420 with CNW – Congressman Introduces Bill to Promote Hemp Industry

September 4, 2020 15:25:07

Almost two years after Congress legalized industrial hemp and allowed farmers across the country to start growing the crop under state and tribal programs, an outgoing congressman has filed a bill that would create a variety of programs that would help new entrants into the industry grow their businesses. Dubbed the ‘Hemp Opportunity Zone Act’ the bill was filed by Rep. Denver Riggleman. One of its main objectives is the creation of “opportunity zones,” areas where farmers who cultivate hemp will be eligible for tax benefits.

These are census-designated low-income areas that are considered economically distressed, with the governor making the designation and the Treasury deciding whether or not to certify it. The Hemp Opportunity Zone Act will promote investments in areas that don’t see much investor activity by allowing investors to defer capital gains taxes as long as they invest their funds in an opportunity zone business.

According to Rep. Riggleman, who lost his primary re-nomination bid and has just a few months left in Congress, hemp farming is a new and thriving industry. “By providing these tax incentives, hemp growers in Virginia and the 5th District are primed to lead based on their historic production of tobacco,” he says. Jonathan Miller, general counsel of the U.S. Hemp Roundtable says that they “are reviewing the legislation now but if it indeed serves to open up investment in hard-hit farming and small business communities, it would be a welcome relief for an industry that has been struggling through the COVID pandemic and federal burdens imposed by FDA, USDA, and now the DEA.

Although treasury Sec. Steve Mnuchin weighed in on the marijuana industry’s eligibility for the opportunity zone program earlier this year, he stated that it is “not the intent of the opportunity zones that if there is this conflict (between state and federal laws) that has not been cleared that, for now, we should not have those businesses in the opportunity zones.”

Aside from clarifying hemp businesses’ eligibility for the opportunity zone program, the bill would also create a “hemp farmer start-up tax credit” equal to 10% of the cash rent paid for the land used for production or 15% of the “crop share rent so paid by the taxpayer. For farmers to be eligible, they need to have less than $25 million in gross receipts for the last taxable year. Additionally, the bill would also establish a “small hemp farmer credit” that would allow businesses with less than $250,000 in gross receipts for the last taxable year to “obtain credit equal to 30% of the basis of hemp farming property placed in service.”

Experts say such a law would go a long way towards addressing the cries of the cannabis sector, including companies like Sugarmade, Inc. (OTCQB: SGMD).

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