person at least eight-
een years of age who violates section 401(a)(1) by distributing a
controlled substance to a person under twenty-one years of age
after a prior conviction under subsection (a) of this section (or
under section 303(b)(2) of the Federal Food, Drug, and Cosmetic
Act as in effect prior to the effective date of section 701(b) of this
Act) has become final, is subject to (1) three times the maximum
punishment authorized by section 401(b), and (2) at least three
times any term of supervised release authorized by section 401(b),
for a second offense or subsequent offense involving the same con-
trolled substance and schedule. Except to the extent a greater min-
imum sentence is otherwise provided by section 401(b), a term of
imprisonment under this subsection shall be not less than one
year. Penalties for third and subsequent convictions shall be gov-
erned by section 401(b)(1)(A).
SEC. 419. DISTRIBUTION IN OR NEAR SCHOOLS.—(a) Any person
who violates section 401(a)(1) or section 416 by distributing, pos-
sessing with intent to distribute, or manufacturing a controlled
substance in or on, or within one thousand feet of, the real prop-
erty comprising a public or private elementary, vocational, or sec-
ondary school or a public or private college, junior college, or uni-
versity, or a playground, or housing facility owned by a public
housing authority, or within 100 feet of a public or private youth
center, public swimming pool, or video arcade facility, is (except as
provided in subsection (b)) subject to (1) twice the maximum pun-
ishment authorized by section 401(b) of this title; and (2) at least
twice any term of supervised release authorized by section 401(b)
for a first offense. A fine up to twice that authorized by section
401(b) may be imposed in addition to any term of imprisonment au-
thorized by this subsection. Except to the extent a greater min-
imum sentence is otherwise provided by section 401(b), a person
shall be sentenced under this subsection to a term of imprisonment
of not less than one year. øThe mandatory minimum sentencing
provisions of this paragraph shall not apply to offenses involving
5 grams or less of marihuana.¿
(b) Any person who violates section 401(a)(1) or section 416 by
distributing, possessing with intent to distribute, or manufacturing
a controlled substance in or on, or within one thousand feet of, the
real property comprising a public or private elementary, vocational,
or secondary school or a public or private college, junior college, or
university, or a playground, or housing facility owned by a public
housing authority, or within 100 feet of a public or private youth
center, public swimming pool, or video arcade facility, after a prior
conviction under subsection (a) has become final is punishable (1)
by the greater of (A) a term of imprisonment of not less than three
years and not more than life imprisonment or (B) three times the
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maximum punishment authorized by section 401(b) for a first of-
fense, and (2) at least three times any term of supervised release
authorized by section 401(b) of this title for a first offense. A fine
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62
up to three times that authorized by section 401(b) may be imposed
in addition to any term of imprisonment authorized by this sub-
section. Except to the extent a greater minimum sentence is other-
wise provided by section 401(b), a person shall be sentenced under
this subsection to a term of imprisonment of not less than three
years. Penalties for third and subsequent convictions shall be gov-
erned by section 401(b)(1)(A).
(c) Notwithstanding any other law, any person at least 21 years
of age who knowingly and intentionally—
(1) employs, hires, uses, persuades, induces, entices, or co-
erces a person under 18 years of age to violate this section; or
(2) employs, hires, uses, persuades, induces, entices, or co-
erces a person under 18 years of age to assist in avoiding de-
tection or apprehension for any offense under this section by
any Federal, State, or local law enforcement official,
is punishable by a term of imprisonment, a fine, or both, up to tri-
ple those authorized by section 401.
(d) In the case of any mandatory minimum sentence imposed
under subsection (b), imposition or execution of such sentence shall
not be suspended and probation shall not be granted. An individual
convicted under this section shall not be eligible for parole until the
individual has served the mandatory minimum term of imprison-
ment as provided by this section.
(e) For the purposes of this section—
(1) The term ‘‘playground’’ means any outdoor facility (in-
cluding any parking lot appurtenant thereto) intended for
recreation, open to the public, and with any portion thereof
containing three or more separate apparatus intended for the
recreation of children including, but not limited to, sliding
boards, swingsets, and teeterboards.
(2) The term ‘‘youth center’’ means any recreational facility
and/or gymnasium (including any parking lot appurtenant
thereto), intended primarily for use by persons under 18 years
of age, which regularly provides athletic, civic, or cultural ac-
tivities.
(3) The term ‘‘video arcade facility’’ means any facility, le-
gally accessible to persons under 18 years of age, intended pri-
marily for the use of pinball and video machines for amuse-
ment containing a minimum of ten pinball and/or video ma-
chines.
(4) The term ‘‘swimming pool’’ includes any parking lot ap-
purtenant thereto.
* * * * * * *
DRUG PARAPHERNALIA
SEC. 422. (a) It is unlawful for any person—
(1) to sell or offer for sale drug paraphernalia;
(2) to use the mails or any other facility of interstate com-
merce to transport drug paraphernalia; or
(3) to import or export drug paraphernalia.
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(b) Anyone convicted of an offense under subsection (a) of this
section shall be imprisoned for not more than three years and fined
under title 18, United States Code.
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63
(c) Any drug paraphernalia involved in any violation of sub-
section (a) of this section shall be subject to seizure and forfeiture
upon the conviction of a person for such violation. Any such para-
phernalia shall be delivered to the Administrator of General Serv-
ices, General Services Administration, who may order such para-
phernalia destroyed or may authorize its use for law enforcement
or educational purposes by Federal, State, or local authorities.
(d) The term ‘‘drug paraphernalia’’ means any equipment, prod-
uct, or material of any kind which is primarily intended or de-
signed for use in manufacturing, compounding, converting, con-
cealing, producing, processing, preparing, injecting, ingesting, in-
haling, or otherwise introducing into the human body a controlled
substance, possession of which is unlawful under the Controlled
Substances Act (title II of Public Law 91–513). It includes items
primarily intended or designed for use in ingesting, inhaling, or
otherwise introducing ømarijuana,¿ cocaine, hashish, hashish oil,
PCP, methamphetamine, or amphetamines into the human body,
such as—
(1) metal, wooden, acrylic, glass, stone, plastic, or ceramic
pipes with or without screens, permanent screens, hashish
heads, or punctured metal bowls;
(2) water pipes;
(3) carburetion tubes and devices;
(4) smoking and carburetion masks;
(5) roach clips: meaning objects used to hold burning
materialø, such as a marihuana cigarette,¿ that has become
too small or too short to be held in the hand;
(6) miniature spoons with level capacities of one-tenth cubic
centimeter or less;
(7) chamber pipes;
(8) carburetor pipes;
(9) electric pipes;
(10) air-driven pipes;
(11) chillums;
(12) bongs;
(13) ice pipes or chillers;
(14) wired cigarette papers; or
(15) cocaine freebase kits.
(e) In determining whether an item constitutes drug para-
phernalia, in addition to all other logically relevant factors, the fol-
lowing may be considered:
(1) instructions, oral or written, provided with the item con-
cerning its use;
(2) descriptive materials accompanying the item which ex-
plain or depict its use;
(3) national and local advertising concerning its use;
(4) the manner in which the item is displayed for sale;
(5) whether the owner, or anyone in control of the item, is
a legitimate supplier of like or related items to the community,
such as a licensed distributor or dealer of tobacco products;
(6) direct or circumstantial evidence of the radio of sales of
the item(s) to the total sales of the business enterprise;
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(7) the existence and scope of legitimate uses of the item in
the community; and
(8) expert testimony concerning its use.
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(f) This section shall not apply to—
(1) any person authorized by local, State, or Federal law to
manufacture, possess, or distribute such items; or
(2) any item that, in the normal lawful course of business,
is imported, exported, transported, or sold through the mail or
by any other means, and traditionally intended for use with to-
bacco products, including any pipe, paper, or accessory.
* * * * * * *
PART E—ADMINISTRATIVE AND ENFORCEMENT PROVISIONS
* * * * * * *
PAYMENTS AND ADVANCES
SEC. 516. (a) The Attorney General is authorized to pay any per-
son, from funds appropriated for the Drug Enforcement Adminis-
tration, for information concerning a violation of this title, such
sum or sums of money as he may deem appropriate, without ref-
erence to any moieties or rewards to which such person may other-
wise be entitled by law.
(b) Moneys expended from appropriations of the Drug Enforce-
ment Administration for purchase of controlled substances and sub-
sequently recovered shall be reimbursed to the current appropria-
tion for the Bureau.
(c) The Attorney General is authorized to direct the advance of
funds by the Treasury Department in connection with the enforce-
ment of this title. Section 16 of Public Law 96–132 (93 Stat. 1049)
amended this title in several other places by striking references to
the Bureau of Narcotics and Dangerous Drugs and inserting ref-
erences to the Drug Enforcement Administration.
(d)(1) There is established in the Treasury a trust fund to be
known as the ‘‘Drug Pollution Fund’’ (hereinafter referred to in this
subsection as the ‘‘Fund’’), consisting of amounts appropriated or
credited to such Fund under øsection 401(b)(6)¿ section 401(b)(5).
(2) There are hereby appropriated to the Fund amounts equiva-
lent to the fines imposed under øsection 401(b)(6)¿ section
401(b)(5).
(3) Amounts in the Fund shall be available, as provided in appro-
priations Acts, for the purpose of making payments in accordance
with paragraph (4) for the clean up of certain pollution resulting
from the actions referred to in øsection 401(b)(6)¿ section 401(b)(5).
(4)(A) The Secretary of the Treasury, after consultation with the
Attorney General, shall make payments under paragraph (3), in
such amounts as the Secretary determines appropriate, to the
heads of executive agencies or departments that meet the require-
ments of subparagraph (B).
(B) In order to receive a payment under paragraph (3), the head
of an executive agency or department shall submit an application
in such form and containing such information as the Secretary of
the Treasury shall by regulation require. Such application shall
contain a description of the fine imposed under øsection 401(b)(6)¿
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section 401(b)(5), the circumstances surrounding the imposition of
such fine, and the type and severity of pollution that resulted from
the actions to which such fine applies.
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65
(5) For purposes of subchapter B of chapter 98 of the Internal
Revenue Code of 1986, the Fund established under this paragraph
shall be treated in the same manner as a trust fund established
under subchapter A of such chapter.
* * * * * * *
NATIONAL FOREST SYSTEM DRUG CONTROL ACT OF
1986
TITLE XV—NATIONAL FOREST SYSTEM DRUG CONTROL
SEC. 15001. SHORT TITLE.
This title may be cited as the ‘‘National Forest System Drug
note. Control Act of 1986’’.
SEC. 15002. PURPOSE.
(a) The purpose of this title is to authorize the Secretary of Agri-
culture (hereinafter in this title referred to as the ‘‘Secretary’’) to
take actions necessary, in connection with the administration and
use of the National Forest System, to prevent the manufacture, dis-
tribution, or dispensing of ømarijuana and other¿ controlled sub-
stances.
(b) Nothing in this title shall diminish in any way the law en-
forcement authority of the Forest Service.
(c) As used in this title, the terms ‘‘manufacture’’, ‘‘dispense’’, and
‘‘distribute’’ shall have the same meaning given such terms in sec-
tion 102 of the Controlled Substances Act (21 U.S.C. 802).
SEC. 15003. POWERS.
For the purposes of this title, if specifically designated by the
Secretary and specially trained, not to exceed 1,000 special agents
and law enforcement officers of the Forest Service when in the per-
formance of their duties shall have authority to—
(1) carry firearms;
(2) conduct, within the exterior boundaries of the National
Forest System, investigations of violations of and enforce sec-
tion 401 of Controlled Substances Act (21 U.S.C. 841) and
other criminal violations relating to ømarijuana and other¿
controlled substances that are manufactured, distributed, or
dispensed on National Forest System lands and to conduct
such investigations and enforcement of such laws outside the
exterior boundaries of the National Forest System for offenses
committed within the National Forest System or which affect
the administration of the National Forest System (including
the pursuit of persons suspected of such offenses who flee the
National Forest System to avoid arrest);
(3) make arrests with a warrant or process for misdemeanor
violations, or without a warrant or process for violations of
such misdemeanors that any such officer or employee has prob-
able cause to believe are being committed in his presence or
view, or for a felony with a warrant or without a warrant if
he has probable cause to believe that the person to be arrested
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has committed or is committing such felony, for offenses com-
mitted within the National Forest System or which affect the
administration of the National Forest System;;
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66
(4) serve warrants and other process issued by a court or of-
ficer of competent jurisdiction;
(5) search with or without warrant or process any person,
place, or conveyance according to Federal law or rule of law;
and
(6) seize with or without warrant or process any evidentiary
item according to Federal law or rule of law.
SEC. 15004. COOPERATION.
For the purposes of this title, in exercising the authority provided
by section 15003—
(1) the Forest Service shall cooperate with any other Federal
law enforcement agency having primary investigative jurisdic-
tion over the offense committed;
(2) the Secretary may authorize the Forest Service to cooper-
ate with the law enforcement officials of any Federal agency,
State, or political subdivision in the investigation of violations
of and enforcement of section 401 of the Controlled Substances
Act (21 U.S.C. 8411, other laws and regulations relating to
ømarijuana and other¿ controlled substances, and State drug
control laws or ordinances for offenses committed within the
National Forest System or which affect the administration of
the National Forest System.
(3) the Forest Service shall cooperate with the Attorney Gen-
eral in carrying out the seizure and forfeiture provisions of sec-
tion 511 of the Controlled Substances Act (21 U.S.C. 881) for
violations of the Controlled Substances Act relating to offenses
committed within the National Forest System, or which affect
the administration of the National Forest System;
(4) the Secretary is authorized to designate law enforcement
officers of any other Federal agency, when the Secretary deter-
mines such designation to be economical and in the public in-
terest, and with the concurrence of that agency, to exercise the
powers and authorities of the Forest Service while assisting
the Forest Service in the National Forest System, or for activi-
ties administered by the Forest Service; and
(5) the Forest Service is authorized to accept law enforce-
ment designation from any other Federal agency or agency of
a State or political subdivision thereof for the purpose of co-
operating in a multi-agency law enforcement task force inves-
tigation of violations of the Controlled Substances Act and
other offenses committed in the course of or in connection with
such violations.
* * * * * * *
TITLE 18, UNITED STATES CODE
PART I—CRIMES
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* * * * * * *
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CHAPTER 119—WIRE AND ELECTRONIC COMMUNICA-
TIONS INTERCEPTION AND INTERCEPTION OF ORAL
COMMUNICATIONS
* * * * * * *
§ 2516. Authorization for interception of wire, oral, or elec-
tronic communications
(1) The Attorney General, Deputy Attorney General, Asso-
ciate Attorney General, or any Assistant Attorney General, any
acting Assistant Attorney General, or any Deputy Assistant At-
torney General or acting Deputy Assistant Attorney General in
the Criminal Division or National Security Division specially
designated by the Attorney General, may authorize an applica-
tion to a Federal judge of competent jurisdiction for, and such
judge may grant in conformity with section 2518 of this chap-
ter an order authorizing or approving the interception of wire
or oral communications by the Federal Bureau of Investigation,
or a Federal agency having responsibility for the investigation
of the offense as to which the application is made, when such
interception may provide or has provided evidence of—
(a) any offense punishable by death or by imprisonment
for more than one year under sections 2122 and 2274
through 2277 of title 42 of the United States Code (relat-
ing to the enforcement of the Atomic Energy Act of 1954),
section 2284 of title 42 of the United States Code (relating
to sabotage of nuclear facilities or fuel), or under the fol-
lowing chapters of this title: chapter 10 (relating to biologi-
cal weapons), chapter 37 (relating to espionage), chapter
55 (relating to kidnapping), chapter 90 (relating to protec-
tion of trade secrets), chapter 105 (relating to sabotage),
chapter 115 (relating to treason), chapter 102 (relating to
riots), chapter 65 (relating to malicious mischief), chapter
111 (relating to destruction of vessels), or chapter 81 (re-
lating to piracy);
(b) a violation of section 186 or section 501(c) of title 29,
United States Code (dealing with restrictions on payments
and loans to labor organizations), or any offense which in-
volves murder, kidnapping, robbery, or extortion, and
which is punishable under this title;
(c) any offense which is punishable under the following
sections of this title: section 37 (relating to violence at
international airports), section 43 (relating to animal en-
terprise terrorism), section 81 (arson within special mari-
time and territorial jurisdiction), section 201 (bribery of
public officials and witnesses), section 215 (relating to
bribery of bank officials), section 224 (bribery in sporting
contests), subsection (d), (e), (f), (g), (h), or (i) of section 844
(unlawful use of explosives), section 1032 (relating to con-
cealment of assets), section 1084 (transmission of wagering
information), section 751 (relating to escape), section 832
(relating to nuclear and weapons of mass destruction
threats), section 842 (relating to explosive materials), sec-
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tion 930 (relating to possession of weapons in Federal fa-
cilities), section 1014 (relating to loans and credit applica-
tions generally; renewals and discounts), section 1114 (re-
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68
lating to officers and employees of the United States), sec-
tion 1116 (relating to protection of foreign officials), sec-
tions 1503, 1512, and 1513 (influencing or injuring an offi-
cer, juror, or witness generally), section 1510 (obstruction
of criminal investigations), section 1511 (obstruction of
State or local law enforcement), section 1581 (peonage),
section 1582 (vessels for slave trade), section 1583 (entice-
ment into slavery), section 1584 (involuntary servitude),
section 1585 (seizure, detention, transportation or sale of
slaves), section 1586 (service on vessels in slave trade),
section 1587 (possession of slaves aboard vessel), section
1588 (transportation of slaves from United States), section
1589 (forced labor), section 1590 (trafficking with respect
to peonage, slavery, involuntary servitude, or forced labor),
section 1591 (sex trafficking of children by force, fraud, or
coercion), section 1592 (unlawful conduct with respect to
documents in furtherance of trafficking, peonage, slavery,
involuntary servitude, or forced labor), section 1751 (Presi-
dential and Presidential staff assassination, kidnapping,
and assault), section 1951 (interference with commerce by
threats or violence), section 1952 (interstate and foreign
travel or transportation in aid of racketeering enterprises),
section 1958 (relating to use of interstate commerce facili-
ties in the commission of murder for hire), section 1959
(relating to violent crimes in aid of racketeering activity),
section 1954 (offer, acceptance, or solicitation to influence
operations of employee benefit plan), section 1955 (prohibi-
tion of business enterprises of gambling), section 1956
(laundering of monetary instruments), section 1957 (relat-
ing to engaging in monetary transactions in property de-
rived from specified unlawful activity), section 659 (theft
from interstate shipment), section 664 (embezzlement from
pension and welfare funds), section 1343 (fraud by wire,
radio, or television), section 1344 (relating to bank fraud),
section 1992 (relating to terrorist attacks against mass
transportation), sections 2251 and 2252 (sexual exploi-
tation of children), section 2251A (selling or buying of chil-
dren), section 2252A (relating to material constituting or
containing child pornography), section 1466A (relating to
child obscenity), section 2260 (production of sexually ex-
plicit depictions of a minor for importation into the United
States), sections 2421, 2422, 2423, and 2425 (relating to
transportation for illegal sexual activity and related
crimes), sections 2312, 2313, 2314, and 2315 (interstate
transportation of stolen property), section 2321 (relating to
trafficking in certain motor vehicles or motor vehicle
parts), section 2340A (relating to torture), section 1203 (re-
lating to hostage taking), section 1029 (relating to fraud
and related activity in connection with access devices), sec-
tion 3146 (relating to penalty for failure to appear), section
3521(b)(3) (relating to witness relocation and assistance),
section 32 (relating to destruction of aircraft or aircraft fa-
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cilities), section 38 (relating to aircraft parts fraud), section
1963 (violations with respect to racketeer influenced and
corrupt organizations), section 115 (relating to threatening
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69
or retaliating against a Federal official), section 1341 (re-
lating to mail fraud), a felony violation of section 1030 (re-
lating to computer fraud and abuse), section 351 (viola-
tions with respect to congressional, Cabinet, or Supreme
Court assassinations, kidnapping, and assault), section 831
(relating to prohibited transactions involving nuclear ma-
terials), section 33 (relating to destruction of motor vehi-
cles or motor vehicle facilities), section 175 (relating to bio-
logical weapons), section 175c (relating to variola virus),
section 956 (conspiracy to harm persons or property over-
seas), a felony violation of section 1028 (relating to produc-
tion of false identification documentation), section 1425
(relating to the procurement of citizenship or nationaliza-
tion unlawfully), section 1426 (relating to the reproduction
of naturalization or citizenship papers), section 1427 (relat-
ing to the sale of naturalization or citizenship papers), sec-
tion 1541 (relating to passport issuance without authority),
section 1542 (relating to false statements in passport ap-
plications), section 1543 (relating to forgery or false use of
passports), section 1544 (relating to misuse of passports),
section 1546 (relating to fraud and misuse of visas, per-
mits, and other documents), or section 555 (relating to con-
struction or use of international border tunnels);
(d) any offense involving counterfeiting punishable under
section 471, 472, or 473 of this title;
(e) any offense involving fraud connected with a case
under title 11 or the manufacture, importation, receiving,
concealment, buying, selling, or otherwise dealing in nar-
cotic drugs, ømarihuana,¿ or other dangerous drugs, pun-
ishable under any law of the United States;
(f) any offense including extortionate credit transactions
under sections 892, 893, or 894 of this title;
(g) a violation of section 5322 of title 31, United States
Code (dealing with the reporting of currency transactions),
or section 5324 of title 31, United States Code (relating to
structuring transactions to evade reporting requirement
prohibited);
(h) any felony violation of sections 2511 and 2512 (relat-
ing to interception and disclosure of certain communica-
tions and to certain intercepting devices) of this title;
(i) any felony violation of chapter 71 (relating to obscen-
ity) of this title;
(j) any violation of section 60123(b) (relating to destruc-
tion of a natural gas pipeline), section 46502 (relating to
aircraft piracy), the second sentence of section 46504 (re-
lating to assault on a flight crew with dangerous weapon),
or section 46505(b)(3) or (c) (relating to explosive or incen-
diary devices, or endangerment of human life, by means of
weapons on aircraft) of title 49;
(k) any criminal violation of section 2778 of title 22 (re-
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lating to the Arms Export Control Act);
(l) the location of any fugitive from justice from an of-
fense described in this section;
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70
(m) a violation of section 274, 277, or 278 of the Immi-
gration and Nationality Act (8 U.S.C. 1324, 1327, or 1328)
(relating to the smuggling of aliens);
(n) any felony violation of sections 922 and 924 of title
18, United States Code (relating to firearms);
(o) any violation of section 5861 of the Internal Revenue
Code of 1986 (relating to firearms);
(p) a felony violation of section 1028 (relating to produc-
tion of false identification documents), section 1542 (relat-
ing to false statements in passport applications), section
1546 (relating to fraud and misuse of visas, permits, and
other documents), section 1028A (relating to aggravated
identity theft) of this title or a violation of section 274,
277, or 278 of the Immigration and Nationality Act (relat-
ing to the smuggling of aliens); or
(q) any criminal violation of section 229 (relating to
chemical weapons) or section 2332, 2332a, 2332b, 2332d,
2332f, 2332g, 2332h 2339, 2339A, 2339B, 2339C, or 2339D
of this title (relating to terrorism);
(r) any criminal violation of section 1 (relating to illegal
restraints of trade or commerce), 2 (relating to illegal mo-
nopolizing of trade or commerce), or 3 (relating to illegal
restraints of trade or commerce in territories or the Dis-
trict of Columbia) of the Sherman Act (15 U.S.C. 1, 2, 3);
(s) any violation of section 670 (relating to theft of med-
ical products);
(t) any violation of the Export Control Reform Act of
2018; or
(u) any conspiracy to commit any offense described in
any subparagraph of this paragraph.
(2) The principal prosecuting attorney of any State, or the prin-
cipal prosecuting attorney of any political subdivision thereof, if
such attorney is authorized by a statute of that State to make ap-
plication to a State court judge of competent jurisdiction for an
order authorizing or approving the interception of wire, oral, or
electronic communications, may apply to such judge for, and such
judge may grant in conformity with section 2518 of this chapter
and with the applicable State statute an order authorizing, or ap-
proving the interception of wire, oral, or electronic communications
by investigative or law enforcement officers having responsibility
for the investigation of the offense as to which the application is
made, when such interception may provide or has provided evi-
dence of the commission of the offense of murder, kidnapping,
human trafficking, child sexual exploitation, child pornography pro-
duction, prostitution, gambling, robbery, bribery, extortion, or deal-
ing in narcotic drugs, ømarihuana¿ or other dangerous drugs, or
other crime dangerous to life, limb, or property, and punishable by
imprisonment for more than one year, designated in any applicable
State statute authorizing such interception, or any conspiracy to
commit any of the foregoing offenses.
(3) Any attorney for the Government (as such term is defined for
the purposes of the Federal Rules of Criminal Procedure) may au-
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thorize an application to a Federal judge of competent jurisdiction
for, and such judge may grant, in conformity with section 2518 of
this title, an order authorizing or approving the interception of
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71
electronic communications by an investigative or law enforcement
officer having responsibility for the investigation of the offense as
to which the application is made, when such interception may pro-
vide or has provided evidence of any Federal felony.
* * * * * * *
INTERNAL REVENUE CODE OF 1986
* * * * * * *
Subtitle E—Alcohol, Tobacco, and Certain
Other Excise Taxes
* * * * * * *
CHAPTER 52—TOBACCO PRODUCTS AND
CIGARETTE PAPERS AND TUBES
* * * * * * *
Subchapter A—DEFINITIONS; RATE AND PAY-
MENT OF TAX; EXEMPTION FROM TAX; AND
REFUND AND DRAWBACK OF TAX
* * * * * * *
SEC. 5701. RATE OF TAX.
(a) CIGARS.—On cigars, manufactured in or imported into the
United States, there shall be imposed the following taxes:
(1) SMALL CIGARS.—On cigars, weighing not more than 3
pounds per thousand, $50.33 per thousand;
(2) LARGE CIGARS.—On cigars weighing more than 3 pounds
per thousand, a tax equal to 52.75 percent of the price for
which sold but not more than 40.26 cents per cigar.
Cigars not exempt from tax under this chapter which are removed
but not intended for sale shall be taxed at the same rate as similar
cigars removed for sale.
(b) CIGARETTES.—On cigarettes, manufactured in or imported
into the United States, there shall be imposed the following taxes:
(1) SMALL CIGARETTES.—On cigarettes, weighing not more
than 3 pounds per thousand, $50.33 per thousand;
(2) LARGE CIGARETTES.—On cigarettes, weighing more than
3 pounds per thousand, $105.69 per thousand; except that, if
more than 61/2 inches in length, they shall be taxable at the
rate prescribed for cigarettes weighing not more than 3 pounds
per thousand, counting each 23/4 inches, or fraction thereof, of
the length of each as one cigarette.
(c) CIGARETTE PAPERS.—On cigarette papers, manufactured in or
imported into the United States, there shall be imposed a tax of
3.15 cents for each 50 papers or fractional part thereof; except that,
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if cigarette papers measure more than 61/2 inches in length, they
shall be taxable at the rate prescribed, counting each 23/4 inches,
or fraction thereof, of the length of each as one cigarette paper.
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72
(d) CIGARETTE TUBES.—On cigarette tubes, manufactured in or
imported into the United States, there shall be imposed a tax of
6.30 cents for each 50 tubes or fractional part thereof, except that
if cigarette tubes measure more than 61/2 inches in length, they
shall be taxable at the rate prescribed, counting each 23/4 inches,
or fraction thereof, of the length of each as one cigarette tube.
(e) SMOKELESS TOBACCO.—On smokeless tobacco, manufactured
in or imported into the United States, there shall be imposed the
following taxes:
(1) SNUFF.—On snuff, $1.51 per pound and a proportionate
tax at the like rate on all fractional parts of a pound.
(2) CHEWING TOBACCO.—On chewing tobacco, 50.33 cents per
pound and a proportionate tax at the like rate on all fractional
parts of a pound.
(f) PIPE TOBACCO.—On pipe tobacco, manufactured in or imported
into the United States, there shall be imposed a tax of $2.8311
cents per pound (and a proportionate tax at the like rate on all
fractional parts of a pound).
(g) ROLL-YOUR-OWN TOBACCO.—On roll-your-own tobacco, manu-
factured in or imported into the United States, there shall be im-
posed a tax of $24.78 per pound (and a proportionate tax at the like
rate on all fractional parts of a pound).
(h) CANNABIS PRODUCTS.—On cannabis products, manufactured
in or imported into the United States, there shall be imposed a tax
equal to 5 percent of the price for which sold.
ø(h)¿ (i) IMPORTED TOBACCO PRODUCTS AND CIGARETTE PAPERS
AND TUBES.—The taxes imposed by this section on tobacco products
and cigarette papers and tubes imported into the United States
shall be in addition to any import duties imposed on such articles,
unless such import duties are imposed in lieu of internal revenue
tax.
SEC. 5702. DEFINITIONS.
When used in this chapter—
(a) CIGAR.—‘‘Cigar’’ means any roll of tobacco wrapped in leaf to-
bacco or in any substance containing tobacco (other than any roll
of tobacco which is a cigarette within the meaning of subsection
(b)(2)).
(b) CIGARETTE.—‘‘Cigarette’’ means—
(1) any roll of tobacco wrapped in paper or in any substance
not containing tobacco, and
(2) any roll of tobacco wrapped in any substance containing
tobacco which, because of its appearance, the type of tobacco
used in the filler, or its packaging and labeling, is likely to be
offered to, or purchased by, consumers as a cigarette described
in paragraph (1).
(c) TOBACCO PRODUCTS.—‘‘Tobacco products’’ means cigars, ciga-
rettes, smokeless tobacco, pipe tobacco, øand roll-your-own tobacco¿
roll-your-own tobacco, and cannabis products.
(d) MANUFACTURER OF TOBACCO PRODUCTS.—‘‘Manufacturer of to-
bacco products’’ means any person who manufactures cigars, ciga-
rettes, smokeless tobacco, pipe tobacco, or roll-your-own tobacco, ex-
cept that such term shall not include—
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(1) a person who produces cigars, cigarettes, smokeless to-
bacco, pipe tobacco, or roll-your-own tobacco solely for the per-
son’s own personal consumption or use, and
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73
(2) a proprietor of a customs bonded manufacturing ware-
house with respect to the operation of such warehouse.
Such term shall include any person who for commercial purposes
makes available for consumer use (including such consumer’s per-
sonal consumption or use under paragraph (1)) a machine capable
of making cigarettes, cigars, or other tobacco products. A person
making such a machine available for consumer use shall be deemed
the person making the removal as defined by subsection (j) with re-
spect to any tobacco products manufactured by such machine. A
person who sells a machine directly to a consumer at retail for a
consumer’s personal home use is not making a machine available
for commercial purposes if such machine is not used at a retail
premises and is designed to produce tobacco products only in per-
sonal use quantities.
(e) CIGARETTE PAPER.—‘‘Cigarette paper’’ means paper, or any
other material except tobacco, prepared for use as a cigarette wrap-
per.
(f) CIGARETTE TUBE.—‘‘Cigarette tube’’ means cigarette paper
made into a hollow cylinder for use in making cigarettes.
(g) MANUFACTURER OF CIGARETTE PAPERS AND TUBES.—‘‘Manufac-
turer of cigarette papers and tubes’’ means any person who manu-
factures cigarette paper, or makes up cigarette paper into tubes,
except for his own personal use or consumption.
(h) EXPORT WAREHOUSE.—‘‘Export warehouse’’ means a bonded
internal revenue warehouse for the storage of tobacco products or
cigarette papers or tubes or any processed tobacco, upon which the
internal revenue tax has not been paid, for subsequent shipment
to a foreign country, Puerto Rico, the Virgin Islands, or a posses-
sion of the United States, or for consumption beyond the jurisdic-
tion of the internal revenue laws of the United States.
(i) EXPORT WAREHOUSE PROPRIETOR.—‘‘Export warehouse propri-
etor’’ means any person who operates an export warehouse.
(j) REMOVAL OR REMOVE.—‘‘Removal’’ or ‘‘remove’’ means the re-
moval of tobacco products or cigarette papers or tubes, or any proc-
essed tobacco, from the factory or from internal revenue bond
under section 5704, as the Secretary shall by regulation prescribe,
or release from customs custody, and shall also include the smug-
gling or other unlawful importation of such articles into the United
States. In the case of a cannabis product, the previous sentence
shall be applied by substituting ‘‘from a facility of a manufacturer
required to file a bond under section 5711’’ for ‘‘from the factory or
from internal revenue bond under section 5704’’.
(k) IMPORTER.—‘‘Importer’’ means any person in the United
States to whom nontaxpaid tobacco products or cigarette papers or
tubes, or any processed tobacco, manufactured in a foreign country,
Puerto Rico, the Virgin Islands, or a possession of the United
States are shipped or consigned; any person who removes cigars or
cigarettes for sale or consumption in the United States from a cus-
toms bonded manufacturing warehouse; and any person who smug-
gles or otherwise unlawfully brings tobacco products or cigarette
papers or tubes, or any processed tobacco, into the United States.
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(l) DETERMINATION OF PRICE ON CIGARS AND CANNABIS PROD-
UCTS.—In determining price for purposes of øsection 5701(a)(2)¿
subsections (a)(2) and (h) of section 5701—
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74
(1) there shall be included any charge incident to placing the
article in condition ready for use,
(2) there shall be excluded—
(A) the amount of the tax imposed by this chapter or sec-
tion 7652, and
(B) if stated as a separate charge, the amount of any re-
tail sales tax imposed by any State or political subdivision
thereof or the District of Columbia, whether the liability
for such tax is imposed on the vendor or vendee, and
(3) rules similar to the rules of section 4216(b) shall apply.
(m) DEFINITIONS RELATING TO SMOKELESS TOBACCO.—
(1) SMOKELESS TOBACCO.—The term ‘‘smokeless tobacco’’
means any snuff or chewing tobacco.
(2) SNUFF.—The term ‘‘snuff’’ means any finely cut, ground,
or powdered tobacco that is not intended to be smoked.
(3) CHEWING TOBACCO.—The term ‘‘chewing tobacco’’ means
any leaf tobacco that is not intended to be smoked.
(n) PIPE TOBACCO.—The term ‘‘pipe tobacco’’ means any tobacco
which, because of its appearance, type, packaging, or labeling, is
suitable for use and likely to be offered to, or purchased by, con-
sumers as tobacco to be smoked in a pipe.
(o) ROLL-YOUR-OWN TOBACCO.—The term ‘‘roll-your-own tobacco’’
means any tobacco which, because of its appearance, type, pack-
aging, or labeling, is suitable for use and likely to be offered to, or
purchased by, consumers as tobacco for making cigarettes or cigars,
or for use as wrappers thereof.
(p) MANUFACTURER OF PROCESSED TOBACCO.—
(1) IN GENERAL.—The term ‘‘manufacturer of processed to-
bacco’’ means any person who processes any tobacco other than
tobacco products.
(2) PROCESSED TOBACCO.—The processing of tobacco shall not
include the farming or growing of tobacco or the handling of to-
bacco solely for sale, shipment, or delivery to a manufacturer
of tobacco products or processed tobacco.
(q) CANNABIS PRODUCT.—
(1) IN GENERAL.—Except as provided in paragraph (2), the
term ‘‘cannabis product’’ means any cannabis or any article
which contains cannabis or any derivative thereof.
(2) EXCEPTION.—The term ‘‘cannabis product’’ shall not in-
clude any medicine or drug that is a prescribed drug (as such
term is defined in section 213(d)(3)).
(3) CANNABIS.—The term ‘‘cannabis’’—
(A) means all parts of the plant Cannabis sativa L.,
whether growing or not; the seeds thereof; the resin ex-
tracted from any part of such plant; and every compound,
manufacture, salt, derivative, mixture, or preparation of
such plant, its seeds or resin; and
(B) does not include—
(i) hemp, as defined in section 297A of the Agricul-
tural Marketing Act of 1946; or
(ii) the mature stalks of such plant, fiber produced
from such stalks, oil or cake made from the seeds of
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such plant, any other compound, manufacture, salt, de-
rivative, mixture, or preparation of such mature stalks
(except the resin extracted therefrom), fiber, oil, or cake,
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75
or the sterilized seed of such plant which is incapable
of germination.
(r) MANUFACTURER OF CANNABIS PRODUCTS.—
(1) IN GENERAL.—Any person who plants, cultivates, harvests,
produces, manufactures, compounds, converts, processes, pre-
pares, or packages any cannabis product shall be treated as a
manufacturer of cannabis products (and as manufacturing such
cannabis product).
(2) EXCEPTION.—Paragraph (1) shall not apply with respect
to any cannabis product which is for such person’s own per-
sonal consumption or use.
(3) APPLICATION OF RULES RELATED TO MANUFACTURERS OF
TOBACCO PRODUCTS.—Any reference to a manufacturer of to-
bacco products, or to manufacturing tobacco products, shall be
treated as including a reference to a manufacturer of cannabis
products, or to manufacturing cannabis products, respectively.
* * * * * * *
Subtitle I—Trust Fund Code
* * * * * * *
CHAPTER 98—TRUST FUND CODE
* * * * * * *
Subchapter A—ESTABLISHMENT OF TRUST
FUNDS
* * * * * * *
Sec. 9512. Opportunity trust fund.
* * * * * * *
SEC. 9512. OPPORTUNITY TRUST FUND.
(a) CREATION OF TRUST FUND.—There is established in the Treas-
ury of the United States a trust fund to be known as the ‘‘Oppor-
tunity Trust Fund’’ (referred to in this section as the ‘‘Trust Fund’’),
consisting of such amounts as may be appropriated or credited to
such fund as provided in this section or section 9602(b).
(b) TRANSFERS TO TRUST FUND.—There are hereby appropriated
to the Trust Fund amounts equivalent to the net revenues received
in the Treasury from the tax imposed by section 5701(h).
(c) EXPENDITURES.—Amounts in the Trust Fund shall be avail-
able, without further appropriation, only as follows:
(1) 50 percent to the Attorney General to carry out section
3052(a) of part OO of the Omnibus Crime Control and Safe
Streets Act of 1968.
(2) 10 percent to the Attorney General to carry out section
3052(b) of part OO of the Omnibus Crime Control and Safe
Streets Act of 1968.
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(3) 20 percent to the Administrator of the Small Business Ad-
ministration to carry out section 6(b)(1) of the Marijuana Op-
portunity Reinvestment and Expungement Act of 2019.
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76
(4) 20 percent to the Administrator of the Small Business Ad-
ministration to carry out section 6(b)(2) of the Marijuana Op-
portunity Reinvestment and Expungement Act of 2019.
* * * * * * *
OMNIBUS CRIME CONTROL AND SAFE STREETS ACT OF
1968
* * * * * * *
TITLE I—JUSTICE SYSTEM IMPROVEMENT
* * * * * * *
PART A—OFFICE OF JUSTICE PROGRAMS
* * * * * * *
SEC. 110. CANNABIS JUSTICE OFFICE.
(a) ESTABLISHMENT.—There is established within the Office of
Justice Programs a Cannabis Justice Office.
(b) DIRECTOR.—The Cannabis Justice Office shall be headed by a
Director who shall be appointed by the Assistant Attorney General
for the Office of Justice Programs. The Director shall report to the
Assistant Attorney General for the Office of Justice Programs. The
Director shall award grants and may enter into compacts, coopera-
tive agreements, and contracts on behalf of the Cannabis Justice Of-
fice. The Director may not engage in any employment other than
that of serving as the Director, nor may the Director hold any office
in, or act in any capacity for, any organization, agency, or institu-
tion with which the Office makes any contract or other arrange-
ment.
(c) EMPLOYEES.—
(1) IN GENERAL.—The Director shall employ as many full-
time employees as are needed to carry out the duties and func-
tions of the Cannabis Justice Office under subsection (d). Such
employees shall be exclusively assigned to the Cannabis Justice
Office.
(2) INITIAL HIRES.—Not later than 6 months after the date of
enactment of this section, the Director shall—
(A) hire no less than one-third of the total number of em-
ployees of the Cannabis Justice Office; and
(B) no more than one-half of the employees assigned to
the Cannabis Justice Office by term appointment that may
after 2 years be converted to career appointment.
(3) LEGAL COUNSEL.—At least one employee hired for the
Cannabis Justice Office shall serve as legal counsel to the Di-
rector and shall provide counsel to the Cannabis Justice Office.
(d) DUTIES AND FUNCTIONS.—The Cannabis Justice Office is au-
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thorized to—
(1) administer the Community Reinvestment Grant Program;
and
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(2) perform such other functions as the Assistant Attorney
General for the Office of Justice Programs may delegate, that
are consistent with the statutory obligations of this section.
* * * * * * *
PART OO—COMMUNITY REINVESTMENT
GRANT PROGRAM
SEC. 3052. AUTHORIZATION.
(a) IN GENERAL.—The Director of the Cannabis Justice Office
shall establish and carry out a grant program, known as the ‘‘Com-
munity Reinvestment Grant Program’’, to provide eligible entities
with funds to administer services for individuals most adversely im-
pacted by the War on Drugs, including—
(1) job training;
(2) reentry services;
(3) legal aid for civil and criminal cases, including
expungement of cannabis convictions;
(4) literacy programs;
(5) youth recreation or mentoring programs;
(6) health education programs; and
(7) services to address any collateral consequences that indi-
viduals or communities face as a result of the War on Drugs.
(b) SUBSTANCE USE TREATMENT SERVICES.—The Community Re-
investment Grant Program established in subsection (a) shall pro-
vide eligible entities with funds to administer substance use treat-
ment services for individuals most adversely impacted by the War
on Drugs.
SEC. 3053. FUNDING FROM OPPORTUNITY TRUST FUND.
The Director shall carry out the program under this part using
funds made available under section 9512(c)(1) and (2) of the Inter-
nal Revenue Code.
SEC. 3054. DEFINITIONS.
In this part:
(1) The term ‘‘cannabis conviction’’ means a conviction, or ad-
judication of juvenile delinquency, for a cannabis offense (as
such term is defined in section 13 of the Marijuana Opportunity
Reinvestment and Expungement Act of 2019).
(2) The term ‘‘substance use treatment’’ means an evidence-
based, professionally directed, deliberate, and planned regimen
including evaluation, observation, medical monitoring, harm
reduction, and rehabilitative services and interventions such as
pharmacotherapy, mental health services, and individual and
group counseling, on an inpatient or outpatient basis, to help
patients with substance use disorder reach remission and main-
tain recovery.
(3) The term ‘‘eligible entity’’ means a nonprofit organization,
as defined in section 501(c)(3) of the Internal Revenue Code,
that is representative of a community or a significant segment
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of a community with experience in providing relevant services
to individuals most adversely impacted by the War on Drugs in
that community.
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(4) The term ‘‘individuals most adversely impacted by the
War on Drugs’’ has the meaning given that term in section 6
of the Marijuana Opportunity Reinvestment and Expungement
Act of 2019.
* * * * * * *
SMALL BUSINESS ACT
* * * * * * *
SEC. 3. DEFINITIONS.
(a) SMALL BUSINESS CONCERNS.—
(1) IN GENERAL.—For the purposes of this Act, a small-busi-
ness concern, including but not limited to enterprises that are
engaged in the business of production of food and fiber, ranch-
ing and raising of livestock, aquaculture, and all other farming
and agricultural related industries, shall be deemed to be one
which is independently owned and operated and which is not
dominant in its field of operation.
(2) ESTABLISHMENT OF SIZE STANDARDS.—
(A) IN GENERAL.—In addition to the criteria specified in
paragraph (1), the Administrator may specify detailed defi-
nitions or standards by which a business concern may be
determined to be a small business concern for the purposes
of this Act or any other Act.
(B) ADDITIONAL CRITERIA.—The standards described in
paragraph (1) may utilize number of employees, dollar vol-
ume of business, net worth, net income, a combination
thereof, or other appropriate factors.
(C) REQUIREMENTS.—Unless specifically authorized by
statute, no Federal department or agency may prescribe a
size standard for categorizing a business concern as a
small business concern, unless such proposed size stand-
ard—
(i) is proposed after an opportunity for public notice
and comment;
(ii) provides for determining—
(I) the size of a manufacturing concern as meas-
ured by the manufacturing concern’s average em-
ployment based upon employment during each of
the manufacturing concern’s pay periods for the
preceding 12 months;
(II) the size of a business concern providing
services on the basis of the annual average gross
receipts of the business concern over a period of
not less than 5 years;
(III) the size of other business concerns on the
basis of data over a period of not less than 3
years; or
(IV) other appropriate factors; and
(iii) is approved by the Administrator.
(3) VARIATION BY INDUSTRY AND CONSIDERATION OF OTHER
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FACTORS.—When establishing or approving any size standard
pursuant to paragraph (2), the Administrator shall ensure that
the size standard varies from industry to industry to the extent
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79
necessary to reflect the differing characteristics of the various
industries and consider other factors deemed to be relevant by
the Administrator.
(4) EXCLUSION OF CERTAIN SECURITY EXPENSES FROM CONSID-
ERATION FOR PURPOSE OF SMALL BUSINESS SIZE STANDARDS.—
(A) DETERMINATION REQUIRED.—Not later than 30 days
after the date of enactment of this paragraph, the Admin-
istrator shall review the application of size standards es-
tablished pursuant to paragraph (2) to small business con-
cerns that are performing contracts in qualified areas and
determine whether it would be fair and appropriate to ex-
clude from consideration in the average annual gross re-
ceipts of such small business concerns any payments made
to such small business concerns by Federal agencies to re-
imburse such small business concerns for the cost of sub-
contracts entered for the sole purpose of providing security
services in a qualified area.
(B) ACTION REQUIRED.—Not later than 60 days after the
date of enactment of this paragraph, the Administrator
shall either—
(i) initiate an adjustment to the size standards, as
described in subparagraph (A), if the Administrator
determines that such an adjustment would be fair and
appropriate; or
(ii) provide a report to the Committee on Small
Business and Entrepreneurship of the Senate and the
Committee on Small Business of the House of Rep-
resentatives explaining in detail the basis for the de-
termination by the Administrator that such an adjust-
ment would not be fair and appropriate.
(C) QUALIFIED AREAS.—In this paragraph, the term
‘‘qualified area’’ means—
(i) Iraq,
(ii) Afghanistan, and
(iii) any foreign country which included a combat
zone, as that term is defined in section 112(c)(2) of the
Internal Revenue Code of 1986, at the time of perform-
ance of the relevant Federal contract or subcontract.
(5) ALTERNATIVE SIZE STANDARD.—
(A) IN GENERAL.—The Administrator shall establish an
alternative size standard for applicants for business loans
under section 7(a) and applicants for development com-
pany loans under title V of the Small Business Investment
Act of 1958 (15 U.S.C. 695 et seq.), that uses maximum
tangible net worth and average net income as an alter-
native to the use of industry standards.
(B) INTERIM RULE.—Until the date on which the alter-
native size standard established under subparagraph (A) is
in effect, an applicant for a business loan under section
7(a) or an applicant for a development company loan under
title V of the Small Business Investment Act of 1958 may
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be eligible for such a loan if—
(i) the maximum tangible net worth of the applicant
is not more than $15,000,000; and
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80
(ii) the average net income after Federal income
taxes (excluding any carry-over losses) of the applicant
for the 2 full fiscal years before the date of the appli-
cation is not more than $5,000,000.
(6) PROPOSED RULEMAKING.—In conducting rulemaking to re-
vise, modify or establish size standards pursuant to this sec-
tion, the Administrator shall consider, and address, and make
publicly available as part of the notice of proposed rulemaking
and notice of final rule each of the following:
(A) a detailed description of the industry for which the
new size standard is proposed;
(B) an analysis of the competitive environment for that
industry;
(C) the approach the Administrator used to develop the
proposed standard including the source of all data used to
develop the proposed rule making; and
(D) the anticipated effect of the proposed rulemaking on
the industry, including the number of concerns not cur-
rently considered small that would be considered small
under the proposed rule making and the number of con-
cerns currently considered small that would be deemed
other than small under the proposed rulemaking.
(7) COMMON SIZE STANDARDS.—In carrying out this sub-
section, the Administrator may establish or approve a single
size standard for a grouping of 4-digit North American Indus-
try Classification System codes only if the Administrator
makes publicly available, not later than the date on which
such size standard is established or approved, a justification
demonstrating that such size standard is appropriate for each
individual industry classification included in the grouping.
(8) NUMBER OF SIZE STANDARDS.—The Administrator shall
not limit the number of size standards established pursuant to
paragraph (2), and shall assign the appropriate size standard
to each North American Industry Classification System Code.
(9) PETITIONS FOR RECONSIDERATION OF SIZE STANDARDS.—
(A) IN GENERAL.—A person may file a petition for recon-
sideration with the Office of Hearings and Appeals (as es-
tablished under section 5(i)) of a size standard revised,
modified, or established by the Administrator pursuant to
this subsection.
(B) TIME LIMIT.—A person filing a petition for reconsid-
eration described in subparagraph (A) shall file such peti-
tion not later than 30 days after the publication in the
Federal Register of the notice of final rule to revise, mod-
ify, or establish size standards described in paragraph (6).
(C) PROCESS FOR AGENCY REVIEW.—The Office of Hear-
ings and Appeals shall use the same process it uses to de-
cide challenges to the size of a small business concern to
decide a petition for review pursuant to this paragraph.
(D) JUDICIAL REVIEW.—The publication of a final rule in
the Federal Register described in subparagraph (B) shall
be considered final agency action for purposes of seeking
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judicial review. Filing a petition for reconsideration under
subparagraph (A) shall not be a condition precedent to ju-
dicial review of any such size standard.
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81
(E) RULES OR GUIDANCE.—The Office of Hearings and
Appeals shall begin accepting petitions for reconsideration
described in subparagraph (A) after the date on which the
Administration issues a rule or other guidance imple-
menting this paragraph. Notwithstanding the provisions of
subparagraph (B), petitions for reconsideration of size
standards revised, modified, or established in a Federal
Register final rule published between November 25, 2015,
and the effective date of such rule or other guidance shall
be considered timely if filed within 30 days of such effec-
tive date.
(b) For purposes of this Act, any reference to an agency or de-
partment of the United States, and the term ‘‘Federal agency,’’
shall have the meaning given the term ‘‘agency’’ by section 551(1)
of title 5, United States Code, but does not include the United
States Postal Service or the General Accounting Office.
(c)(1) For purposes of this Act, a qualified employee trust shall
be eligible for any loan guarantee under section 7(a) with respect
to a small business concern on the same basis as if such trust were
the same legal entity as such concern.
(2) For purposes of this Act, the term ‘‘qualified employee trust’’
means, with respect to a small business concern, a trust—
(A) which forms part of an employee stock ownership plan
(as defined in section 4975(e)(7) of the Internal Revenue Code
of 1954)—
(i) which is maintained by such concern, and
(ii) which provides that each participant is entitled to di-
rect the plan trustee as to the manner of how to vote the
qualified employer securities (as defined in section
4975(e)(8) of the Internal Revenue Code of 1986), which
are allocated to the account of such participant with re-
spect to a corporate matter which (by law or charter) must
be decided by a vote conducted in accordance with section
409(e) of the Internal Revenue Code of 1986; and
(B) in the case of any loan guarantee under section 7(a), the
trustee of which enters into an agreement with the Adminis-
trator of which enters into an agreement with the Adminis-
trator which is binding on the trust and no such small busi-
ness concern and which provides that—
(i) the loan guaranteed under section 7(a) shall be used
solely for the purchase of qualifying employer securities of
such concern.
(ii) all funds acquired by the concern in such purchase
shall be used by such concern solely for the purposes for
which such loan was guaranteed,
(iii) such concern will provide such funds as may be nec-
essary for the timely repayment of such loan, and the
property of such concern shall be available as security for
repayment of such loan, and
(iv) all qualifying employer securities acquired by such
trust in such purchase shall be allocated to the accounts
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of participants in such plan who are entitled to share in
such allocation, and each participant has a nonforfeitable
right, not later than the date such loan is repaid, to all
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82
such qualifying employer securities which are so allocated
to the participant’s account.
(3) Under regulations which may be prescribed by the Adminis-
trator, a trust may be treated as a qualified employee trust with
respect to a small business concern if—
(A) the trust is maintained by an employee organization
which represents at least 51 percent of the employee of such
concern, and
(B) such concern maintains a plan—
(i) which is an employee benefit plan which is designed
to invest primarily in qualifying employer securities (as
defined in section 4975(e)(8) of the Internal Revenue Code
of 1954).
(ii) which provides that each participant in the plan is
entitled to direct the plan as to the manner in which vot-
ing rights under qualifying employer securities which are
allocated to the account of such participant are to be exer-
cised with respect to a corporate matter which (by law or
charter) must be decided by a majority vote of the out-
standing common shares voted,
(iii) which provides that each participant who is entitled
to distribution from the plan has a right, in the case of
qualifying employer securities which are not readily
tradable on an established market, to require that the con-
cern repurchase such securities under a fair valuation for-
mula, and
(iv) which meets such other requirements (similar to re-
quirements applicable to employee ownership plans as de-
fined in section 4975(e)(7) of the Internal Revenue Code of
1954) as the Administrator may prescribe, and
(C) in the case of a loan guarantee under section 7(a), such
organization enters into an agreement with the Administration
which is described in paragraph (2)(B).
(d) For purposes of section 7 of this Act, the term ‘‘qualified In-
dian tribe’’ means an Indian tribe as defined in section 4(a) of the
Indian Self-Determination and Education Assistance Act, which
owns and controls 100 per centum of a small business concern.
(e) For purposes of section 7 of this Act, the term ‘‘public or pri-
vate organization for the handicapped’’ means one—
(1) which is organized under the laws of the United States
or of any State, operated in the interest of handicapped indi-
viduals, the net income of which does not insure in whole or
in part to the benefit of any shareholder or other individual;
(2) which complies with any applicable occupational health
and safety standard prescribed by the Secretary of Labor; and
(3) which, in the production of commodities and in the provi-
sion of services during any fiscal year in which it received fi-
nancial assistance under this subsection, employs handicapped
individuals for not less than 75 per centum of the man-hours
required for the production or provision of the commodities or
services.
(f) For purposes of section 7 of this Act, the term ‘‘handicapped
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individual’’ means an individual—
(1) who has a physical, mental, or emotional impairment, de-
fect, ailment, disease, or disability of a permanent nature
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83
which in any way limits the selection of any type of employ-
ment for which the person would otherwise be qualified or
qualifiable; or
(2) who is a service-disabled veteran.
(g) For purposes of section 7 of this Act, the term ‘‘energy meas-
ures’’ includes—
(1) solar thermal energy equipment which is either of the ac-
tive type based upon mechanically forced energy transfer or of
the passive type based on convective, conductive, or radiant en-
ergy transfer or some combination equipment;
(2) photovoltaic cells and related equipment;
(3) a product or service the primary purpose of which is con-
servation of energy through devices or techniques which in-
crease the energy through devices or techniques which increase
the energy efficiency of existing equipment, methods of oper-
ation, or systems which use fossil fuels, and which is on the
Energy Conservation Measures list of the Secretary of Energy
or which the Administrator determines to be consistent with
the intent of this subsection;
(4) equipment the primary purpose of which is production of
energy from wood, biological waste, grain, or other biomass
source of energy;
(5) equipment the primary purpose of which is industrial co-
generation of energy, district heating, or production of energy
from industrial waste;
(6) hydroelectric power equipment;
(7) wind energy conversion equipment; and
(8) engineering, architectural, consulting, or other profes-
sional services which are necessary or appropriate to aid citi-
zens in using any of the measures described in paragraph (1)
through (7).
(h) The term ‘‘credit elsewhere’’ means—
(1) for the purposes of this Act (except as used in section
7(b)), the availability of credit on reasonable terms and condi-
tions to the individual loan applicant from non-Federal, non-
State, or non-local government sources, considering factors as-
sociated with conventional lending practices, including—
(A) the business industry in which the loan applicant op-
erates;
(B) whether the loan applicant is an enterprise that has
been in operation for a period of not more than 2 years;
(C) the adequacy of the collateral available to secure the
requested loan;
(D) the loan term necessary to reasonably assure the
ability of the loan applicant to repay the debt from the ac-
tual or projected cash flow of the business; and
(E) any other factor relating to the particular credit ap-
plication, as documented in detail by the lender, that can-
not be overcome except through obtaining a Federal loan
guarantee under prudent lending standards; and
(2) for the purposes of section 7(b), the availability of credit
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on reasonable terms and conditions from non-Federal sources
taking into consideration the prevailing rates and terms in the
community in or near where the applicant business concern
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84
transacts business, or the applicant homeowner resides, for
similar purposes and periods of time.
(i) For purposes of section 7 of this Act, the term ‘‘homeowners’’
includes owners and lessees of residential property and also in-
cludes personal property.
(j) For the purposes of this Act, the term ‘‘small agricultural co-
operative’’ means an association (corporate or otherwise) acting
pursuant to the provisions of the Agricultural Marketing Act (12
U.S.C. 1141j), whose size does not exceed the size standard estab-
lished by the Administration for other similar agricultural small
business concerns. In determining such size, the Administration
shall regard the association as a business concern and shall not in-
clude the income or employees of any member shareholder of such
cooperative.
(k)(1) For the purposes of this Act, the term ‘‘disaster’’ means a
sudden event which causes severe damage including, but not lim-
ited to, floods, hurricanes, tornadoes, earthquakes, fires, explosions,
volcanoes, windstorms, landslides or mudslides, tidal waves, com-
mercial fishery failures or fishery resource disasters (as determined
by the Secretary of Commerce under section 308(b) of the Inter-
jurisdictional Fisheries Act of 1986), ocean conditions resulting in
the closure of customary fishing waters, riots, civil disorders or
other catastrophes, except it does not include economic dislocations.
(2) For purposes of section 7(b)(2), the term ‘‘disaster’’ includes—
(A) drought;
(B) below average water levels in the Great Lakes, or on any
body of water in the United States that supports commerce by
small business concerns; and
(C) ice storms and blizzards.
(l) For purposes of this Act—
(1) the term ‘‘computer crime’’ means’’—
(A) any crime committed against a small business con-
cern by means of the use of a computer; and
(B) any crime involving the illegal use of, or tampering
with, a computer owned or utilized by a small business
concern.
(m) DEFINITIONS RELATING TO CONTRACTING.—In this Act:
(1) PRIME CONTRACT.—The term ‘‘prime contract’’ has the
meaning given such term in section 8701(4) of title 41, United
States Code.
(2) PRIME CONTRACTOR.—The term ‘‘prime contractor’’ has
the meaning given such term in section 8701(5) of title 41,
United States Code.
(3) SIMPLIFIED ACQUISITION THRESHOLD.—The term ‘‘sim-
plified acquisition threshold’’ has the meaning given such term
in section 134 of title 41, United States Code.
(4) MICRO-PURCHASE THRESHOLD.—The term ‘‘micro-purchase
threshold’’ has the meaning given such term in section 1902 of
title 41, United States Code.
(5) TOTAL PURCHASES AND CONTRACTS FOR PROPERTY AND
SERVICES.—The term ‘‘total purchases and contracts for prop-
erty and services’’ shall mean total number and total dollar
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amount of contracts and orders for property and services.
(n) For the purposes of this Act, a small business concern is a
small business concern owned and controlled by women if—
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85
(1) at least 51 percent of small business concern is owned by
one or more women or, in the case of any publicly owned busi-
ness, at least 51 percent of the stock of which is owned by one
or more women; and
(2) the management and daily business operations of the
business are controlled by one or more women.
(o) DEFINITIONS OF BUNDLING OF CONTRACT REQUIREMENTS AND
RELATED TERMS.—In this Act:
(1) BUNDLED CONTRACT.—The term ‘‘bundled contract’’
means a contract that is entered into to meet requirements
that are consolidated in a bundling of contract requirements.
(2) BUNDLING OF CONTRACT REQUIREMENTS.—The term ‘‘bun-
dling of contract requirements’’ means consolidating 2 or more
procurement requirements for goods or services previously pro-
vided or performed under separate smaller contracts into a so-
licitation of offers for a single contract that is likely to be un-
suitable for award to a small-business concern due to—
(A) the diversity, size, or specialized nature of the ele-
ments of the performance specified;
(B) the aggregate dollar value of the anticipated award;
(C) the geographical dispersion of the contract perform-
ance sites; or
(D) any combination of the factors described in subpara-
graphs (A), (B), and (C).
(3) SEPARATE SMALLER CONTRACT.—The term ‘‘separate
smaller contract’’, with respect to a bundling of contract re-
quirements, means a contract that has been performed by 1 or
more small business concerns or was suitable for award to 1
or more small business concerns.
(p) DEFINITIONS RELATING TO HUBZONES.—In this Act:
(1) HISTORICALLY UNDERUTILIZED BUSINESS ZONE.—The term
‘‘historically underutilized business zone’’ means any area lo-
cated within 1 or more—
(A) qualified census tracts;
(B) qualified nonmetropolitan counties;
(C) lands within the external boundaries of an Indian
reservation;
(D) redesignated areas;
(E) base closure areas; or
(F) qualified disaster areas.
(2) HUBZONE.—The term ‘‘HUBZone’’ means a historically
underutilized business zone.
(3) HUBZONE SMALL BUSINESS CONCERN.—The term
‘‘HUBZone small business concern’’ means—
(A) a small business concern that is at least 51 percent
owned and controlled by United States citizens;
(B) a small business concern that is—
(i) an Alaska Native Corporation owned and con-
trolled by Natives (as determined pursuant to section
29(e)(1) of the Alaska Native Claims Settlement Act
(43 U.S.C. 1626(e)(1))); or
(ii) a direct or indirect subsidiary corporation, joint
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venture, or partnership of an Alaska Native Corpora-
tion qualifying pursuant to section 29(e)(1) of the Alas-
ka Native Claims Settlement Act (43 U.S.C.
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86
1626(e)(1)), if that subsidiary, joint venture, or part-
nership is owned and controlled by Natives (as deter-
mined pursuant to section 29(e)(2)) of the Alaska Na-
tive Claims Settlement Act (43 U.S.C. 1626(e)(2)));
(C) a small business concern—
(i) that is wholly owned by one or more Indian tribal
governments, or by a corporation that is wholly owned
by one or more Indian tribal governments; or
(ii) that is owned in part by one or more Indian trib-
al governments, or by a corporation that is wholly
owned by one or more Indian tribal governments, if all
other owners are either United States citizens or small
business concerns;
(D) a small business concern—
(i) that is wholly owned by one or more Native Ha-
waiian Organizations (as defined in section 8(a)(15)),
or by a corporation that is wholly owned by one or
more Native Hawaiian Organizations; or
(ii) that is owned in part by one or more Native Ha-
waiian Organizations, or by a corporation that is whol-
ly owned by one or more Native Hawaiian Organiza-
tions, if all other owners are either United States citi-
zens or small business concerns;
(E) a small business concern that is—
(i) wholly owned by a community development cor-
poration that has received financial assistance under
part 1 of subchapter A of the Community Economic
Development Act of 1981 (42 U.S.C. 9805 et seq.); or
(ii) owned in part by one or more community devel-
opment corporations, if all other owners are either
United States citizens or small business concerns; or
(F) a small business concern that is—
(i) a small agricultural cooperative organized or in-
corporated in the United States;
(ii) wholly owned by 1 or more small agricultural co-
operatives organized or incorporated in the United
States; or
(iii) owned in part by 1 or more small agricultural
cooperatives organized or incorporated in the United
States, if all owners are small business concerns or
United States citizens.
(4) QUALIFIED AREAS.—
(A) QUALIFIED CENSUS TRACT.—
(i) IN GENERAL.—The term ‘‘qualified census tract’’
has the meaning given that term in section
42(d)(5)(B)(ii) of the Internal Revenue Code of 1986.
(ii) EXCEPTION.—For any metropolitan statistical
area in the Commonwealth of Puerto Rico, the term
‘‘qualified census tract’’ has the meaning given that
term in section 42(d)(5)(B)(ii) of the Internal Revenue
Code of 1986 as applied without regard to subclause
(II) of such section, except that this clause shall only
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apply—
(I) 10 years after the date that the Adminis-
trator implements this clause, or
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87
(II) the date on which the Financial Oversight
and Management Board for the Commonwealth of
Puerto Rico created by the Puerto Rico Oversight,
Management, and Economic Stability Act ceases
to exist,
whichever event occurs first.
(B) QUALIFIED NONMETROPOLITAN COUNTY.—The term
‘‘qualified nonmetropolitan county’’ means any county—
(i) that was not located in a metropolitan statistical
area (as defined in section 143(k)(2)(B) of the Internal
Revenue Code of 1986) at the time of the most recent
census taken for purposes of selecting qualified census
tracts under section 42(d)(5)(C)(ii) of the Internal Rev-
enue Code of 1986; and
(ii) in which—
(I) the median household income is less than 80
percent of the nonmetropolitan State median
household income, based on the most recent data
available from the Bureau of the Census of the
Department of Commerce;
(II) the unemployment rate is not less than 140
percent of the average unemployment rate for the
United States or for the State in which such coun-
ty is located, whichever is less, based on the most
recent data available from the Secretary of Labor;
or
(III) there is located a difficult development
area, as designated by the Secretary of Housing
and Urban Development in accordance with sec-
tion 42(d)(5)(C)(iii) of the Internal Revenue Code
of 1986, within Alaska, Hawaii, or any territory or
possession of the United States outside the 48
contiguous States.
(C) REDESIGNATED AREA.—The term ‘‘redesignated area’’
means any census tract that ceases to be qualified under
subparagraph (A) and any nonmetropolitan county that
ceases to be qualified under subparagraph (B), except that
a census tract or a nonmetropolitan county may be a ‘‘re-
designated area’’ only until the later of—
(i) the date on which the Census Bureau publicly re-
leases the first results from the 2010 decennial census;
or
(ii) 3 years after the date on which the census tract
or nonmetropolitan county ceased to be so qualified.
(D) BASE CLOSURE AREA.—
(i) IN GENERAL.—Subject to clause (ii), the term
‘‘base closure area’’ means—
(I) lands within the external boundaries of a
military installation that were closed through a
privatization process under the authority of—
(aa) the Defense Base Closure and Realign-
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ment Act of 1990 (part A of title XXIX of divi-
sion B of Public Law 101–510; 10 U.S.C. 2687
note);
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88
(bb) title II of the Defense Authorization
Amendments and Base Closure and Realign-
ment Act (Public Law 100–526; 10 U.S.C.
2687 note);
(cc) section 2687 of title 10, United States
Code; or
(dd) any other provision of law authorizing
or directing the Secretary of Defense or the
Secretary of a military department to dispose
of real property at the military installation for
purposes relating to base closures of redevel-
opment, while retaining the authority to enter
into a leaseback of all or a portion of the prop-
erty for military use;
(II) the census tract or nonmetropolitan county
in which the lands described in subclause (I) are
wholly contained;
(III) a census tract or nonmetropolitan county
the boundaries of which intersect the area de-
scribed in subclause (I); and
(IV) a census tract or nonmetropolitan county
the boundaries of which are contiguous to the area
described in subclause (II) or subclause (III).
(ii) LIMITATION.—A base closure area shall be treat-
ed as a HUBZone—
(I) with respect to a census tract or nonmetro-
politan county described in clause (i), for a period
of not less than 8 years, beginning on the date the
military installation undergoes final closure and
ending on the date the Administrator makes a
final determination as to whether or not to imple-
ment the applicable designation described in sub-
paragraph (A) or (B) in accordance with the re-
sults of the decennial census conducted after the
area was initially designated as a base closure
area; and
(II) if such area was treated as a HUBZone at
any time after 2010, until such time as the Ad-
ministrator makes a final determination as to
whether or not to implement the applicable des-
ignation described in subparagraph (A) or (B),
after the 2020 decennial census.
(iii) DEFINITIONS.—In this subparagraph:
(I) CENSUS TRACT.—The term ‘‘census tract’’
means a census tract delineated by the United
States Bureau of the Census in the most recent
decennial census that is not located in a non-
metropolitan county and does not otherwise qual-
ify as a qualified census tract.
(II) NONMETROPOLITAN COUNTY.—The term
‘‘nonmetropolitan county’’ means a county that
was not located in a metropolitan statistical area
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(as defined in section 143(k)(2)(B) of the Internal
Revenue Code of 1986) at the time of the most re-
cent census taken for purposes of selecting quali-
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89
fied census tracts and does not otherwise qualify
as a qualified nonmetropolitan county.
(E) QUALIFIED DISASTER AREA.—
(i) IN GENERAL.—Subject to clause (ii), the term
‘‘qualified disaster area’’ means any census tract or
nonmetropolitan county located in an area for which
the President has declared a major disaster under sec-
tion 401 of the Robert T. Stafford Disaster Relief and
Emergency Assistance Act (42 U.S.C. 5170) or located
in an area in which a catastrophic incident has oc-
curred if such census tract or nonmetropolitan county
ceased to be qualified under subparagraph (A) or (B),
as applicable, during the period beginning 5 years be-
fore the date on which the President declared the
major disaster or the catastrophic incident occurred
and ending 2 years after such date, except that such
census tract or nonmetropolitan county may be a
‘‘qualified disaster area’’ only—
(I) in the case of a major disaster declared by
the President, during the 5-year period beginning
on the date on which the President declared the
major disaster for the area in which the census
tract or nonmetropolitan county, as applicable, is
located; and
(II) in the case of a catastrophic incident, during
the 10-year period beginning on the date on which
the catastrophic incident occurred in the area in
which the census tract or nonmetropolitan county,
as applicable, is located.
(ii) LIMITATION.—A qualified disaster area described
in clause (i) shall be treated as a HUBZone for a pe-
riod of not less than 8 years, beginning on the date the
Administrator makes a final determination as to
whether or not to implement the designations de-
scribed in subparagraphs (A) and (B) in accordance
with the results of the decennial census conducted
after the area was initially designated as a qualified
disaster area.
(5) QUALIFIED HUBZONE SMALL BUSINESS CONCERN.—
(A) IN GENERAL.—A HUBZone small business concern is
‘‘qualified’’, if—
(i) the small business concern has certified in writ-
ing to the Administrator (or the Administrator other-
wise determines, based on information submitted to
the Administrator by the small business concern, or
based on certification procedures, which shall be es-
tablished by the Administration by regulation) that—
(I) it is a HUBZone small business concern—
(aa) pursuant to subparagraph (A), (B), (C),
(D), (E), or (F) of paragraph (3), and that its
principal office is located in a HUBZone and
not fewer than 35 percent of its employees re-
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side in a HUBZone;
(bb) pursuant to subparagraph (A), (B), (C),
(D), (E), or (F) of paragraph (3), that its prin-
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90
cipal office is located within a base closure
area and that not fewer than 35 percent of its
employees reside in such base closure area or
in another HUBZone; or
(cc) pursuant to paragraph (3)(C), and not
fewer than 35 percent of its employees en-
gaged in performing a contract awarded to the
small business concern on the basis of a pref-
erence provided under section 31(b) reside
within any Indian reservation governed by
one or more of the tribal government owners,
or reside within any HUBZone adjoining any
such Indian reservation;
(II) the small business concern will attempt to
maintain the applicable employment percentage
under subclause (I) during the performance of any
contract awarded to the small business concern on
the basis of a preference provided under section
31(b); and
(III) with respect to any subcontract entered
into by the small business concern pursuant to a
contract awarded to the small business concern
under section 31, the small business concern will
ensure that the requirements of section 46 are
satisfied; and
(ii) no certification made or information provided by
the small business concern under clause (i) has been,
in accordance with the procedures established under
section 31(c)(1)—
(I) successfully challenged by an interested
party; or
(II) otherwise determined by the Administrator
to be materially false.
(B) LIST OF QUALIFIED SMALL BUSINESS CONCERNS.—The
Administrator shall establish and maintain a list of quali-
fied HUBZone small business concerns, which list shall, to
the extent practicable—
(i) once the Administrator has made the certification
required by subparagraph (A)(i) regarding a qualified
HUBZone small business concern and has determined
that subparagraph (A)(ii) does not apply to that con-
cern, include the name, address, and type of business
with respect to each such small business concern;
(ii) be updated by the Administrator not less than
annually; and
(iii) be provided upon request to any Federal agency
or other entity.
(6) NATIVE AMERICAN SMALL BUSINESS CONCERNS.—
(A) ALASKA NATIVE CORPORATION.—The term ‘‘Alaska
Native Corporation’’ has the same meaning as the term
‘‘Native Corporation’’ in section 3 of the Alaska Native
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Claims Settlement Act (43 U.S.C. 1602).
(B) ALASKA NATIVE VILLAGE.—The term ‘‘Alaska Native
Village’’ has the same meaning as the term ‘‘Native vil-
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91
lage’’ in section 3 of the Alaska Native Claims Settlement
Act (43 U.S.C. 1602).
(C) INDIAN RESERVATION.—The term ‘‘Indian reserva-
tion’’—
(i) has the same meaning as the term ‘‘Indian coun-
try’’ in section 1151 of title 18, United States Code, ex-
cept that such term does not include—
(I) any lands that are located within a State in
which a tribe did not exercise governmental juris-
diction on the date of the enactment of this para-
graph, unless that tribe is recognized after that
date of the enactment by either an Act of Con-
gress or pursuant to regulations of the Secretary
of the Interior for the administrative recognition
that an Indian group exists as an Indian tribe
(part 83 of title 25, Code of Federal Regulations);
and
(II) lands taken into trust or acquired by an In-
dian tribe after the date of the enactment of this
paragraph if such lands are not located within the
external boundaries of an Indian reservation or
former reservation or are not contiguous to the
lands held in trust or restricted status on that
date of the enactment; and
(ii) in the State of Oklahoma, means lands that—
(I) are within the jurisdictional areas of an
Oklahoma Indian tribe (as determined by the Sec-
retary of the Interior); and
(II) are recognized by the Secretary of the Inte-
rior as eligible for trust land status under part
151 of title 25, Code of Federal Regulations (as in
effect on the date of the enactment of this para-
graph).
(7) AGRICULTURAL COMMODITY.—The term ‘‘agricultural com-
modity’’ has the same meaning as in section 102 of the Agricul-
tural Trade Act of 1978 (7 U.S.C. 5602).
(q) DEFINITIONS RELATING TO VETERANS.—In this Act, the fol-
lowing definitions apply:
(1) SERVICE-DISABLED VETERAN.—The term ‘‘service-disabled
veteran’’ means a veteran with a disability that is service-con-
nected (as defined in section 101(16) of title 38, United States
Code).
(2) SMALL BUSINESS CONCERN OWNED AND CONTROLLED BY
SERVICE-DISABLED VETERANS.—The term ‘‘small business con-
cern owned and controlled by service-disabled veterans’’ means
any of the following:
(A) A small business concern—
(i) not less than 51 percent of which is owned by one
or more service-disabled veterans or, in the case of any
publicly owned business, not less than 51 percent of
the stock (not including any stock owned by an ESOP)
of which is owned by one or more service-disabled vet-
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erans; and
(ii) the management and daily business operations
of which are controlled by one or more service-disabled
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92
veterans or, in the case of a veteran with permanent
and severe disability, the spouse or permanent care-
giver of such veteran.
(B) A small business concern—
(i) not less than 51 percent of which is owned by one
or more service-disabled veterans with a disability
that is rated by the Secretary of Veterans Affairs as
a permanent and total disability who are unable to
manage the daily business operations of such concern;
or
(ii) in the case of a publicly owned business, not less
than 51 percent of the stock (not including any stock
owned by an ESOP) of which is owned by one or more
such veterans.
(C)(i) During the time period described in clause (ii), a
small business concern that was a small business concern
described in subparagraph (A) or (B) immediately prior to
the death of a service-disabled veteran who was the owner
of the concern, the death of whom causes the concern to
be less than 51 percent owned by one or more service-dis-
abled veterans, if—
(I) the surviving spouse of the deceased veteran
acquires such veteran’s ownership interest in such
concern;
(II) such veteran had a service-connected dis-
ability (as defined in section 101(16) of title 38,
United States Code) rated as 100 percent dis-
abling under the laws administered by the Sec-
retary of Veterans Affairs or such veteran died as
a result of a service-connected disability; and
(III) immediately prior to the death of such vet-
eran, and during the period described in clause
(ii), the small business concern is included in the
database described in section 8127(f) of title 38,
United States Code.
(ii) The time period described in this clause is the
time period beginning on the date of the veteran’s
death and ending on the earlier of—
(I) the date on which the surviving spouse re-
marries;
(II) the date on which the surviving spouse re-
linquishes an ownership interest in the small
business concern; or
(III) the date that is 10 years after the date of
the death of the veteran.
(3) SMALL BUSINESS CONCERN OWNED AND CONTROLLED BY
VETERANS.—The term ‘‘small business concern owned and con-
trolled by veterans’’ means a small business concern—
(A) not less than 51 percent of which is owned by one
or more veterans or, in the case of any publicly owned
business, not less than 51 percent of the stock of which is
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owned by one or more veterans; and
(B) the management and daily business operations of
which are controlled by one or more veterans.
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93
(4) VETERAN.—The term ‘‘veteran’’ has the meaning given
the term in section 101(2) of title 38, United States Code.
(5) RELIEF FROM TIME LIMITATIONS.—
(A) IN GENERAL.—Any time limitation on any qualifica-
tion, certification, or period of participation imposed under
this Act on any program that is available to small business
concerns shall be extended for a small business concern
that—
(i) is owned and controlled by—
(I) a veteran who was called or ordered to active
duty under a provision of law specified in section
101(a)(13)(B) of title 10, United States Code, on or
after September 11, 2001; or
(II) a service-disabled veteran who became such
a veteran due to an injury or illness incurred or
aggravated in the active military, naval, or air
service during a period of active duty pursuant to
a call or order to active duty under a provision of
law referred to in subclause (I) on or after Sep-
tember 11, 2001; and
(ii) was subject to the time limitation during such
period of active duty.
(B) DURATION.—Upon submission of proper documenta-
tion to the Administrator, the extension of a time limita-
tion under subparagraph (A) shall be equal to the period
of time that such veteran who owned or controlled such a
concern was on active duty as described in that subpara-
graph.
(C) EXCEPTION FOR PROGRAMS SUBJECT TO FEDERAL
CREDIT REFORM ACT OF 1990.—The provisions of subpara-
graphs (A) and (B) shall not apply to any programs subject
to the Federal Credit Reform Act of 1990 (2 U.S.C. 661 et
seq.).
(6) ESOP.—The term ‘‘ESOP’’ has the meaning given the
term ‘‘employee stock ownership plan’’ in section 4975(e)(7) of
the Internal Revenue Code of 1986 (26 U.S.C. 4975(e)(7)).
(7) SURVIVING SPOUSE.—The term ‘‘surviving spouse’’ has the
meaning given such term in section 101(3) of title 38, United
States Code.
(r) DEFINITIONS RELATING TO SMALL BUSINESS LENDING COMPA-
NIES.—As used in section 23 of this Act:
(1) SMALL BUSINESS LENDING COMPANY.—The term ‘‘small
business lending company’’ means a business concern that is
authorized by the Administrator to make loans pursuant to
section 7(a) and whose lending activities are not subject to reg-
ulation by any Federal or State regulatory agency.
(2) NON-FEDERALLY REGULATED LENDER.—The term ‘‘non-
Federally regulated lender’’ means a business concern if—
(A) such concern is authorized by the Administrator to
make loans under section 7;
(B) such concern is subject to regulation by a State; and
(C) the lending activities of such concern are not regu-
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lated by any Federal banking authority.
(s) MAJOR DISASTER.—In this Act, the term ‘‘major disaster’’ has
the meaning given that term in section 102 of the Robert T. Staf-
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94
ford Disaster Relief and Emergency Assistance Act (42 U.S.C.
5122).
(t) SMALL BUSINESS DEVELOPMENT CENTER.—In this Act, the
term ‘‘small business development center’’ means a small business
development center described in section 21.
(u) REGION OF THE ADMINISTRATION.—In this Act, the term ‘‘re-
gion of the Administration’’ means the geographic area served by
a regional office of the Administration established under section
4(a).
(v) MULTIPLE AWARD CONTRACT.—In this Act, the term ‘‘multiple
award contract’’ means—
(1) a multiple award task order contract or delivery order
contract that is entered into under the authority of sections
303H through 303K of the Federal Property and Administra-
tive Services Act of 1949 (41 U.S.C. 253h through 253k); and
(2) any other indefinite delivery, indefinite quantity contract
that is entered into by the head of a Federal agency with 2 or
more sources pursuant to the same solicitation.
(w) PRESUMPTION.—
(1) IN GENERAL.—In every contract, subcontract, cooperative
agreement, cooperative research and development agreement,
or grant which is set aside, reserved, or otherwise classified as
intended for award to small business concerns, there shall be
a presumption of loss to the United States based on the total
amount expended on the contract, subcontract, cooperative
agreement, cooperative research and development agreement,
or grant whenever it is established that a business concern
other than a small business concern willfully sought and re-
ceived the award by misrepresentation.
(2) DEEMED CERTIFICATIONS.—The following actions shall be
deemed affirmative, willful, and intentional certifications of
small business size and status:
(A) Submission of a bid or proposal for a Federal grant,
contract, subcontract, cooperative agreement, or coopera-
tive research and development agreement reserved, set
aside, or otherwise classified as intended for award to
small business concerns.
(B) Submission of a bid or proposal for a Federal grant,
contract, subcontract, cooperative agreement, or coopera-
tive research and development agreement which in any
way encourages a Federal agency to classify the bid or pro-
posal, if awarded, as an award to a small business concern.
(C) Registration on any Federal electronic database for
the purpose of being considered for award of a Federal
grant, contract, subcontract, cooperative agreement, or co-
operative research agreement, as a small business concern.
(3) CERTIFICATION BY SIGNATURE OF RESPONSIBLE OFFICIAL.—
(A) IN GENERAL.—Each solicitation, bid, or application
for a Federal contract, subcontract, or grant shall contain
a certification concerning the small business size and sta-
tus of a business concern seeking the Federal contract,
subcontract, or grant.
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(B) CONTENT OF CERTIFICATIONS.—A certification that a
business concern qualifies as a small business concern of
the exact size and status claimed by the business concern
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95
for purposes of bidding on a Federal contract or sub-
contract, or applying for a Federal grant, shall contain the
signature of an authorized official on the same page on
which the certification is contained.
(4) REGULATIONS.—The Administrator shall promulgate reg-
ulations to provide adequate protections to individuals and
business concerns from liability under this subsection in cases
of unintentional errors, technical malfunctions, and other simi-
lar situations.
(x) ANNUAL CERTIFICATION.—
(1) IN GENERAL.—Each business certified as a small business
concern under this Act shall annually certify its small business
size and, if appropriate, its small business status, by means of
a confirming entry on the Online Representations and Certifi-
cations Application database of the Administration, or any suc-
cessor thereto.
(2) REGULATIONS.—Not later than 1 year after the date of
enactment of this subsection, the Administrator, in consulta-
tion with the Inspector General and the Chief Counsel for Ad-
vocacy of the Administration, shall promulgate regulations to
ensure that—
(A) no business concern continues to be certified as a
small business concern on the Online Representations and
Certifications Application database of the Administration,
or any successor thereto, without fulfilling the require-
ments for annual certification under this subsection; and
(B) the requirements of this subsection are implemented
in a manner presenting the least possible regulatory bur-
den on small business concerns.
(y) POLICY ON PROSECUTIONS OF SMALL BUSINESS SIZE AND STA-
TUS FRAUD.—Not later than 1 year after the date of enactment of
this subsection, the Administrator, in consultation with the Attor-
ney General, shall issue a Government-wide policy on prosecution
of small business size and status fraud, which shall direct Federal
agencies to appropriately publicize the policy.
(z) AQUACULTURE BUSINESS DISASTER ASSISTANCE.—Subject to
section 18(a) and notwithstanding section 18(b)(1), the Adminis-
trator may provide disaster assistance under section 7(b)(2) to
aquaculture enterprises that are small businesses.
(aa) VENTURE CAPITAL OPERATING COMPANY.—In this Act, the
term ‘‘venture capital operating company’’ means an entity de-
scribed in clause (i), (v), or (vi) of section 121.103(b)(5) of title 13,
Code of Federal Regulations (or any successor thereto).
(bb) HEDGE FUND.—In this Act, the term ‘‘hedge fund’’ has the
meaning given that term in section 13(h)(2) of the Bank Holding
Company Act of 1956 (12 U.S.C. 1851(h)(2)).
(cc) PRIVATE EQUITY FIRM.—In this Act, the term ‘‘private equity
firm’’ has the meaning given the term ‘‘private equity fund’’ in sec-
tion 13(h)(2) of the Bank Holding Company Act of 1956 (12 U.S.C.
1851(h)(2)).
(dd) DEFINITIONS PERTAINING TO SUBCONTRACTING.—In this Act:
(1) SUBCONTRACT.—The term ‘‘subcontract’’ means a legally
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binding agreement between a contractor that is already under
contract to another party to perform work, and a third party,
hereinafter referred to as the subcontractor, for the subcon-
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96
tractor to perform a part, or all, of the work that the contractor
has undertaken.
(2) FIRST TIER SUBCONTRACTOR.—The term ‘‘first tier subcon-
tractor’’ means a subcontractor who has a subcontract directly
with the prime contractor.
(3) AT ANY TIER.—The term ‘‘at any tier’’ means any subcon-
tractor other than a subcontractor who is a first tier subcon-
tractor.
(ee) PUERTO RICO BUSINESS.—In this Act, the term ‘‘Puerto Rico
business’’ means a small business concern that has its principal of-
fice located in the Commonwealth of Puerto Rico.
(ff) CANNABIS-RELATED LEGITIMATE BUSINESSES AND SERVICE
PROVIDERS.—In this Act:
(1) CANNABIS.—The term ‘‘cannabis’’—
(A) means all parts of the plant Cannabis sativa L.,
whether growing or not; the seeds thereof; the resin ex-
tracted from any part of such plant; and every compound,
manufacture, salt, derivative, mixture, or preparation of
such plant, its seeds or resin; and
(B) does not include—
(i) hemp, as defined in section 297A of the Agricul-
tural Marketing Act of 1946; or
(ii) the mature stalks of such plant, fiber produced
from such stalks, oil or cake made from the seeds of
such plant, any other compound, manufacture, salt, de-
rivative, mixture, or preparation of such mature stalks
(except the resin extracted therefrom), fiber, oil, or cake,
or the sterilized seed of such plant which is incapable
of germination.
(2) CANNABIS-RELATED LEGITIMATE BUSINESS.—The term
‘‘cannabis-related legitimate business’’ means a manufacturer,
producer, or any person or company that is a small business
concern and that—
(A) engages in any activity described in subparagraph
(B) pursuant to a law established by a State or a political
subdivision of a State, as determined by such State or polit-
ical sub-division; and
(B) participates in any business or organized activity that
involves handling cannabis or cannabis products, includ-
ing cultivating, producing, manufacturing, selling, trans-
porting, displaying, dispensing, distributing, or purchasing
cannabis or cannabis products.
(3) SERVICE PROVIDER.—The term ‘‘service provider’’—
(A) means a business, organization, or other person
that—
(i) sells goods or services to a cannabis-related legiti-
mate business; or
(ii) provides any business services, including the sale
or lease of real or any other property, legal or other li-
censed services, or any other ancillary service, relating
to cannabis; and
(B) does not include a business, organization, or other
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person that participates in any business or organized activ-
ity that involves handling cannabis or cannabis products,
including cultivating, producing, manufacturing, selling,
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97
transporting, displaying, dispensing, distributing, or pur-
chasing cannabis or cannabis products.
* * * * * * *
SEC. 7. (a) LOANS TO SMALL BUSINESS CONCERNS; ALLOWABLE
PURPOSES; QUALIFIED BUSINESS; RESTRICTIONS AND LIMITATIONS.—
The Administration is empowered to the extent and in such
amounts as provided in advance in appropriation Acts to make
loans for plant acquisition, construction, conversion, or expansion,
including the acquisition of land, material, supplies, equipment,
and working capital, and to make loans to any qualified small busi-
ness concern, including those owned by qualified Indian tribes, for
purposes of this Act. Such financings may be made either directly
or in cooperation with banks or other financial institutions through
agreements to participate on an immediate or deferred (guaran-
teed) basis. These powers shall be subject, however, to the fol-
lowing restrictions, limitations, and provisions:
(1) IN GENERAL.—
(A) CREDIT ELSEWHERE.—
(i) IN GENERAL.—The Administrator has the author-
ity to direct, and conduct oversight for, the methods by
which lenders determine whether a borrower is able to
obtain credit elsewhere. No financial assistance shall
be extended pursuant to this subsection if the appli-
cant can obtain credit elsewhere. No immediate par-
ticipation may be purchased unless it is shown that a
deferred participation is not available; and no direct fi-
nancing may be made unless it is shown that a par-
ticipation is not available.
(ii) LIQUIDITY.—On and after October 1, 2015, the
Administrator may not guarantee a loan under this
subsection if the lender determines that the borrower
is unable to obtain credit elsewhere solely because the
liquidity of the lender depends upon the guaranteed
portion of the loan being sold on the secondary mar-
ket.
(B) BACKGROUND CHECKS.—Prior to the approval of any
loan made pursuant to this subsection, or section 503 of
the Small Business Investment Act of 1958, the Adminis-
trator may verify the applicant’s criminal background, or
lack thereof, through the best available means, including,
if possible, use of the National Crime Information Center
computer system at the Federal Bureau of Investigation.
(C) LENDING LIMITS OF LENDERS.—On and after October
1, 2015, the Administrator may not guarantee a loan
under this subsection if the sole purpose for requesting the
guarantee is to allow the lender to exceed the legal lending
limit of the lender.
(2) LEVEL OF PARTICIPATION IN GUARANTEED LOANS.—
(A) IN GENERAL.—Except as provided in subparagraphs
(B), (D), and (E), in an agreement to participate in a loan
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on a deferred basis under this subsection (including a loan
made under the Preferred Lenders Program), such partici-
pation by the Administration shall be equal to—
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98
(i) 75 percent of the balance of the financing out-
standing at the time of disbursement of the loan, if
such balance exceeds $150,000; or
(ii) 85 percent of the balance of the financing out-
standing at the time of disbursement of the loan, if
such balance is less than or equal to $150,000.
(B) REDUCED PARTICIPATION UPON REQUEST.—
(i) IN GENERAL.—The guarantee percentage specified
by subparagraph (A) for any loan under this sub-
section may be reduced upon the request of the par-
ticipating lender.
(ii) PROHIBITION.—The Administration shall not use
the guarantee percentage requested by a participating
lender under clause (i) as a criterion for establishing
priorities in approving loan guarantee requests under
this subsection.
(C) INTEREST RATE UNDER PREFERRED LENDERS PRO-
GRAM.—
(i) IN GENERAL.—The maximum interest rate for a
loan guaranteed under the Preferred Lenders Program
shall not exceed the maximum interest rate, as deter-
mined by the Administration, applicable to other loans
guaranteed under this subsection.
(ii) EXPORT-IMPORT BANK LENDERS.—Any lender that
is participating in the Delegated Authority Lender
Program of the Export-Import Bank of the United
States (or any successor to the Program) shall be eligi-
ble to participate in the Preferred Lenders Program.
(iii) PREFERRED LENDERS PROGRAM DEFINED.—For
purposes of this subparagraph, the term ‘‘Preferred
Lenders Program’’ means any program established by
the Administrator, as authorized under the proviso in
section 5(b)(7), under which a written agreement be-
tween the lender and the Administration delegates to
the lender—
(I) complete authority to make and close loans
with a guarantee from the Administration without
obtaining the prior specific approval of the Admin-
istration; and
(II) complete authority to service and liquidate
such loans without obtaining the prior specific ap-
proval of the Administration for routine servicing
and liquidation activities, but shall not take any
actions creating an actual or apparent conflict of
interest.
(D) PARTICIPATION UNDER EXPORT WORKING CAPITAL PRO-
GRAM.—In an agreement to participate in a loan on a de-
ferred basis under the Export Working Capital Program
established pursuant to paragraph (14)(A), such participa-
tion by the Administration shall be 90 percent.
(E) PARTICIPATION IN INTERNATIONAL TRADE LOAN.—In
an agreement to participate in a loan on a deferred basis
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under paragraph (16), the participation by the Administra-
tion may not exceed 90 percent.
(3) No loan shall be made under this subsection—
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99
(A) if the total amount outstanding and committed (by
participation or otherwise) to the borrower from the busi-
ness loan and investment fund established by this Act
would exceed $3,750,000 (or if the gross loan amount
would exceed $5,000,000), except as provided in subpara-
graph (B);
(B) if the total amount outstanding and committed (on
a deferred basis) solely for the purposes provided in para-
graph (16) to the borrower from the business loan and in-
vestment fund established by this Act would exceed
$4,500,000 (or if the gross loan amount would exceed
$5,000,000), of which not more than $4,000,000 may be
used for working capital, supplies, or financings under sec-
tion 7(a)(14) for export purposes; and
(C) if effected either directly or in cooperation with
banks or other lending institutions through agreements to
participate on an immediate basis if the amount would ex-
ceed $350,000.
(4) INTEREST RATES AND PREPAYMENT CHARGES.—
(A) INTEREST RATES.—Notwithstanding the provisions of
the constitution of any State or the laws of any State lim-
iting the rate or amount of interest which may be charged,
taken, received, or reserved, the maximum legal rate of in-
terest on any financing made on a deferred basis pursuant
to this subsection shall not exceed a rate prescribed by the
Administration, and the rate of interest for the Adminis-
tration’s share of any direct or immediate participation
loan shall not exceed the current average market yield on
outstanding marketable obligations of the United States
with remaining periods to maturity comparable to the av-
erage maturities of such loans and adjusted to the nearest
one-eighth of 1 per centum, and an additional amount as
determined by the Administration, but not to exceed 1 per
centum per annum: Provided, That for those loans to as-
sist any public or private organization for the handicapped
or to assist any handicapped individual as provided in
paragraph (10) of this subsection, the interest rate shall be
3 per centum per annum.
(B) PAYMENT OF ACCRUED INTEREST.—
(i) IN GENERAL.—Any bank or other lending institu-
tion making a claim for payment on the guaranteed
portion of a loan made under this subsection shall be
paid the accrued interest due on the loan from the ear-
liest date of default to the date of payment of the
claim at a rate not to exceed the rate of interest on the
loan on the date of default, minus one percent.
(ii) LOANS SOLD ON SECONDARY MARKET.—If a loan
described in clause (i) is sold on the secondary market,
the amount of interest paid to a bank or other lending
institution described in that clause from the earliest
date of default to the date of payment of the claim
shall be no more than the agreed upon rate, minus one
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percent.
(iii) APPLICABILITY.—Clauses (i) and (ii) shall not
apply to loans made on or after October 1, 2000.
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100
(C) PREPAYMENT CHARGES.—
(i) IN GENERAL.—A borrower who prepays any loan
guaranteed under this subsection shall remit to the
Administration a subsidy recoupment fee calculated in
accordance with clause (ii) if—
(I) the loan is for a term of not less than 15
years;
(II) the prepayment is voluntary;
(III) the amount of prepayment in any calendar
year is more than 25 percent of the outstanding
balance of the loan; and
(IV) the prepayment is made within the first 3
years after disbursement of the loan proceeds.
(ii) SUBSIDY RECOUPMENT FEE.—The subsidy
recoupment fee charged under clause (i) shall be—
(I) 5 percent of the amount of prepayment, if the
borrower prepays during the first year after dis-
bursement;
(II) 3 percent of the amount of prepayment, if
the borrower prepays during the second year after
disbursement; and
(III) 1 percent of the amount of prepayment, if
the borrower prepays during the third year after
disbursement.
(5) No such loans including renewals and extensions thereof
may be made for a period or periods exceeding twenty-five
years, except that such portion of a loan made for the purpose
of acquiring real property or constructing, converting, or ex-
panding facilities may have a maturity of twenty-five years
plus such additional period as is estimated may be required to
complete such construction, conversion, or expansion.
(6) All loans made under this subsection shall be of such
sound value or so secured as reasonably to assure repayment:
Provided, however, That—
(A) for loans to assist any public or private organization
or to assist any handicapped individual as provided in
paragraph (10) of this subsection any reasonable doubt
shall be resolved in favor of the applicant;
(B) recognizing that greater risk may be associated with
loans for energy measures as provided in paragraph (12)
of this subsection, factors in determining ‘‘sound value’’
shall include, but not be limited to, quality of the product
or service; technical qualifications of the applicant or his
employees; sales projections; and the financial status of
the business concern: Provided further, That such status
need not be as sound as that required for general loans
under this subsection; and
On that portion of the loan used to refinance existing indebted-
ness held by a bank or other lending institution, the Adminis-
tration shall limit the amount of deferred participation to 80
per centum of the amount of the loan at the time of disburse-
ment: Provided further, That any authority conferred by this
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subparagraph on the Administration shall be exercised solely
by the Administration and shall not be delegated to other than
Administration personnel.
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101
(7) The Administration may defer payments on the principal
of such loans for a grace period and use such other methods
as it deems necessary and appropriate to assure the successful
establishment and operation of such concern.
(8) The Administration may make loans under this sub-
section to small business concerns owned and controlled by dis-
abled veterans (as defined in section 4211(3) of title 38, United
States Code).
(9) The Administration may provide loans under this sub-
section to finance residential or commercial construction or re-
habilitation for sale: Provided, however, That such loans shall
not be used primarily for the acquisition of land.
(10) The Administration may provide guaranteed loans
under this subsection to assist any public or private organiza-
tion for the handicapped or to assist any handicapped indi-
vidual, including service-disabled veterans, in establishing, ac-
quiring, or operating a small business concern.
(11) The Administration may provide loans under this sub-
section to any small business concern, or to any qualified per-
son seeking to establish such a concern when it determines
that such loan will further the policies established in section
2(c) of this Act, with particular emphasis on the preservation
or establishment of small business concerns located in urban
or rural areas with high proportions of unemployed or low-in-
come individuals or owned by low-income individuals.
(12)(A) The Administration may provide loans under this
subsection to assist any small business concern, including start
up, to enable such concern to design architecturally or engi-
neer, manufacture, distribute, market, install, or service en-
ergy measures: Provided, however, That such loan proceeds
shall not be used primarily for research and development.
(b) The Administration may provide deferred participation loans
under this subsection to finance the planning, design, or installa-
tion of pollution control facilities for the purposes set forth in sec-
tion 404 of the Small Business Investment Act of 1958. Notwith-
standing the limitation expressed in paragraph (3) of this sub-
section, a loan made under this paragraph may not result in a total
amount outstanding and committed to a borrower from the busi-
ness loan and investment fund of more than $1,000,000.
(13) The Administration may provide financing under this
subsection to State and local development companies for the
purposes of, and subject to the restrictions in, title V of the
Small Business Investment Act of 1958.
(14) EXPORT WORKING CAPITAL PROGRAM.—
(A) IN GENERAL.—The Administrator may provide exten-
sions of credit, standby letters of credit, revolving lines of
credit for export purposes, and other financing to enable
small business concerns, including small business export
trading companies and small business export management
companies, to develop foreign markets. A bank or partici-
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pating lending institution may establish the rate of inter-
est on such financings as may be legal and reasonable.
(B) TERMS.—
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102
(i) LOAN AMOUNT.—The Administrator may not
guarantee a loan under this paragraph of more than
$5,000,000.
(ii) FEES.—
(I) IN GENERAL.—For a loan under this para-
graph, the Administrator shall collect the fee as-
sessed under paragraph (23) not more frequently
than once each year.
(II) UNTAPPED CREDIT.—The Administrator may
not assess a fee on capital that is not accessed by
the small business concern.
(C) CONSIDERATIONS.—When considering loan or guar-
antee applications, the Administration shall give weight to
export-related benefits, including opening new markets for
United States goods and services abroad and encouraging
the involvement of small businesses, including agricultural
concerns, in the export market.
(D) MARKETING.—The Administrator shall aggressively
market its export financing program to small businesses.
(15)(A) The Administration may guarantee loans under this
subsection—
(i) to qualified employee trusts with respect to a small
business concern for the purpose of purchasing, and for
any transaction costs associated with purchasing, stock of
the concern under a plan approved by the Administrator
which, when carried out, results in the qualified employee
trust owning at least 51 per centum of the stock of the con-
cern; and
(ii) to a small business concern under a plan approved
by the Administrator, if the proceeds from the loan are
only used to make a loan to a qualified employee trust,
and for any transaction costs associated with making that
loan, that results in the qualified employee trust owning
at least 51 percent of the small business concern.
(B) The plan requiring the Administrator’s approval under
subparagraph (A) shall be submitted to the Administration by
the trustee of such trust or by the small business concern with
its application for the guarantee. Such plan shall include an
agreement with the Administrator which is binding on such
trust and on the small business concern and which provides
that—
(i) not later than the date the loan guaranteed under
subparagraph (A) is repaid (or as soon thereafter as is con-
sistent with the requirements of section 401(a) of the In-
ternal Revenue Code of 1954), at least 51 per centum of
the total stock of such concern shall be allocated to the ac-
counts of at least 51 per centum of the employees of such
concern who are entitled to share in such allocation,
(ii) there will be periodic reviews of the role in the man-
agement of such concern of employees to whose accounts
stock is allocated,
(iii) there will be adequate management to assure man-
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agement expertise and continuity, and
(iv) with respect to a loan made to a trust, or to a coop-
erative in accordance with paragraph (35)—
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103
(I) a seller of the small business concern may re-
main involved as an officer, director, or key employee
of the small business concern when a qualified em-
ployee trust or cooperative has acquired 100 percent of
ownership of the small business concern; and
(II) any seller of the small business concern who re-
mains as an owner of the small business concern, re-
gardless of the percentage of ownership interest, shall
be required to provide a personal guarantee by the Ad-
ministration.
(C) In determining whether to guarantee any loan under this
paragraph, the individual business experience or personal as-
sets of employee-owners shall not be used as criteria, except in-
asmuch as certain employee-owners may assume managerial
responsibilities, in which case business experience may be con-
sidered.
(D) For purposes of this paragraph, a corporation which is
controlled by any other person shall be treated as a small busi-
ness concern if such corporation would, after the plan de-
scribed in subparagraph (B) is carried out, be treated as a
small business concern.
(E) The Administration shall compile a separate list of appli-
cations for assistance under this paragraph, indicating which
applications were accepted and which were denied, and shall
report periodically to the Congress on the status of employee-
owned firms assisted by the Administration, which shall in-
clude—
(i) the total number of loans made to employee-owned
business concerns that were guaranteed by the Adminis-
trator under section 7(a) of the Small Business Act (15
U.S.C. 636(a)) or section 502 of the Small Business Invest-
ment Act of 1958 (15 U.S.C. 696), including the number of
loans made—
(I) to small business concerns owned and controlled
by socially and economically disadvantaged individ-
uals; and
(II) to cooperatives;
(ii) the total number of financings made to employee-
owned business concerns by companies licensed under sec-
tion 301(c) of the Small Business Investment Act of 1958
(15 U.S.C. 696(c)), including the number of financings
made—
(I) to small business concerns owned and controlled
by socially and economically disadvantaged individ-
uals; and
(II) to cooperatives; and
(iii) any outreach and educational activities conducted by
the Administration with respect to employee-owned busi-
ness concerns.
(F) A small business concern that makes a loan to a qualified
employee trust under subparagraph (A)(ii) is not required to
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contain the same terms and conditions as the loan made to the
small business concern that is guaranteed by the Administra-
tion under such subparagraph.
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104
(G) With respect to a loan made to a qualified employee trust
under this paragraph, or to a cooperative in accordance with
paragraph (35), the Administrator may, as deemed appro-
priate, elect to not require any mandatory equity to be pro-
vided by the qualified employee trust or cooperative to make
the loan.
(16) INTERNATIONAL TRADE.—
(A) IN GENERAL.—If the Administrator determines that a
loan guaranteed under this subsection will allow an eligi-
ble small business concern that is engaged in or adversely
affected by international trade to improve its competitive
position, the Administrator may make such loan to assist
such concern—
(i) in the financing of the acquisition, construction,
renovation, modernization, improvement, or expansion
of productive facilities or equipment to be used in the
United States in the production of goods and services
involved in international trade;
(ii) in the refinancing of existing indebtedness that
is not structured with reasonable terms and condi-
tions, including any debt that qualifies for refinancing
under any other provision of this subsection; or
(iii) by providing working capital.
(B) SECURITY.—
(i) IN GENERAL.—Except as provided in clause (ii),
each loan made under this paragraph shall be secured
by a first lien position or first mortgage on the prop-
erty or equipment financed by the loan or on other as-
sets of the small business concern.
(ii) EXCEPTION.—A loan under this paragraph may
be secured by a second lien position on the property or
equipment financed by the loan or on other assets of
the small business concern, if the Administrator deter-
mines the lien provides adequate assurance of the pay-
ment of the loan.
(C) ENGAGED IN INTERNATIONAL TRADE.—For purposes of
this paragraph, a small business concern is engaged in
international trade if, as determined by the Administrator,
the small business concern is in a position to expand exist-
ing export markets or develop new export markets.
(D) ADVERSELY AFFECTED BY INTERNATIONAL TRADE.—
For purposes of this paragraph, a small business concern
is adversely affected by international trade if, as deter-
mined by the Administrator, the small business concern—
(i) is confronting increased competition with foreign
firms in the relevant market; and
(ii) is injured by such competition.
(E) FINDINGS BY CERTAIN FEDERAL AGENCIES.—For pur-
poses of subparagraph (D)(ii) the Administrator shall ac-
cept any finding of injury by the International Trade Com-
mission or any finding of injury by the Secretary of Com-
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merce pursuant to chapter 3 of title II of the Trade Act of
1974.
(F) LIST OF EXPORT FINANCE LENDERS.—
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105
(i) PUBLICATION OF LIST REQUIRED.—The Adminis-
trator shall publish an annual list of the banks and
participating lending institutions that, during the 1-
year period ending on the date of publication of the
list, have made loans guaranteed by the Administra-
tion under—
(I) this paragraph;
(II) paragraph (14); or
(III) paragraph (34).
(ii) AVAILABILITY OF LIST.—The Administrator
shall—
(I) post the list published under clause (i) on the
website of the Administration; and
(II) make the list published under clause (i)
available, upon request, at each district office of
the Administration.
(17) The Administration shall authorize lending institutions
and other entities in addition to banks to make loans author-
ized under this subsection.
(18) GUARANTEE FEES.—
(A) IN GENERAL.—With respect to each loan guaranteed
under this subsection (other than a loan that is repayable
in 1 year or less), the Administration shall collect a guar-
antee fee, which shall be payable by the participating lend-
er, and may be charged to the borrower, as follows:
(i) A guarantee fee not to exceed 2 percent of the de-
ferred participation share of a total loan amount that
is not more than $150,000.
(ii) A guarantee fee not to exceed 3 percent of the
deferred participation share of a total loan amount
that is more than $150,000, but not more than
$700,000.
(iii) A guarantee fee not to exceed 3.5 percent of the
deferred participation share of a total loan amount
that is more than $700,000.
(iv) In addition to the fee under clause (iii), a guar-
antee fee equal to 0.25 percent of any portion of the
deferred participation share that is more than
$1,000,000.
(B) RETENTION OF CERTAIN FEES.—Lenders participating
in the programs established under this subsection may re-
tain not more than 25 percent of a fee collected under sub-
paragraph (A)(i).
(19)(A) In addition to the Preferred Lenders Program author-
ized by the proviso in section 5(b)(7), the Administration is au-
thorized to establish a Certified Lenders Program for lenders
who establish their knowledge of Administration laws and reg-
ulations concerning the guaranteed loan program and their
proficiency in program requirements. The designation of a
lender as a certified lender shall be suspended or revoked at
any time that the Administration determines that the lender
is not adhering to its rules and regulations or that the loss ex-
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perience of the lender is excessive as compared to other lend-
ers, but such suspension or revocation shall not affect any out-
standing guarantee.
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106
(B) In order to encourage all lending institutions and other
entities making loans authorized under this subsection to pro-
vide loans of $50,000 or less in guarantees to eligible small
business loan applicants, the Administration shall develop and
allow participating lenders to solely utilize a uniform and sim-
plified loan form for such loans.
(C) Authority to liquidate loans.—
(i) IN GENERAL.—The Administrator may permit
lenders participating in the Certified Lenders Program
to liquidate loans made with a guarantee from the Ad-
ministration pursuant to a liquidation plan approved
by the Administrator.
(ii) Automatic approval.—If the Administrator does
not approve or deny a request for approval of a liq-
uidation plan within 10 business days of the date on
which the request is made (or with respect to any rou-
tine liquidation activity under such a plan, within 5
business days) such request shall be deemed to be ap-
proved.
(20)(A) The Administration is empowered to make loans ei-
ther directly or in cooperation with banks or other financial in-
stitutions through agreements to participate on an immediate
or deferred (guaranteed) basis to small business concerns eligi-
ble for assistance under subsection (j)(10) and section 8(a).
Such assistance may be provided only if the Administration de-
termines that—
(i) the type and amount of such assistance requested by
such concern is not otherwise available on reasonable
terms from other sources;
(ii) with such assistance such concern has a reasonable
prospect for operating soundly and profitably within a rea-
sonable period of time;
(iii) the proceeds of such assistance will be used within
a reasonable time for plant construction, conversion, or ex-
pansion, including the acquisition of equipment, facilities,
machinery, supplies, or material or to supply such concern
with working capital to be used in the manufacture of arti-
cles, equipment, supplies, or material for defense or civil-
ian production or as may be necessary to insure a well-bal-
anced national economy; and
(iv) such assistance is of such sound value as reasonably
to assure that the terms under which it is provided will
not be breached by the small business concern.
(B)(i) No loan shall be made under this paragraph if the total
amount outstanding and committed (by participation or other-
wise) to the borrower would exceed $750,000.
(ii) Subject to the provisions of clause (i), in agreements to
participate in loans on a deferred (guaranteed) basis, participa-
tion by the Administration shall be not less than 85 per cen-
tum of the balance of the financing outstanding at the time of
disbursement.
(iii) The rate of interest on financings made on a deferred
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(guaranteed) basis shall be legal and reasonable.
(iv) Financings made pursuant to this paragraph shall be
subject to the following limitations:
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107
(I) No immediate participation may be purchased unless
it is shown that a deferred participation is not available.
(II) No direct financing may be made unless it is shown
that a participation is unavailable.
(C) A direct loan or the Administration’s share of an imme-
diate participation loan made pursuant to this paragraph shall
be any secured debt instrument—
(i) that is subordinated by its terms to all other bor-
rowings of the issuer;
(ii) the rate of interest on which shall not exceed the cur-
rent average market yield on outstanding marketable obli-
gations of the United States with remaining periods to ma-
turity comparable to the average maturities of such loan
and adjusted to the nearest one-eighth of 1 per centum;
(iii) the term of which is not more than twenty-five
years; and
(iv) the principal on which is amortized at such rate as
may be deemed appropriate by the Administration, and
the interest on which is payable not less often than annu-
ally.
(21)(A) The Administration may make loans on a guaranteed
basis under the authority of this subsection—
(i) to a small business concern that has been (or can reason-
ably be expected to be) detrimentally affected by—
(I) the closure (or substantial reduction) of a Department
of Defense installation; or
(II) the termination (or substantial reduction) of a De-
partment of Defense program on which such small busi-
ness was a prime contractor or subcontractor (or supplier)
at any tier; or
(ii) to a qualified individual or a veteran seeking to establish
(or acquire) and operate a small business concern.
(B) Recognizing that greater risk may be associated with a loan
to a small business concern described in subparagraph (A)(i), any
reasonable doubts concerning the firm’s proposed business plan for
transition to nondefense-related markets shall be resolved in favor
of the loan applicant when making any determination regarding
the sound value of the proposed loan in accordance with paragraph
(6).
(C) Loans pursuant to this paragraph shall be authorized in such
amounts as provided in advance in appropriation Acts for the pur-
poses of loans under this paragraph.
(D) For purposes of this paragraph a qualified individual is—
(i) a member of the Armed Forces of the United States, hon-
orably discharged from active duty involuntarily or pursuant to
a program providing bonuses or other inducements to encour-
age voluntary separation or early retirement;
(ii) a civilian employee of the Department of Defense invol-
untarily separated from Federal service or retired pursuant to
a program offering inducements to encourage early retirement;
or
(iii) an employee of a prime contractor, subcontractor, or sup-
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plier at any tier of a Department of Defense program whose
employment is involuntarily terminated (or voluntarily termi-
nated pursuant to a program offering inducements to encour-
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108
age voluntary separation or early retirement) due to the termi-
nation (or substantial reduction) of a Department of Defense
program.
(E) JOB CREATION AND COMMUNITY BENEFIT.—In providing
assistance under this paragraph, the Administration shall de-
velop procedures to ensure, to the maximum extent practicable,
that such assistance is used for projects that—
(i) have the greatest potential for—
(I) creating new jobs for individuals whose employ-
ment is involuntarily terminated due to reductions in
Federal defense expenditures; or
(II) preventing the loss of jobs by employees of small
business concerns described in subparagraph (A)(i);
and
(ii) have substantial potential for stimulating new eco-
nomic activity in communities most affected by reductions
in Federal defense expenditures.
(22) The Administration is authorized to permit participating
lenders to impose and collect a reasonable penalty fee on late
payments of loans guaranteed under this subsection in an
amount not to exceed 5 percent of the monthly loan payment
per month plus interest.
(23) YEARLY FEE.—
(A) IN GENERAL.—With respect to each loan approved
under this subsection, the Administration shall assess, col-
lect, and retain a fee, not to exceed 0.55 percent per year
of the outstanding balance of the deferred participation
share of the loan, in an amount established once annually
by the Administration in the Administration’s annual
budget request to Congress, as necessary to reduce to zero
the cost to the Administration of making guarantees under
this subsection. As used in this paragraph, the term ‘‘cost’’
has the meaning given that term in section 502 of the Fed-
eral Credit Reform Act of 1990 (2 U.S.C. 661a).
(B) PAYER.—The yearly fee assessed under subpara-
graph (A) shall be payable by the participating lender and
shall not be charged to the borrower.
(C) LOWERING OF BORROWER FEES.—If the Administra-
tion determines that fees paid by lenders and by small
business borrowers for guarantees under this subsection
may be reduced, consistent with reducing to zero the cost
to the Administration of making such guarantees—
(i) the Administration shall first consider reducing
fees paid by small business borrowers under clauses (i)
through (iii) of paragraph (18)(A), to the maximum ex-
tent possible; and
(ii) fees paid by small business borrowers shall not
be increased above the levels in effect on the date of
enactment of this subparagraph.
(24) NOTIFICATION REQUIREMENT.—The Administration shall
notify the Committees on Small Business of the Senate and the
House of Representatives not later than 15 days before making
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any significant policy or administrative change affecting the
operation of the loan program under this subsection.
(25) LIMITATION ON CONDUCTING PILOT PROJECTS.—
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109
(A) IN GENERAL.—Not more than 10 percent of the total
number of loans guaranteed in any fiscal year under this
subsection may be awarded as part of a pilot program
which is commenced by the Administrator on or after Octo-
ber 1, 1996.
(B) PILOT PROGRAM DEFINED.—In this paragraph, the
term ‘‘pilot program’’ means any lending program initia-
tive, project, innovation, or other activity not specifically
authorized by law.
(C) LOW DOCUMENTATION LOAN PROGRAM.—The Adminis-
trator may carry out the low documentation loan program
for loans of $100,000 or less only through lenders with sig-
nificant experience in making small business loans. Not
later than 90 days after the date of enactment of this sub-
section, the Administrator shall promulgate regulations
defining the experience necessary for participation as a
lender in the low documentation loan program.
(26) CALCULATION OF SUBSIDY RATE.—All fees, interest, and
profits received and retained by the Administration under this
subsection shall be included in the calculations made by the
Director of the Office of Management and Budget to offset the
cost (as that term is defined in section 502 of the Federal Cred-
it Reform Act of 1990) to the Administration of purchasing and
guaranteeing loans under this Act.
(28) LEASING.—In addition to such other lease arrangements
as may be authorized by the Administration, a borrower may
permanently lease to one or more tenants not more than 20
percent of any property constructed with the proceeds of a loan
guaranteed under this subsection, if the borrower permanently
occupies and uses not less than 60 percent of the total business
space in the property.
(29) REAL ESTATE APPRAISALS.—
(A) IN GENERAL.—With respect to a loan under this sub-
section that is secured by commercial real property, an ap-
praisal of such property by a State licensed or certified ap-
praiser—
(i) shall be required by the Administration in con-
nection with any such loan, if such loan is in an
amount greater than the Federal banking regulator
appraisal threshold; or
(ii) may be required by the Administration or the
lender in connection with any such loan, if such loan
is in an amount equal to or less than the Federal
banking regulator appraisal threshold, if such ap-
praisal is necessary for appropriate evaluation of cred-
itworthiness.
(B) FEDERAL BANKING REGULATOR APPRAISAL THRESHOLD
DEFINED.—For purposes of this paragraph, the term ‘‘Fed-
eral banking regulator appraisal threshold’’ means the
lesser of the threshold amounts set by the Board of Gov-
ernors of the Federal Reserve System, the Comptroller of
the Currency, and the Federal Deposit Insurance Corpora-
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tion for when a federally related transaction that is a com-
mercial real estate transaction requires an appraisal pre-
pared by a State licensed or certified appraiser.
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110
(30) OWNERSHIP REQUIREMENTS.—Ownership requirements
to determine the eligibility of a small business concern that ap-
plies for assistance under any credit program under this Act
shall be determined without regard to any ownership interest
of a spouse arising solely from the application of the commu-
nity property laws of a State for purposes of determining mar-
ital interests.
(31) EXPRESS LOANS.—
(A) DEFINITIONS.—As used in this paragraph:
(i) The term ‘‘disaster area’’ means the area for
which the President has declared a major disaster,
during the 5-year period beginning on the date of the
declaration.
(ii) The term ‘‘express lender’’ means any lender au-
thorized by the Administration to participate in the
Express Loan Program.
(iii) The term ‘‘express loan’’ means any loan made
pursuant to this paragraph in which a lender utilizes
to the maximum extent practicable its own loan anal-
yses, procedures, and documentation.
(iv) The term ‘‘Express Loan Program’’ means the
program for express loans established by the Adminis-
tration under paragraph (25)(B), as in existence on
April 5, 2004, with a guaranty rate of not more than
50 percent.
(B) RESTRICTION TO EXPRESS LENDER.—The authority to
make an express loan shall be limited to those lenders
deemed qualified to make such loans by the Administra-
tion. Designation as an express lender for purposes of
making an express loan shall not prohibit such lender from
taking any other action authorized by the Administration
for that lender pursuant to this subsection.
(C) GRANDFATHERING OF EXISTING LENDERS.—Any ex-
press lender shall retain such designation unless the Ad-
ministration determines that the express lender has vio-
lated the law or regulations promulgated by the Adminis-
tration or modifies the requirements to be an express lend-
er and the lender no longer satisfies those requirements.
(D) MAXIMUM LOAN AMOUNT.—The maximum loan
amount under the Express Loan Program is $350,000.
(E) OPTION TO PARTICIPATE.—Except as otherwise pro-
vided in this paragraph, the Administration shall take no
regulatory, policy, or administrative action, without regard
to whether such action requires notification pursuant to
paragraph (24), that has the effect of requiring a lender to
make an express loan pursuant to subparagraph (D).
(F) EXPRESS LOANS FOR RENEWABLE ENERGY AND ENERGY
EFFICIENCY.—
(i) DEFINITIONS.—In this subparagraph—
(I) the term ‘‘biomass’’—
(aa) means any organic material that is
available on a renewable or recurring basis,
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including—
(AA) agricultural crops;
(BB) trees grown for energy production;
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111
(CC) wood waste and wood residues;
(DD) plants (including aquatic plants
and grasses);
(EE) residues;
(FF) fibers;
(GG) animal wastes and other waste
materials; and
(HH) fats, oils, and greases (including
recycled fats, oils, and greases); and
(bb) does not include—
(AA) paper that is commonly recycled;
or
(BB) unsegregated solid waste;
(II) the term ‘‘energy efficiency project’’ means
the installation or upgrading of equipment that
results in a significant reduction in energy usage;
and
(III) the term ‘‘renewable energy system’’ means
a system of energy derived from—
(aa) a wind, solar, biomass (including bio-
diesel), or geothermal source; or
(bb) hydrogen derived from biomass or
water using an energy source described in
item (aa).
(ii) LOANS.—The Administrator may make a loan
under the Express Loan Program for the purpose of—
(I) purchasing a renewable energy system; or
(II) carrying out an energy efficiency project for
a small business concern.
(G) GUARANTEE FEE WAIVER FOR VETERANS.—
(i) GUARANTEE FEE WAIVER.—The Administrator
may not collect a guarantee fee described in paragraph
(18) in connection with a loan made under this para-
graph to a veteran or spouse of a veteran on or after
October 1, 2015.
(ii) EXCEPTION.—If the President’s budget for the
upcoming fiscal year, submitted to Congress pursuant
to section 1105(a) of title 31, United States Code, in-
cludes a cost for the program established under this
subsection that is above zero, the requirements of
clause (i) shall not apply to loans made during such
upcoming fiscal year.
(iii) DEFINITION.—In this subparagraph, the term
‘‘veteran or spouse of a veteran’’ means—
(I) a veteran, as defined in section 3(q)(4);
(II) an individual who is eligible to participate
in the Transition Assistance Program established
under section 1144 of title 10, United States Code;
(III) a member of a reserve component of the
Armed Forces named in section 10101 of title 10,
United States Code;
(IV) the spouse of an individual described in
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subclause (I), (II), or (III); or
(V) the surviving spouse (as defined in section
101 of title 38, United States Code) of an indi-
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112
vidual described in subclause (I), (II), or (III) who
died while serving on active duty or as a result of
a disability that is service-connected (as defined in
such section).
(H) RECOVERY OPPORTUNITY LOANS.—
(i) IN GENERAL.—The Administrator may guarantee
an express loan to a small business concern located in
a disaster area in accordance with this subparagraph.
(ii) MAXIMUMS.—For a loan guaranteed under clause
(i)—
(I) the maximum loan amount is $150,000; and
(II) the guarantee rate shall be not more than
85 percent.
(iii) OVERALL CAP.—A loan guaranteed under clause
(i) shall not be counted in determining the amount of
loans made to a borrower for purposes of subpara-
graph (D).
(iv) OPERATIONS.—A small business concern receiv-
ing a loan guaranteed under clause (i) shall certify
that the small business concern was in operation on
the date on which the applicable major disaster oc-
curred as a condition of receiving the loan.
(v) REPAYMENT ABILITY.—A loan guaranteed under
clause (i) may only be made to a small business con-
cern that demonstrates, to the satisfaction of the Ad-
ministrator, sufficient capacity to repay the loan.
(vi) TIMING OF PAYMENT OF GUARANTEES.—
(I) IN GENERAL.—Not later than 90 days after
the date on which a request for purchase is filed
with the Administrator, the Administrator shall
determine whether to pay the guaranteed portion
of the loan.
(II) RECAPTURE.—Notwithstanding any other
provision of law, unless there is a subsequent
finding of fraud by a court of competent jurisdic-
tion relating to a loan guaranteed under clause (i),
on and after the date that is 6 months after the
date on which the Administrator determines to
pay the guaranteed portion of the loan, the Ad-
ministrator may not attempt to recapture the paid
guarantee.
(vii) FEES.—
(I) IN GENERAL.—Unless the Administrator has
waived the guarantee fee that would otherwise be
collected by the Administrator under paragraph
(18) for a loan guaranteed under clause (i), and
except as provided in subclause (II), the guarantee
fee for the loan shall be equal to the guarantee fee
that the Administrator would collect if the guar-
antee rate for the loan was 50 percent.
(II) EXCEPTION.—Subclause (I) shall not apply if
the cost of carrying out the program under this
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subsection in a fiscal year is more than zero and
such cost is directly attributable to the cost of
guaranteeing loans under clause (i).
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113
(viii) RULES.—Not later than 270 days after the date
of enactment of this subparagraph, the Administrator
shall promulgate rules to carry out this subparagraph.
(32) LOANS FOR ENERGY EFFICIENT TECHNOLOGIES.—
(A) DEFINITIONS.—In this paragraph—
(i) the term ‘‘cost’’ has the meaning given that term
in section 502 of the Federal Credit Reform Act of
1990 (2 U.S.C. 661a);
(ii) the term ‘‘covered energy efficiency loan’’ means
a loan—
(I) made under this subsection; and
(II) the proceeds of which are used to purchase
energy efficient designs, equipment, or fixtures, or
to reduce the energy consumption of the borrower
by 10 percent or more; and
(iii) the term ‘‘pilot program’’ means the pilot pro-
gram established under subparagraph (B)
(B) ESTABLISHMENT.—The Administrator shall establish
and carry out a pilot program under which the Adminis-
trator shall reduce the fees for covered energy efficiency
loans.
(C) DURATION.—The pilot program shall terminate at
the end of the second full fiscal year after the date that the
Administrator establishes the pilot program.
(D) MAXIMUM PARTICIPATION.—A covered energy effi-
ciency loan shall include the maximum participation levels
by the Administrator permitted for loans made under this
subsection.
(E) FEES.—
(i) IN GENERAL.—The fee on a covered energy effi-
ciency loan shall be equal to 50 percent of the fee oth-
erwise applicable to that loan under paragraph (18).
(ii) WAIVER.—The Administrator may waive clause
(i) for a fiscal year if—
(I) for the fiscal year before that fiscal year, the
annual rate of default of covered energy efficiency
loans exceeds that of loans made under this sub-
section that are not covered energy efficiency
loans;
(II) the cost to the Administration of making
loans under this subsection is greater than zero
and such cost is directly attributable to the cost of
making covered energy efficiency loans; and
(III) no additional sources of revenue authority
are available to reduce the cost of making loans
under this subsection to zero.
(iii) EFFECT OF WAIVER.—If the Administrator
waives the reduction of fees under clause (ii), the Ad-
ministrator—
(I) shall not assess or collect fees in an amount
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greater than necessary to ensure that the cost of
the program under this subsection is not greater
than zero; and
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114
(II) shall reinstate the fee reductions under
clause (i) when the conditions in clause (ii) no
longer apply.
(iv) NO INCREASE OF FEES.—The Administrator shall
not increase the fees under paragraph (18) on loans
made under this subsection that are not covered en-
ergy efficiency loans as a direct result of the pilot pro-
gram.
(F) GAO REPORT.—
(i) IN GENERAL.—Not later than 1 year after the
date that the pilot program terminates, the Comp-
troller General of the United States shall submit to
the Committee on Small Business of the House of Rep-
resentatives and the Committee on Small Business
and Entrepreneurship of the Senate a report on the
pilot program.
(ii) CONTENTS.—The report submitted under clause
(i) shall include—
(I) the number of covered energy efficiency loans
for which fees were reduced under the pilot pro-
gram;
(II) a description of the energy efficiency savings
with the pilot program;
(III) a description of the impact of the pilot pro-
gram on the program under this subsection;
(IV) an evaluation of the efficacy and potential
fraud and abuse of the pilot program; and
(V) recommendations for improving the pilot
program.
(33) INCREASED VETERAN PARTICIPATION PROGRAM.—
(A) DEFINITIONS.—In this paragraph—
(i) the term ‘‘cost’’ has the meaning given that term
in section 502 of the Federal Credit Reform Act of
1990 (2 U.S.C. 661a);
(ii) the term ‘‘pilot program’’ means the pilot pro-
gram established under subparagraph (B); and
(iii) the term ‘‘veteran participation loan’’ means a
loan made under this subsection to a small business
concern owned and controlled by veterans of the
Armed Forces or members of the reserve components
of the Armed Forces.
(B) ESTABLISHMENT.—The Administrator shall establish
and carry out a pilot program under which the Adminis-
trator shall reduce the fees for veteran participation loans.
(C) DURATION.—The pilot program shall terminate at
the end of the second full fiscal year after the date that the
Administrator establishes the pilot program.
(D) MAXIMUM PARTICIPATION.—A veteran participation
loan shall include the maximum participation levels by the
Administrator permitted for loans made under this sub-
section.
(E) FEES.—
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(i) IN GENERAL.—The fee on a veteran participation
loan shall be equal to 50 percent of the fee otherwise
applicable to that loan under paragraph (18).
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115
(ii) WAIVER.—The Administrator may waive clause
(i) for a fiscal year if—
(I) for the fiscal year before that fiscal year, the
annual estimated rate of default of veteran par-
ticipation loans exceeds that of loans made under
this subsection that are not veteran participation
loans;
(II) the cost to the Administration of making
loans under this subsection is greater than zero
and such cost is directly attributable to the cost of
making veteran participation loans; and
(III) no additional sources of revenue authority
are available to reduce the cost of making loans
under this subsection to zero.
(iii) EFFECT OF WAIVER.—If the Administrator
waives the reduction of fees under clause (ii), the Ad-
ministrator—
(I) shall not assess or collect fees in an amount
greater than necessary to ensure that the cost of
the program under this subsection is not greater
than zero; and
(II) shall reinstate the fee reductions under
clause (i) when the conditions in clause (ii) no
longer apply.
(iv) NO INCREASE OF FEES.—The Administrator shall
not increase the fees under paragraph (18) on loans
made under this subsection that are not veteran par-
ticipation loans as a direct result of the pilot program.
(F) GAO REPORT.—
(i) IN GENERAL.—Not later than 1 year after the
date that the pilot program terminates, the Comp-
troller General of the United States shall submit to
the Committee on Small Business of the House of Rep-
resentatives and the Committee on Small Business
and Entrepreneurship of the Senate a report on the
pilot program.
(ii) CONTENTS.—The report submitted under clause
(i) shall include—
(I) the number of veteran participation loans for
which fees were reduced under the pilot program;
(II) a description of the impact of the pilot pro-
gram on the program under this subsection;
(III) an evaluation of the efficacy and potential
fraud and abuse of the pilot program; and
(IV) recommendations for improving the pilot
program.
(34) EXPORT EXPRESS PROGRAM.—
(A) DEFINITIONS.—In this paragraph—
(i) the term ‘‘export development activity’’ includes—
(I) obtaining a standby letter of credit when re-
quired as a bid bond, performance bond, or ad-
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vance payment guarantee;
(II) participation in a trade show that takes
place outside the United States;
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116
(III) translation of product brochures or cata-
logues for use in markets outside the United
States;
(IV) obtaining a general line of credit for export
purposes;
(V) performing a service contract from buyers
located outside the United States;
(VI) obtaining transaction-specific financing as-
sociated with completing export orders;
(VII) purchasing real estate or equipment to be
used in the production of goods or services for ex-
port;
(VIII) providing term loans or other financing to
enable a small business concern, including an ex-
port trading company and an export management
company, to develop a market outside the United
States; and
(IX) acquiring, constructing, renovating, mod-
ernizing, improving, or expanding a production fa-
cility or equipment to be used in the United
States in the production of goods or services for
export; and
(ii) the term ‘‘express loan’’ means a loan in which
a lender uses to the maximum extent practicable the
loan analyses, procedures, and documentation of the
lender to provide expedited processing of the loan ap-
plication.
(B) AUTHORITY.—The Administrator may guarantee the
timely payment of an express loan to a small business con-
cern made for an export development activity.
(C) LEVEL OF PARTICIPATION.—
(i) MAXIMUM AMOUNT.—The maximum amount of an
express loan guaranteed under this paragraph shall be
$500,000.
(ii) PERCENTAGE.—For an express loan guaranteed
under this paragraph, the Administrator shall guar-
antee—
(I) 90 percent of a loan that is not more than
$350,000; and
(II) 75 percent of a loan that is more than
$350,000 and not more than $500,000.
(35) LOANS TO COOPERATIVES.—
(A) DEFINITION.—In this paragraph, the term ‘‘coopera-
tive’’ means an entity that is determined to be a coopera-
tive by the Administrator, in accordance with applicable
Federal and State laws and regulation.
(B) AUTHORITY.—The Administration shall guarantee
loans made to a cooperative for the purpose described in
paragraph (15).
(36) LOANS TO CANNABIS-RELATED LEGITIMATE BUSINESSES
AND SERVICE PROVIDERS.—The Administrator may not decline
to provide a guarantee for a loan under this subsection to an
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otherwise eligible small business concern solely because such
concern is a cannabis-related legitimate business or service pro-
vider.
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117
(b) Except as to agricultural enterprises as defined in section
18(b)(1) of this Act, the Administration also is empowered to the
extent and in such amounts as provided in advance in appropria-
tion Acts—
(1)(A) to make such loans (either directly or in cooperation
with banks or other lending institutions through agreements to
participate on an immediate or deferred (guaranteed) basis) as
the Administration may determine to be necessary or appro-
priate to repair, rehabilitate or replace property, real or per-
sonal, damaged or destroyed by or as a result of natural or
other disasters: Provided, That such damage or destruction is
not compensated for by insurance or otherwise: And provided
further, That the Administration may increase the amount of
the loan by up to an additional 20 per centum of the aggregate
costs of such damage or destruction (whether or not com-
pensated for by insurance or otherwise) if it determines such
increase to be necessary or appropriate in order to protect the
damaged or destroyed property from possible future disasters
by taking mitigating measures, including—
(i) construction of retaining walls and sea walls;
(ii) grading and contouring land; and
(iii) relocating utilities and modifying structures, includ-
ing construction of a safe room or similar storm shelter de-
signed to protect property and occupants from tornadoes or
other natural disasters, if such safe room or similar storm
shelter is constructed in accordance with applicable stand-
ards issued by the Federal Emergency Management Agen-
cy;
(B) to refinance any mortgage or other lien against a totally
destroyed or substantially damaged home or business concern:
Provided, That no loan or guarantee shall be extended unless
the Administration finds that (i) the applicant is not able to ob-
tain credit elsewhere; (ii) such property is to be repaired, reha-
bilitated, or replaced; (iii) the amount refinanced shall not ex-
ceed the amount of physical loss sustained; and (iv) such
amount shall be reduced to the extent such mortgage or lien
is satisfied by insurance or otherwise; and
(C) during fiscal years 2000 through 2004, to establish a
predisaster mitigation program to make such loans (either di-
rectly or in cooperation with banks or other lending institu-
tions through agreements to participate on an immediate or
deferred (guaranteed) basis), as the Administrator may deter-
mine to be necessary or appropriate, to enable small busi-
nesses to use mitigation techniques in support of a formal miti-
gation program established by the Federal Emergency Manage-
ment Agency, except that no loan or guarantee may be ex-
tended to a small business under this subparagraph unless the
Administration finds that the small business is otherwise un-
able to obtain credit for the purposes described in this subpara-
graph;
(2) to make such loans (either directly or in cooperation with
banks or other lending institutions through agreements to par-
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ticipate on an immediate or deferred (guaranteed) basis) as the
Administration may determine to be necessary or appropriate
to any small business concern, private nonprofit organization,
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118
or small agricultural cooperative located in an area affected by
a disaster, (including drought), with respect to both farm-re-
lated and nonfarm-related small business concerns, if the Ad-
ministration determines that the concern, the organization, or
the cooperative has suffered a substantial economic injury as
a result of such disaster and if such disaster constitutes—
(A) a major disaster, as determined by the President
under the Robert T. Stafford Disaster Relief and Emer-
gency Assistance Act (42 U.S.C. 5121 et seq.); or
(B) a natural disaster, as determined by the Secretary of
Agriculture pursuant to section 321 of the Consolidated
Farm and Rural Development Act (7 U.S.C. 1961), in
which case, assistance under this paragraph may be pro-
vided to farm-related and nonfarm-related small business
concerns, subject to the other applicable requirements of
this paragraph; or
(C) a disaster, as determined by the Administrator of the
Small Business Administration; or
(D) if no disaster declaration has been issued pursuant
to subparagraph (A), (B), or (C), the Governor of a State
in which a disaster has occurred may certify to the Small
Business Administration that small business concerns, pri-
vate nonprofit organizations, or small agricultural coopera-
tives (1) have suffered economic injury as a result of such
disaster, and (2) are in need of financial assistance which
is not available on reasonable terms in the disaster strick-
en area. Not later than 30 days after the date of receipt
of such certification by a Governor of a State, the Adminis-
tration shall respond in writing to that Governor on its de-
termination and the reasons therefore, and may then
make such loans as would have been available under this
paragraph if a disaster declaration had been issued.
Provided, That no loan or guarantee shall be extended pursu-
ant to this paragraph (2) unless the Administration finds that
the applicant is not able to obtain credit elsewhere.
(3)(A) In this paragraph—
(i) the term ‘‘essential employee’’ means an individual
who is employed by a small business concern and whose
managerial or technical expertise is critical to the success-
ful day-to-day operations of that small business concern;
(ii) the term ‘‘period of military conflict’’ has the meaning
given the term in subsection (n)(1); and
(iii) the term ‘‘substantial economic injury’’ means an
economic harm to a business concern that results in the in-
ability of the business concern—
(I) to meet its obligations as they mature;
(II) to pay its ordinary and necessary operating ex-
penses; or
(III) to market, produce, or provide a product or
service ordinarily marketed, produced, or provided by
the business concern.
(B) The Administration may make such disaster loans (either
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directly or in cooperation with banks or other lending institu-
tions through agreements to participate on an immediate or
deferred basis) to assist a small business concern that has suf-
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119
fered or that is likely to suffer substantial economic injury as
the result of an essential employee of such small business con-
cern being ordered to active military duty during a period of
military conflict.
(C) A small business concern described in subparagraph (B)
shall be eligible to apply for assistance under this paragraph
during the period beginning on the date on which the essential
employee is ordered to active duty and ending on the date that
is 1 year after the date on which such essential employee is
discharged or released from active duty. The Administrator
may, when appropriate (as determined by the Administrator),
extend the ending date specified in the preceding sentence by
not more than 1 year.
(D) Any loan or guarantee extended pursuant to this para-
graph shall be made at the same interest rate as economic in-
jury loans under paragraph (2).
(E) No loan may be made under this paragraph, either di-
rectly or in cooperation with banks or other lending institu-
tions through agreements to participate on an immediate or
deferred basis, if the total amount outstanding and committed
to the borrower under this subsection would exceed $1,500,000,
unless such applicant constitutes, or have become due to
changed economic circumstances, a major source of employ-
ment in its surrounding area, as determined by the Adminis-
tration, in which case the Administration, in its discretion,
may waive the $1,500,000 limitation.
(F) For purposes of assistance under this paragraph, no dec-
laration of a disaster area shall be required.
(G)(i) Notwithstanding any other provision of law, the
Administrator may make a loan under this paragraph of
not more than $50,000 without collateral.
(ii) The Administrator may defer payment of principal
and interest on a loan described in clause (i) during the
longer of—
(I) the 1-year period beginning on the date of the
initial disbursement of the loan; and
(II) the period during which the relevant essential
employee is on active duty.
(H) The Administrator shall give priority to any applica-
tion for a loan under this paragraph and shall process and
make a determination regarding such applications prior to
processing or making a determination on other loan appli-
cations under this subsection, on a rolling basis.
(4) COORDINATION WITH FEMA.—
(A) IN GENERAL.—Notwithstanding any other provision
of law, for any disaster declared under this subsection or
major disaster (including any major disaster relating to
which the Administrator declares eligibility for additional
disaster assistance under paragraph (9)), the Adminis-
trator, in consultation with the Administrator of the Fed-
eral Emergency Management Agency, shall ensure, to the
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maximum extent practicable, that all application periods
for disaster relief under this Act correspond with applica-
tion deadlines established under the Robert T. Stafford
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120
Disaster Relief and Emergency Assistance Act (42 U.S.C.
5121 et seq.), or as extended by the President.
(B) DEADLINES.—Notwithstanding any other provision of
law, not later than 10 days before the closing date of an
application period for a major disaster (including any
major disaster relating to which the Administrator de-
clares eligibility for additional disaster assistance under
paragraph (9)), the Administrator, in consultation with the
Administrator of the Federal Emergency Management
Agency, shall submit to the Committee on Small Business
and Entrepreneurship of the Senate and the Committee on
Small Business of the House of Representatives a report
that includes—
(i) the deadline for submitting applications for as-
sistance under this Act relating to that major disaster;
(ii) information regarding the number of loan appli-
cations and disbursements processed by the Adminis-
trator relating to that major disaster for each day dur-
ing the period beginning on the date on which that
major disaster was declared and ending on the date of
that report; and
(iii) an estimate of the number of potential appli-
cants that have not submitted an application relating
to that major disaster.
(5) PUBLIC AWARENESS OF DISASTERS.—If a disaster is de-
clared under this subsection or the Administrator declares eli-
gibility for additional disaster assistance under paragraph (9),
the Administrator shall make every effort to communicate
through radio, television, print, and web-based outlets, all rel-
evant information needed by disaster loan applicants, includ-
ing—
(A) the date of such declaration;
(B) cities and towns within the area of such declaration;
(C) loan application deadlines related to such disaster;
(D) all relevant contact information for victim services
available through the Administration (including links to
small business development center websites);
(E) links to relevant Federal and State disaster assist-
ance websites, including links to websites providing infor-
mation regarding assistance available from the Federal
Emergency Management Agency;
(F) information on eligibility criteria for Administration
loan programs, including where such applications can be
found; and
(G) application materials that clearly state the function
of the Administration as the Federal source of disaster
loans for homeowners and renters.
(6) AUTHORITY FOR QUALIFIED PRIVATE CONTRACTORS.—
(A) DISASTER LOAN PROCESSING.—The Administrator
may enter into an agreement with a qualified private con-
tractor, as determined by the Administrator, to process
loans under this subsection in the event of a major dis-
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aster (including any major disaster relating to which the
Administrator declares eligibility for additional disaster
assistance under paragraph (9)), under which the Adminis-
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121
trator shall pay the contractor a fee for each loan proc-
essed.
(B) LOAN LOSS VERIFICATION SERVICES.—The Adminis-
trator may enter into an agreement with a qualified lender
or loss verification professional, as determined by the Ad-
ministrator, to verify losses for loans under this subsection
in the event of a major disaster (including any major dis-
aster relating to which the Administrator declares eligi-
bility for additional disaster assistance under paragraph
(9)), under which the Administrator shall pay the lender or
verification professional a fee for each loan for which such
lender or verification professional verifies losses.
(7) DISASTER ASSISTANCE EMPLOYEES.—
(A) IN GENERAL.—In carrying out this section, the Ad-
ministrator may, where practicable, ensure that the num-
ber of full-time equivalent employees—
(i) in the Office of the Disaster Assistance is not
fewer than 800; and
(ii) in the Disaster Cadre of the Administration is
not fewer than 1,000.
(B) REPORT.—In carrying out this subsection, if the num-
ber of full-time employees for either the Office of Disaster
Assistance or the Disaster Cadre of the Administration is
below the level described in subparagraph (A) for that of-
fice, not later than 21 days after the date on which that
staffing level decreased below the level described in sub-
paragraph (A), the Administrator shall submit to the Com-
mittee on Appropriations and the Committee on Small
Business and Entrepreneurship of the Senate and the
Committee on Appropriations and Committee on Small
Business of the House of Representatives, a report—
(i) detailing staffing levels on that date;
(ii) requesting, if practicable and determined appro-
priate by the Administrator, additional funds for addi-
tional employees; and
(iii) containing such additional information, as de-
termined appropriate by the Administrator.
(8) INCREASED LOAN CAPS.—
(A) AGGREGATE LOAN AMOUNTS.—Except as provided in
subparagraph (B), and notwithstanding any other provi-
sion of law, the aggregate loan amount outstanding and
committed to a borrower under this subsection may not ex-
ceed $2,000,000.
(B) WAIVER AUTHORITY.—The Administrator may, at the
discretion of the Administrator, increase the aggregate
loan amount under subparagraph (A) for loans relating to
a disaster to a level established by the Administrator,
based on appropriate economic indicators for the region in
which that disaster occurred.
(9) DECLARATION OF ELIGIBILITY FOR ADDITIONAL DISASTER
ASSISTANCE.—
(A) IN GENERAL.—If the President declares a major dis-
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aster, the Administrator may declare eligibility for addi-
tional disaster assistance in accordance with this para-
graph.
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122
(B) THRESHOLD.—A major disaster for which the Admin-
istrator declares eligibility for additional disaster assist-
ance under this paragraph shall—
(i) have resulted in extraordinary levels of casualties
or damage or disruption severely affecting the popu-
lation (including mass evacuations), infrastructure, en-
vironment, economy, national morale, or government
functions in an area;
(ii) be comparable to the description of a cata-
strophic incident in the National Response Plan of the
Administration, or any successor thereto, unless there
is no successor to such plan, in which case this clause
shall have no force or effect; and
(iii) be of such size and scope that—
(I) the disaster assistance programs under the
other paragraphs under this subsection are in-
capable of providing adequate and timely assist-
ance to individuals or business concerns located
within the disaster area; or
(II) a significant number of business concerns
outside the disaster area have suffered disaster-
related substantial economic injury as a result of
the incident.
(C) ADDITIONAL ECONOMIC INJURY DISASTER LOAN ASSIST-
ANCE.—
(i) IN GENERAL.—If the Administrator declares eligi-
bility for additional disaster assistance under this
paragraph, the Administrator may make such loans
under this subparagraph (either directly or in coopera-
tion with banks or other lending institutions through
agreements to participate on an immediate or deferred
basis) as the Administrator determines appropriate to
eligible small business concerns located anywhere in
the United States.
(ii) PROCESSING TIME.—
(I) IN GENERAL.—If the Administrator deter-
mines that the average processing time for appli-
cations for disaster loans under this subparagraph
relating to a specific major disaster is more than
15 days, the Administrator shall give priority to
the processing of such applications submitted by
eligible small business concerns located inside the
disaster area, until the Administrator determines
that the average processing time for such applica-
tions is not more than 15 days.
(II) SUSPENSION OF APPLICATIONS FROM OUTSIDE
DISASTER AREA.—If the Administrator determines
that the average processing time for applications
for disaster loans under this subparagraph relat-
ing to a specific major disaster is more than 30
days, the Administrator shall suspend the proc-
SSpencer on DSK126QN23PROD with REPORTS
essing of such applications submitted by eligible
small business concerns located outside the dis-
aster area, until the Administrator determines
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123
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