Bill Text: IL HB5306 | 2023-2024 | 103rd General Assembly | Introduced

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Bill Title: Amends the Illinois Income Tax Act. Sets forth provisions concerning the computation of taxes related to minority and other specific priority population owned business in the State. Amends the Liquor Control Act of 1934. Provides that hemp extract, hemp cannabinoid products, and any other ingredient or product derived from hemp made in compliance with State law or the originating jurisdiction shall be considered fit for human consumption and shall not be considered injurious to health or deleterious for human consumption. Sets forth provisions relating to license holders under the Act as it relates to hemp cannabinoid and cannabinoid products. Amends the Industrial Hemp Act. Establishes provisions that will enable the State to regulate hemp-derived cannabinoids. Sets forth the limitation and penalties concerning the unlawful use of hemp cannabinoid, and distinguishes the lawful use of hemp-derived cannabinoids. Sets forth other provisions concerning licenses and registration of cultivating industrial hemp, rules, administrative hearings and judicial review, loans and grants, immunity, age verification, packaging and labeling of hemp cannabinoid products, laboratory approvals, testing requirements, violations of State and federal law, licensing and regulation of hemp processors and hemp food establishments, academic research institutions, government demonstration and research entity, and cannabinoid retail tax. Limits home rule powers by providing that, except as otherwise provided in the Act, the regulation and permitting of the activities described in the Act are exclusive powers and functions of the State. Defines terms.

Spectrum: Partisan Bill (Democrat 6-0)

Status: (Introduced) 2024-11-15 - Added Co-Sponsor Rep. Theresa Mah [HB5306 Detail]

Download: Illinois-2023-HB5306-Introduced.html

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103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 HB5306 Introduced , by Rep. La Shawn K. Ford SYNOPSIS AS INTRODUCED:
See Index
Amends the Illinois Income Tax Act. Sets forth provisions concerning the computation of taxes related to minority and other specific priority population owned business in the State. Amends the Liquor Control Act of 1934. Sets forth provisions concerning hemp products. Amends the Industrial Hemp Act. Establishes provisions that will enable the State to regulate hemp-derived cannabinoids. Distinguishes the lawful use of hemp-derived cannabinoids. Sets forth the limitation and penalties concerning the unlawful use of hemp cannabinoid. Sets forth other provisions concerning licenses and registration of cultivating industrial hemp, rules, administrative hearings and judicial review, loans and grants, immunity, age verification, packaging and labeling of hemp cannabinoid products, laboratory approvals, testing requirements, violations of State and federal law, licensing and regulation of hemp processors and hemp food establishments, academic research institutions, government demonstration and research entity, and cannabinoid retail tax. Limits home rule powers. Defines terms.
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A BILL FOR
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AN ACT concerning agriculture.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Illinois Income Tax Act is amended by
changing Section 203 as follows:
(35 ILCS 5/203)
Sec. 203. Base income defined.
(a) Individuals.
(1) In general. In the case of an individual, base
income means an amount equal to the taxpayer's adjusted
gross income for the taxable year as modified by paragraph
(2).
(2) Modifications. The adjusted gross income referred
to in paragraph (1) shall be modified by adding thereto
the sum of the following amounts:
(A) An amount equal to all amounts paid or accrued
to the taxpayer as interest or dividends during the
taxable year to the extent excluded from gross income
in the computation of adjusted gross income, except
stock dividends of qualified public utilities
described in Section 305(e) of the Internal Revenue
Code;
(B) An amount equal to the amount of tax imposed by

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this Act to the extent deducted from gross income in
the computation of adjusted gross income for the
taxable year;
(C) An amount equal to the amount received during
the taxable year as a recovery or refund of real
property taxes paid with respect to the taxpayer's
principal residence under the Revenue Act of 1939 and
for which a deduction was previously taken under
subparagraph (L) of this paragraph (2) prior to July
1, 1991, the retrospective application date of Article
4 of Public Act 87-17. In the case of multi-unit or
multi-use structures and farm dwellings, the taxes on
the taxpayer's principal residence shall be that
portion of the total taxes for the entire property
which is attributable to such principal residence;
(D) An amount equal to the amount of the capital
gain deduction allowable under the Internal Revenue
Code, to the extent deducted from gross income in the
computation of adjusted gross income;
(D-5) An amount, to the extent not included in
adjusted gross income, equal to the amount of money
withdrawn by the taxpayer in the taxable year from a
medical care savings account and the interest earned
on the account in the taxable year of a withdrawal
pursuant to subsection (b) of Section 20 of the
Medical Care Savings Account Act or subsection (b) of

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Section 20 of the Medical Care Savings Account Act of
2000;
(D-10) For taxable years ending after December 31,
1997, an amount equal to any eligible remediation
costs that the individual deducted in computing
adjusted gross income and for which the individual
claims a credit under subsection (l) of Section 201;
(D-15) For taxable years 2001 and thereafter, an
amount equal to the bonus depreciation deduction taken
on the taxpayer's federal income tax return for the
taxable year under subsection (k) of Section 168 of
the Internal Revenue Code;
(D-16) If the taxpayer sells, transfers, abandons,
or otherwise disposes of property for which the
taxpayer was required in any taxable year to make an
addition modification under subparagraph (D-15), then
an amount equal to the aggregate amount of the
deductions taken in all taxable years under
subparagraph (Z) with respect to that property.
If the taxpayer continues to own property through
the last day of the last tax year for which a
subtraction is allowed with respect to that property
under subparagraph (Z) and for which the taxpayer was
allowed in any taxable year to make a subtraction
modification under subparagraph (Z), then an amount
equal to that subtraction modification.

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The taxpayer is required to make the addition
modification under this subparagraph only once with
respect to any one piece of property;
(D-17) An amount equal to the amount otherwise
allowed as a deduction in computing base income for
interest paid, accrued, or incurred, directly or
indirectly, (i) for taxable years ending on or after
December 31, 2004, to a foreign person who would be a
member of the same unitary business group but for the
fact that foreign person's business activity outside
the United States is 80% or more of the foreign
person's total business activity and (ii) for taxable
years ending on or after December 31, 2008, to a person
who would be a member of the same unitary business
group but for the fact that the person is prohibited
under Section 1501(a)(27) from being included in the
unitary business group because he or she is ordinarily
required to apportion business income under different
subsections of Section 304. The addition modification
required by this subparagraph shall be reduced to the
extent that dividends were included in base income of
the unitary group for the same taxable year and
received by the taxpayer or by a member of the
taxpayer's unitary business group (including amounts
included in gross income under Sections 951 through
964 of the Internal Revenue Code and amounts included

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in gross income under Section 78 of the Internal
Revenue Code) with respect to the stock of the same
person to whom the interest was paid, accrued, or
incurred.
This paragraph shall not apply to the following:
(i) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person who
is subject in a foreign country or state, other
than a state which requires mandatory unitary
reporting, to a tax on or measured by net income
with respect to such interest; or
(ii) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person if
the taxpayer can establish, based on a
preponderance of the evidence, both of the
following:
(a) the person, during the same taxable
year, paid, accrued, or incurred, the interest
to a person that is not a related member, and
(b) the transaction giving rise to the
interest expense between the taxpayer and the
person did not have as a principal purpose the
avoidance of Illinois income tax, and is paid
pursuant to a contract or agreement that
reflects an arm's-length interest rate and
terms; or

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(iii) the taxpayer can establish, based on
clear and convincing evidence, that the interest
paid, accrued, or incurred relates to a contract
or agreement entered into at arm's-length rates
and terms and the principal purpose for the
payment is not federal or Illinois tax avoidance;
or
(iv) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person if
the taxpayer establishes by clear and convincing
evidence that the adjustments are unreasonable; or
if the taxpayer and the Director agree in writing
to the application or use of an alternative method
of apportionment under Section 304(f).
Nothing in this subsection shall preclude the
Director from making any other adjustment
otherwise allowed under Section 404 of this Act
for any tax year beginning after the effective
date of this amendment provided such adjustment is
made pursuant to regulation adopted by the
Department and such regulations provide methods
and standards by which the Department will utilize
its authority under Section 404 of this Act;
(D-18) An amount equal to the amount of intangible
expenses and costs otherwise allowed as a deduction in
computing base income, and that were paid, accrued, or

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incurred, directly or indirectly, (i) for taxable
years ending on or after December 31, 2004, to a
foreign person who would be a member of the same
unitary business group but for the fact that the
foreign person's business activity outside the United
States is 80% or more of that person's total business
activity and (ii) for taxable years ending on or after
December 31, 2008, to a person who would be a member of
the same unitary business group but for the fact that
the person is prohibited under Section 1501(a)(27)
from being included in the unitary business group
because he or she is ordinarily required to apportion
business income under different subsections of Section
304. The addition modification required by this
subparagraph shall be reduced to the extent that
dividends were included in base income of the unitary
group for the same taxable year and received by the
taxpayer or by a member of the taxpayer's unitary
business group (including amounts included in gross
income under Sections 951 through 964 of the Internal
Revenue Code and amounts included in gross income
under Section 78 of the Internal Revenue Code) with
respect to the stock of the same person to whom the
intangible expenses and costs were directly or
indirectly paid, incurred, or accrued. The preceding
sentence does not apply to the extent that the same

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dividends caused a reduction to the addition
modification required under Section 203(a)(2)(D-17) of
this Act. As used in this subparagraph, the term
"intangible expenses and costs" includes (1) expenses,
losses, and costs for, or related to, the direct or
indirect acquisition, use, maintenance or management,
ownership, sale, exchange, or any other disposition of
intangible property; (2) losses incurred, directly or
indirectly, from factoring transactions or discounting
transactions; (3) royalty, patent, technical, and
copyright fees; (4) licensing fees; and (5) other
similar expenses and costs. For purposes of this
subparagraph, "intangible property" includes patents,
patent applications, trade names, trademarks, service
marks, copyrights, mask works, trade secrets, and
similar types of intangible assets.
This paragraph shall not apply to the following:
(i) any item of intangible expenses or costs
paid, accrued, or incurred, directly or
indirectly, from a transaction with a person who
is subject in a foreign country or state, other
than a state which requires mandatory unitary
reporting, to a tax on or measured by net income
with respect to such item; or
(ii) any item of intangible expense or cost
paid, accrued, or incurred, directly or

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indirectly, if the taxpayer can establish, based
on a preponderance of the evidence, both of the
following:
(a) the person during the same taxable
year paid, accrued, or incurred, the
intangible expense or cost to a person that is
not a related member, and
(b) the transaction giving rise to the
intangible expense or cost between the
taxpayer and the person did not have as a
principal purpose the avoidance of Illinois
income tax, and is paid pursuant to a contract
or agreement that reflects arm's-length terms;
or
(iii) any item of intangible expense or cost
paid, accrued, or incurred, directly or
indirectly, from a transaction with a person if
the taxpayer establishes by clear and convincing
evidence, that the adjustments are unreasonable;
or if the taxpayer and the Director agree in
writing to the application or use of an
alternative method of apportionment under Section
304(f);
Nothing in this subsection shall preclude the
Director from making any other adjustment
otherwise allowed under Section 404 of this Act

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for any tax year beginning after the effective
date of this amendment provided such adjustment is
made pursuant to regulation adopted by the
Department and such regulations provide methods
and standards by which the Department will utilize
its authority under Section 404 of this Act;
(D-19) For taxable years ending on or after
December 31, 2008, an amount equal to the amount of
insurance premium expenses and costs otherwise allowed
as a deduction in computing base income, and that were
paid, accrued, or incurred, directly or indirectly, to
a person who would be a member of the same unitary
business group but for the fact that the person is
prohibited under Section 1501(a)(27) from being
included in the unitary business group because he or
she is ordinarily required to apportion business
income under different subsections of Section 304. The
addition modification required by this subparagraph
shall be reduced to the extent that dividends were
included in base income of the unitary group for the
same taxable year and received by the taxpayer or by a
member of the taxpayer's unitary business group
(including amounts included in gross income under
Sections 951 through 964 of the Internal Revenue Code
and amounts included in gross income under Section 78
of the Internal Revenue Code) with respect to the

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stock of the same person to whom the premiums and costs
were directly or indirectly paid, incurred, or
accrued. The preceding sentence does not apply to the
extent that the same dividends caused a reduction to
the addition modification required under Section
203(a)(2)(D-17) or Section 203(a)(2)(D-18) of this
Act;
(D-20) For taxable years beginning on or after
January 1, 2002 and ending on or before December 31,
2006, in the case of a distribution from a qualified
tuition program under Section 529 of the Internal
Revenue Code, other than (i) a distribution from a
College Savings Pool created under Section 16.5 of the
State Treasurer Act or (ii) a distribution from the
Illinois Prepaid Tuition Trust Fund, an amount equal
to the amount excluded from gross income under Section
529(c)(3)(B). For taxable years beginning on or after
January 1, 2007, in the case of a distribution from a
qualified tuition program under Section 529 of the
Internal Revenue Code, other than (i) a distribution
from a College Savings Pool created under Section 16.5
of the State Treasurer Act, (ii) a distribution from
the Illinois Prepaid Tuition Trust Fund, or (iii) a
distribution from a qualified tuition program under
Section 529 of the Internal Revenue Code that (I)
adopts and determines that its offering materials

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comply with the College Savings Plans Network's
disclosure principles and (II) has made reasonable
efforts to inform in-state residents of the existence
of in-state qualified tuition programs by informing
Illinois residents directly and, where applicable, to
inform financial intermediaries distributing the
program to inform in-state residents of the existence
of in-state qualified tuition programs at least
annually, an amount equal to the amount excluded from
gross income under Section 529(c)(3)(B).
For the purposes of this subparagraph (D-20), a
qualified tuition program has made reasonable efforts
if it makes disclosures (which may use the term
"in-state program" or "in-state plan" and need not
specifically refer to Illinois or its qualified
programs by name) (i) directly to prospective
participants in its offering materials or makes a
public disclosure, such as a website posting; and (ii)
where applicable, to intermediaries selling the
out-of-state program in the same manner that the
out-of-state program distributes its offering
materials;
(D-20.5) For taxable years beginning on or after
January 1, 2018, in the case of a distribution from a
qualified ABLE program under Section 529A of the
Internal Revenue Code, other than a distribution from

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a qualified ABLE program created under Section 16.6 of
the State Treasurer Act, an amount equal to the amount
excluded from gross income under Section 529A(c)(1)(B)
of the Internal Revenue Code;
(D-21) For taxable years beginning on or after
January 1, 2007, in the case of transfer of moneys from
a qualified tuition program under Section 529 of the
Internal Revenue Code that is administered by the
State to an out-of-state program, an amount equal to
the amount of moneys previously deducted from base
income under subsection (a)(2)(Y) of this Section;
(D-21.5) For taxable years beginning on or after
January 1, 2018, in the case of the transfer of moneys
from a qualified tuition program under Section 529 or
a qualified ABLE program under Section 529A of the
Internal Revenue Code that is administered by this
State to an ABLE account established under an
out-of-state ABLE account program, an amount equal to
the contribution component of the transferred amount
that was previously deducted from base income under
subsection (a)(2)(Y) or subsection (a)(2)(HH) of this
Section;
(D-22) For taxable years beginning on or after
January 1, 2009, and prior to January 1, 2018, in the
case of a nonqualified withdrawal or refund of moneys
from a qualified tuition program under Section 529 of

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the Internal Revenue Code administered by the State
that is not used for qualified expenses at an eligible
education institution, an amount equal to the
contribution component of the nonqualified withdrawal
or refund that was previously deducted from base
income under subsection (a)(2)(y) of this Section,
provided that the withdrawal or refund did not result
from the beneficiary's death or disability. For
taxable years beginning on or after January 1, 2018:
(1) in the case of a nonqualified withdrawal or
refund, as defined under Section 16.5 of the State
Treasurer Act, of moneys from a qualified tuition
program under Section 529 of the Internal Revenue Code
administered by the State, an amount equal to the
contribution component of the nonqualified withdrawal
or refund that was previously deducted from base
income under subsection (a)(2)(Y) of this Section, and
(2) in the case of a nonqualified withdrawal or refund
from a qualified ABLE program under Section 529A of
the Internal Revenue Code administered by the State
that is not used for qualified disability expenses, an
amount equal to the contribution component of the
nonqualified withdrawal or refund that was previously
deducted from base income under subsection (a)(2)(HH)
of this Section;
(D-23) An amount equal to the credit allowable to

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the taxpayer under Section 218(a) of this Act,
determined without regard to Section 218(c) of this
Act;
(D-24) For taxable years ending on or after
December 31, 2017, an amount equal to the deduction
allowed under Section 199 of the Internal Revenue Code
for the taxable year;
(D-25) In the case of a resident, an amount equal
to the amount of tax for which a credit is allowed
pursuant to Section 201(p)(7) of this Act;
and by deducting from the total so obtained the sum of the
following amounts:
(E) For taxable years ending before December 31,
2001, any amount included in such total in respect of
any compensation (including but not limited to any
compensation paid or accrued to a serviceman while a
prisoner of war or missing in action) paid to a
resident by reason of being on active duty in the Armed
Forces of the United States and in respect of any
compensation paid or accrued to a resident who as a
governmental employee was a prisoner of war or missing
in action, and in respect of any compensation paid to a
resident in 1971 or thereafter for annual training
performed pursuant to Sections 502 and 503, Title 32,
United States Code as a member of the Illinois
National Guard or, beginning with taxable years ending

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on or after December 31, 2007, the National Guard of
any other state. For taxable years ending on or after
December 31, 2001, any amount included in such total
in respect of any compensation (including but not
limited to any compensation paid or accrued to a
serviceman while a prisoner of war or missing in
action) paid to a resident by reason of being a member
of any component of the Armed Forces of the United
States and in respect of any compensation paid or
accrued to a resident who as a governmental employee
was a prisoner of war or missing in action, and in
respect of any compensation paid to a resident in 2001
or thereafter by reason of being a member of the
Illinois National Guard or, beginning with taxable
years ending on or after December 31, 2007, the
National Guard of any other state. The provisions of
this subparagraph (E) are exempt from the provisions
of Section 250;
(F) An amount equal to all amounts included in
such total pursuant to the provisions of Sections
402(a), 402(c), 403(a), 403(b), 406(a), 407(a), and
408 of the Internal Revenue Code, or included in such
total as distributions under the provisions of any
retirement or disability plan for employees of any
governmental agency or unit, or retirement payments to
retired partners, which payments are excluded in

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computing net earnings from self employment by Section
1402 of the Internal Revenue Code and regulations
adopted pursuant thereto;
(G) The valuation limitation amount;
(H) An amount equal to the amount of any tax
imposed by this Act which was refunded to the taxpayer
and included in such total for the taxable year;
(I) An amount equal to all amounts included in
such total pursuant to the provisions of Section 111
of the Internal Revenue Code as a recovery of items
previously deducted from adjusted gross income in the
computation of taxable income;
(J) An amount equal to those dividends included in
such total which were paid by a corporation which
conducts business operations in a River Edge
Redevelopment Zone or zones created under the River
Edge Redevelopment Zone Act, and conducts
substantially all of its operations in a River Edge
Redevelopment Zone or zones. This subparagraph (J) is
exempt from the provisions of Section 250;
(K) An amount equal to those dividends included in
such total that were paid by a corporation that
conducts business operations in a federally designated
Foreign Trade Zone or Sub-Zone and that is designated
a High Impact Business located in Illinois; provided
that dividends eligible for the deduction provided in

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subparagraph (J) of paragraph (2) of this subsection
shall not be eligible for the deduction provided under
this subparagraph (K);
(L) For taxable years ending after December 31,
1983, an amount equal to all social security benefits
and railroad retirement benefits included in such
total pursuant to Sections 72(r) and 86 of the
Internal Revenue Code;
(M) With the exception of any amounts subtracted
under subparagraph (N), an amount equal to the sum of
all amounts disallowed as deductions by (i) Sections
171(a)(2) and 265(a)(2) of the Internal Revenue Code,
and all amounts of expenses allocable to interest and
disallowed as deductions by Section 265(a)(1) of the
Internal Revenue Code; and (ii) for taxable years
ending on or after August 13, 1999, Sections
171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the
Internal Revenue Code, plus, for taxable years ending
on or after December 31, 2011, Section 45G(e)(3) of
the Internal Revenue Code and, for taxable years
ending on or after December 31, 2008, any amount
included in gross income under Section 87 of the
Internal Revenue Code; the provisions of this
subparagraph are exempt from the provisions of Section
250;
(N) An amount equal to all amounts included in

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such total which are exempt from taxation by this
State either by reason of its statutes or Constitution
or by reason of the Constitution, treaties or statutes
of the United States; provided that, in the case of any
statute of this State that exempts income derived from
bonds or other obligations from the tax imposed under
this Act, the amount exempted shall be the interest
net of bond premium amortization;
(O) An amount equal to any contribution made to a
job training project established pursuant to the Tax
Increment Allocation Redevelopment Act;
(P) An amount equal to the amount of the deduction
used to compute the federal income tax credit for
restoration of substantial amounts held under claim of
right for the taxable year pursuant to Section 1341 of
the Internal Revenue Code or of any itemized deduction
taken from adjusted gross income in the computation of
taxable income for restoration of substantial amounts
held under claim of right for the taxable year;
(Q) An amount equal to any amounts included in
such total, received by the taxpayer as an
acceleration in the payment of life, endowment or
annuity benefits in advance of the time they would
otherwise be payable as an indemnity for a terminal
illness;
(R) An amount equal to the amount of any federal or

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State bonus paid to veterans of the Persian Gulf War;
(S) An amount, to the extent included in adjusted
gross income, equal to the amount of a contribution
made in the taxable year on behalf of the taxpayer to a
medical care savings account established under the
Medical Care Savings Account Act or the Medical Care
Savings Account Act of 2000 to the extent the
contribution is accepted by the account administrator
as provided in that Act;
(T) An amount, to the extent included in adjusted
gross income, equal to the amount of interest earned
in the taxable year on a medical care savings account
established under the Medical Care Savings Account Act
or the Medical Care Savings Account Act of 2000 on
behalf of the taxpayer, other than interest added
pursuant to item (D-5) of this paragraph (2);
(U) For one taxable year beginning on or after
January 1, 1994, an amount equal to the total amount of
tax imposed and paid under subsections (a) and (b) of
Section 201 of this Act on grant amounts received by
the taxpayer under the Nursing Home Grant Assistance
Act during the taxpayer's taxable years 1992 and 1993;
(V) Beginning with tax years ending on or after
December 31, 1995 and ending with tax years ending on
or before December 31, 2004, an amount equal to the
amount paid by a taxpayer who is a self-employed

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taxpayer, a partner of a partnership, or a shareholder
in a Subchapter S corporation for health insurance or
long-term care insurance for that taxpayer or that
taxpayer's spouse or dependents, to the extent that
the amount paid for that health insurance or long-term
care insurance may be deducted under Section 213 of
the Internal Revenue Code, has not been deducted on
the federal income tax return of the taxpayer, and
does not exceed the taxable income attributable to
that taxpayer's income, self-employment income, or
Subchapter S corporation income; except that no
deduction shall be allowed under this item (V) if the
taxpayer is eligible to participate in any health
insurance or long-term care insurance plan of an
employer of the taxpayer or the taxpayer's spouse. The
amount of the health insurance and long-term care
insurance subtracted under this item (V) shall be
determined by multiplying total health insurance and
long-term care insurance premiums paid by the taxpayer
times a number that represents the fractional
percentage of eligible medical expenses under Section
213 of the Internal Revenue Code of 1986 not actually
deducted on the taxpayer's federal income tax return;
(W) For taxable years beginning on or after
January 1, 1998, all amounts included in the
taxpayer's federal gross income in the taxable year

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from amounts converted from a regular IRA to a Roth
IRA. This paragraph is exempt from the provisions of
Section 250;
(X) For taxable year 1999 and thereafter, an
amount equal to the amount of any (i) distributions,
to the extent includible in gross income for federal
income tax purposes, made to the taxpayer because of
his or her status as a victim of persecution for racial
or religious reasons by Nazi Germany or any other Axis
regime or as an heir of the victim and (ii) items of
income, to the extent includible in gross income for
federal income tax purposes, attributable to, derived
from or in any way related to assets stolen from,
hidden from, or otherwise lost to a victim of
persecution for racial or religious reasons by Nazi
Germany or any other Axis regime immediately prior to,
during, and immediately after World War II, including,
but not limited to, interest on the proceeds
receivable as insurance under policies issued to a
victim of persecution for racial or religious reasons
by Nazi Germany or any other Axis regime by European
insurance companies immediately prior to and during
World War II; provided, however, this subtraction from
federal adjusted gross income does not apply to assets
acquired with such assets or with the proceeds from
the sale of such assets; provided, further, this

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paragraph shall only apply to a taxpayer who was the
first recipient of such assets after their recovery
and who is a victim of persecution for racial or
religious reasons by Nazi Germany or any other Axis
regime or as an heir of the victim. The amount of and
the eligibility for any public assistance, benefit, or
similar entitlement is not affected by the inclusion
of items (i) and (ii) of this paragraph in gross income
for federal income tax purposes. This paragraph is
exempt from the provisions of Section 250;
(Y) For taxable years beginning on or after
January 1, 2002 and ending on or before December 31,
2004, moneys contributed in the taxable year to a
College Savings Pool account under Section 16.5 of the
State Treasurer Act, except that amounts excluded from
gross income under Section 529(c)(3)(C)(i) of the
Internal Revenue Code shall not be considered moneys
contributed under this subparagraph (Y). For taxable
years beginning on or after January 1, 2005, a maximum
of $10,000 contributed in the taxable year to (i) a
College Savings Pool account under Section 16.5 of the
State Treasurer Act or (ii) the Illinois Prepaid
Tuition Trust Fund, except that amounts excluded from
gross income under Section 529(c)(3)(C)(i) of the
Internal Revenue Code shall not be considered moneys
contributed under this subparagraph (Y). For purposes

HB5306 - 24 - LRB103 37926 CES 68058 b
of this subparagraph, contributions made by an
employer on behalf of an employee, or matching
contributions made by an employee, shall be treated as
made by the employee. This subparagraph (Y) is exempt
from the provisions of Section 250;
(Z) For taxable years 2001 and thereafter, for the
taxable year in which the bonus depreciation deduction
is taken on the taxpayer's federal income tax return
under subsection (k) of Section 168 of the Internal
Revenue Code and for each applicable taxable year
thereafter, an amount equal to "x", where:
(1) "y" equals the amount of the depreciation
deduction taken for the taxable year on the
taxpayer's federal income tax return on property
for which the bonus depreciation deduction was
taken in any year under subsection (k) of Section
168 of the Internal Revenue Code, but not
including the bonus depreciation deduction;
(2) for taxable years ending on or before
December 31, 2005, "x" equals "y" multiplied by 30
and then divided by 70 (or "y" multiplied by
0.429); and
(3) for taxable years ending after December
31, 2005:
(i) for property on which a bonus
depreciation deduction of 30% of the adjusted

HB5306 - 25 - LRB103 37926 CES 68058 b
basis was taken, "x" equals "y" multiplied by
30 and then divided by 70 (or "y" multiplied
by 0.429);
(ii) for property on which a bonus
depreciation deduction of 50% of the adjusted
basis was taken, "x" equals "y" multiplied by
1.0;
(iii) for property on which a bonus
depreciation deduction of 100% of the adjusted
basis was taken in a taxable year ending on or
after December 31, 2021, "x" equals the
depreciation deduction that would be allowed
on that property if the taxpayer had made the
election under Section 168(k)(7) of the
Internal Revenue Code to not claim bonus
depreciation on that property; and
(iv) for property on which a bonus
depreciation deduction of a percentage other
than 30%, 50% or 100% of the adjusted basis
was taken in a taxable year ending on or after
December 31, 2021, "x" equals "y" multiplied
by 100 times the percentage bonus depreciation
on the property (that is, 100(bonus%)) and
then divided by 100 times 1 minus the
percentage bonus depreciation on the property
(that is, 100(1-bonus%)).

HB5306 - 26 - LRB103 37926 CES 68058 b
The aggregate amount deducted under this
subparagraph in all taxable years for any one piece of
property may not exceed the amount of the bonus
depreciation deduction taken on that property on the
taxpayer's federal income tax return under subsection
(k) of Section 168 of the Internal Revenue Code. This
subparagraph (Z) is exempt from the provisions of
Section 250;
(AA) If the taxpayer sells, transfers, abandons,
or otherwise disposes of property for which the
taxpayer was required in any taxable year to make an
addition modification under subparagraph (D-15), then
an amount equal to that addition modification.
If the taxpayer continues to own property through
the last day of the last tax year for which a
subtraction is allowed with respect to that property
under subparagraph (Z) and for which the taxpayer was
required in any taxable year to make an addition
modification under subparagraph (D-15), then an amount
equal to that addition modification.
The taxpayer is allowed to take the deduction
under this subparagraph only once with respect to any
one piece of property.
This subparagraph (AA) is exempt from the
provisions of Section 250;
(BB) Any amount included in adjusted gross income,

HB5306 - 27 - LRB103 37926 CES 68058 b
other than salary, received by a driver in a
ridesharing arrangement using a motor vehicle;
(CC) The amount of (i) any interest income (net of
the deductions allocable thereto) taken into account
for the taxable year with respect to a transaction
with a taxpayer that is required to make an addition
modification with respect to such transaction under
Section 203(a)(2)(D-17), 203(b)(2)(E-12),
203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
the amount of that addition modification, and (ii) any
income from intangible property (net of the deductions
allocable thereto) taken into account for the taxable
year with respect to a transaction with a taxpayer
that is required to make an addition modification with
respect to such transaction under Section
203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
203(d)(2)(D-8), but not to exceed the amount of that
addition modification. This subparagraph (CC) is
exempt from the provisions of Section 250;
(DD) An amount equal to the interest income taken
into account for the taxable year (net of the
deductions allocable thereto) with respect to
transactions with (i) a foreign person who would be a
member of the taxpayer's unitary business group but
for the fact that the foreign person's business
activity outside the United States is 80% or more of

HB5306 - 28 - LRB103 37926 CES 68058 b
that person's total business activity and (ii) for
taxable years ending on or after December 31, 2008, to
a person who would be a member of the same unitary
business group but for the fact that the person is
prohibited under Section 1501(a)(27) from being
included in the unitary business group because he or
she is ordinarily required to apportion business
income under different subsections of Section 304, but
not to exceed the addition modification required to be
made for the same taxable year under Section
203(a)(2)(D-17) for interest paid, accrued, or
incurred, directly or indirectly, to the same person.
This subparagraph (DD) is exempt from the provisions
of Section 250;
(EE) An amount equal to the income from intangible
property taken into account for the taxable year (net
of the deductions allocable thereto) with respect to
transactions with (i) a foreign person who would be a
member of the taxpayer's unitary business group but
for the fact that the foreign person's business
activity outside the United States is 80% or more of
that person's total business activity and (ii) for
taxable years ending on or after December 31, 2008, to
a person who would be a member of the same unitary
business group but for the fact that the person is
prohibited under Section 1501(a)(27) from being

HB5306 - 29 - LRB103 37926 CES 68058 b
included in the unitary business group because he or
she is ordinarily required to apportion business
income under different subsections of Section 304, but
not to exceed the addition modification required to be
made for the same taxable year under Section
203(a)(2)(D-18) for intangible expenses and costs
paid, accrued, or incurred, directly or indirectly, to
the same foreign person. This subparagraph (EE) is
exempt from the provisions of Section 250;
(FF) An amount equal to any amount awarded to the
taxpayer during the taxable year by the Court of
Claims under subsection (c) of Section 8 of the Court
of Claims Act for time unjustly served in a State
prison. This subparagraph (FF) is exempt from the
provisions of Section 250;
(GG) For taxable years ending on or after December
31, 2011, in the case of a taxpayer who was required to
add back any insurance premiums under Section
203(a)(2)(D-19), such taxpayer may elect to subtract
that part of a reimbursement received from the
insurance company equal to the amount of the expense
or loss (including expenses incurred by the insurance
company) that would have been taken into account as a
deduction for federal income tax purposes if the
expense or loss had been uninsured. If a taxpayer
makes the election provided for by this subparagraph

HB5306 - 30 - LRB103 37926 CES 68058 b
(GG), the insurer to which the premiums were paid must
add back to income the amount subtracted by the
taxpayer pursuant to this subparagraph (GG). This
subparagraph (GG) is exempt from the provisions of
Section 250;
(HH) For taxable years beginning on or after
January 1, 2018 and prior to January 1, 2028, a maximum
of $10,000 contributed in the taxable year to a
qualified ABLE account under Section 16.6 of the State
Treasurer Act, except that amounts excluded from gross
income under Section 529(c)(3)(C)(i) or Section
529A(c)(1)(C) of the Internal Revenue Code shall not
be considered moneys contributed under this
subparagraph (HH). For purposes of this subparagraph
(HH), contributions made by an employer on behalf of
an employee, or matching contributions made by an
employee, shall be treated as made by the employee;
(II) For taxable years that begin on or after
January 1, 2021 and begin before January 1, 2026, the
amount that is included in the taxpayer's federal
adjusted gross income pursuant to Section 61 of the
Internal Revenue Code as discharge of indebtedness
attributable to student loan forgiveness and that is
not excluded from the taxpayer's federal adjusted
gross income pursuant to paragraph (5) of subsection
(f) of Section 108 of the Internal Revenue Code; and

HB5306 - 31 - LRB103 37926 CES 68058 b
(JJ) For taxable years beginning on or after
January 1, 2023, for any cannabis establishment
operating in this State and licensed under the
Cannabis Regulation and Tax Act or any cannabis
cultivation center or medical cannabis dispensing
organization operating in this State and licensed
under the Compassionate Use of Medical Cannabis
Program Act, an amount equal to the deductions that
were disallowed under Section 280E of the Internal
Revenue Code for the taxable year and that would not be
added back under this subsection. The provisions of
this subparagraph (JJ) are exempt from the provisions
of Section 250.
(KK) (JJ) To the extent includible in gross income
for federal income tax purposes, any amount awarded or
paid to the taxpayer as a result of a judgment or
settlement for fertility fraud as provided in Section
15 of the Illinois Fertility Fraud Act, donor
fertility fraud as provided in Section 20 of the
Illinois Fertility Fraud Act, or similar action in
another state.
(LL) For taxable years beginning on or after
January 1, 2025, for any hemp business establishment
operating in this State and licensed under the
Industrial Hemp Act, an amount equal to 50% of the
income generated by the sale products made by minority

HB5306 - 32 - LRB103 37926 CES 68058 b
and other specific priority population owned
businesses. The provisions of this subparagraph are
exempt from the provisions of Section 250. For
purposes of this paragraph, the term "minority and
other specific priority population owned businesses"
may include, but shall not be limited to, businesses
51% or more owned by groups such as women,
African-Americans, Puerto Ricans, Hispanics, Asian
Americans, veterans, the elderly, hemp justice or hemp
social equity participants as defined in the
Industrial Hemp Act, persons who are clients of
services provided by other State agencies, individuals
identifying as LGBTQ, persons with disabilities,
intravenous drug users, persons with AIDS or who are
HIV infected, and such other specific populations as
the Department may from time to time identify.
(b) Corporations.
(1) In general. In the case of a corporation, base
income means an amount equal to the taxpayer's taxable
income for the taxable year as modified by paragraph (2).
(2) Modifications. The taxable income referred to in
paragraph (1) shall be modified by adding thereto the sum
of the following amounts:
(A) An amount equal to all amounts paid or accrued
to the taxpayer as interest and all distributions

HB5306 - 33 - LRB103 37926 CES 68058 b
received from regulated investment companies during
the taxable year to the extent excluded from gross
income in the computation of taxable income;
(B) An amount equal to the amount of tax imposed by
this Act to the extent deducted from gross income in
the computation of taxable income for the taxable
year;
(C) In the case of a regulated investment company,
an amount equal to the excess of (i) the net long-term
capital gain for the taxable year, over (ii) the
amount of the capital gain dividends designated as
such in accordance with Section 852(b)(3)(C) of the
Internal Revenue Code and any amount designated under
Section 852(b)(3)(D) of the Internal Revenue Code,
attributable to the taxable year (this amendatory Act
of 1995 (Public Act 89-89) is declarative of existing
law and is not a new enactment);
(D) The amount of any net operating loss deduction
taken in arriving at taxable income, other than a net
operating loss carried forward from a taxable year
ending prior to December 31, 1986;
(E) For taxable years in which a net operating
loss carryback or carryforward from a taxable year
ending prior to December 31, 1986 is an element of
taxable income under paragraph (1) of subsection (e)
or subparagraph (E) of paragraph (2) of subsection

HB5306 - 34 - LRB103 37926 CES 68058 b
(e), the amount by which addition modifications other
than those provided by this subparagraph (E) exceeded
subtraction modifications in such earlier taxable
year, with the following limitations applied in the
order that they are listed:
(i) the addition modification relating to the
net operating loss carried back or forward to the
taxable year from any taxable year ending prior to
December 31, 1986 shall be reduced by the amount
of addition modification under this subparagraph
(E) which related to that net operating loss and
which was taken into account in calculating the
base income of an earlier taxable year, and
(ii) the addition modification relating to the
net operating loss carried back or forward to the
taxable year from any taxable year ending prior to
December 31, 1986 shall not exceed the amount of
such carryback or carryforward;
For taxable years in which there is a net
operating loss carryback or carryforward from more
than one other taxable year ending prior to December
31, 1986, the addition modification provided in this
subparagraph (E) shall be the sum of the amounts
computed independently under the preceding provisions
of this subparagraph (E) for each such taxable year;
(E-5) For taxable years ending after December 31,

HB5306 - 35 - LRB103 37926 CES 68058 b
1997, an amount equal to any eligible remediation
costs that the corporation deducted in computing
adjusted gross income and for which the corporation
claims a credit under subsection (l) of Section 201;
(E-10) For taxable years 2001 and thereafter, an
amount equal to the bonus depreciation deduction taken
on the taxpayer's federal income tax return for the
taxable year under subsection (k) of Section 168 of
the Internal Revenue Code;
(E-11) If the taxpayer sells, transfers, abandons,
or otherwise disposes of property for which the
taxpayer was required in any taxable year to make an
addition modification under subparagraph (E-10), then
an amount equal to the aggregate amount of the
deductions taken in all taxable years under
subparagraph (T) with respect to that property.
If the taxpayer continues to own property through
the last day of the last tax year for which a
subtraction is allowed with respect to that property
under subparagraph (T) and for which the taxpayer was
allowed in any taxable year to make a subtraction
modification under subparagraph (T), then an amount
equal to that subtraction modification.
The taxpayer is required to make the addition
modification under this subparagraph only once with
respect to any one piece of property;

HB5306 - 36 - LRB103 37926 CES 68058 b
(E-12) An amount equal to the amount otherwise
allowed as a deduction in computing base income for
interest paid, accrued, or incurred, directly or
indirectly, (i) for taxable years ending on or after
December 31, 2004, to a foreign person who would be a
member of the same unitary business group but for the
fact the foreign person's business activity outside
the United States is 80% or more of the foreign
person's total business activity and (ii) for taxable
years ending on or after December 31, 2008, to a person
who would be a member of the same unitary business
group but for the fact that the person is prohibited
under Section 1501(a)(27) from being included in the
unitary business group because he or she is ordinarily
required to apportion business income under different
subsections of Section 304. The addition modification
required by this subparagraph shall be reduced to the
extent that dividends were included in base income of
the unitary group for the same taxable year and
received by the taxpayer or by a member of the
taxpayer's unitary business group (including amounts
included in gross income pursuant to Sections 951
through 964 of the Internal Revenue Code and amounts
included in gross income under Section 78 of the
Internal Revenue Code) with respect to the stock of
the same person to whom the interest was paid,

HB5306 - 37 - LRB103 37926 CES 68058 b
accrued, or incurred.
This paragraph shall not apply to the following:
(i) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person who
is subject in a foreign country or state, other
than a state which requires mandatory unitary
reporting, to a tax on or measured by net income
with respect to such interest; or
(ii) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person if
the taxpayer can establish, based on a
preponderance of the evidence, both of the
following:
(a) the person, during the same taxable
year, paid, accrued, or incurred, the interest
to a person that is not a related member, and
(b) the transaction giving rise to the
interest expense between the taxpayer and the
person did not have as a principal purpose the
avoidance of Illinois income tax, and is paid
pursuant to a contract or agreement that
reflects an arm's-length interest rate and
terms; or
(iii) the taxpayer can establish, based on
clear and convincing evidence, that the interest
paid, accrued, or incurred relates to a contract

HB5306 - 38 - LRB103 37926 CES 68058 b
or agreement entered into at arm's-length rates
and terms and the principal purpose for the
payment is not federal or Illinois tax avoidance;
or
(iv) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person if
the taxpayer establishes by clear and convincing
evidence that the adjustments are unreasonable; or
if the taxpayer and the Director agree in writing
to the application or use of an alternative method
of apportionment under Section 304(f).
Nothing in this subsection shall preclude the
Director from making any other adjustment
otherwise allowed under Section 404 of this Act
for any tax year beginning after the effective
date of this amendment provided such adjustment is
made pursuant to regulation adopted by the
Department and such regulations provide methods
and standards by which the Department will utilize
its authority under Section 404 of this Act;
(E-13) An amount equal to the amount of intangible
expenses and costs otherwise allowed as a deduction in
computing base income, and that were paid, accrued, or
incurred, directly or indirectly, (i) for taxable
years ending on or after December 31, 2004, to a
foreign person who would be a member of the same

HB5306 - 39 - LRB103 37926 CES 68058 b
unitary business group but for the fact that the
foreign person's business activity outside the United
States is 80% or more of that person's total business
activity and (ii) for taxable years ending on or after
December 31, 2008, to a person who would be a member of
the same unitary business group but for the fact that
the person is prohibited under Section 1501(a)(27)
from being included in the unitary business group
because he or she is ordinarily required to apportion
business income under different subsections of Section
304. The addition modification required by this
subparagraph shall be reduced to the extent that
dividends were included in base income of the unitary
group for the same taxable year and received by the
taxpayer or by a member of the taxpayer's unitary
business group (including amounts included in gross
income pursuant to Sections 951 through 964 of the
Internal Revenue Code and amounts included in gross
income under Section 78 of the Internal Revenue Code)
with respect to the stock of the same person to whom
the intangible expenses and costs were directly or
indirectly paid, incurred, or accrued. The preceding
sentence shall not apply to the extent that the same
dividends caused a reduction to the addition
modification required under Section 203(b)(2)(E-12) of
this Act. As used in this subparagraph, the term

HB5306 - 40 - LRB103 37926 CES 68058 b
"intangible expenses and costs" includes (1) expenses,
losses, and costs for, or related to, the direct or
indirect acquisition, use, maintenance or management,
ownership, sale, exchange, or any other disposition of
intangible property; (2) losses incurred, directly or
indirectly, from factoring transactions or discounting
transactions; (3) royalty, patent, technical, and
copyright fees; (4) licensing fees; and (5) other
similar expenses and costs. For purposes of this
subparagraph, "intangible property" includes patents,
patent applications, trade names, trademarks, service
marks, copyrights, mask works, trade secrets, and
similar types of intangible assets.
This paragraph shall not apply to the following:
(i) any item of intangible expenses or costs
paid, accrued, or incurred, directly or
indirectly, from a transaction with a person who
is subject in a foreign country or state, other
than a state which requires mandatory unitary
reporting, to a tax on or measured by net income
with respect to such item; or
(ii) any item of intangible expense or cost
paid, accrued, or incurred, directly or
indirectly, if the taxpayer can establish, based
on a preponderance of the evidence, both of the
following:

HB5306 - 41 - LRB103 37926 CES 68058 b
(a) the person during the same taxable
year paid, accrued, or incurred, the
intangible expense or cost to a person that is
not a related member, and
(b) the transaction giving rise to the
intangible expense or cost between the
taxpayer and the person did not have as a
principal purpose the avoidance of Illinois
income tax, and is paid pursuant to a contract
or agreement that reflects arm's-length terms;
or
(iii) any item of intangible expense or cost
paid, accrued, or incurred, directly or
indirectly, from a transaction with a person if
the taxpayer establishes by clear and convincing
evidence, that the adjustments are unreasonable;
or if the taxpayer and the Director agree in
writing to the application or use of an
alternative method of apportionment under Section
304(f);
Nothing in this subsection shall preclude the
Director from making any other adjustment
otherwise allowed under Section 404 of this Act
for any tax year beginning after the effective
date of this amendment provided such adjustment is
made pursuant to regulation adopted by the

HB5306 - 42 - LRB103 37926 CES 68058 b
Department and such regulations provide methods
and standards by which the Department will utilize
its authority under Section 404 of this Act;
(E-14) For taxable years ending on or after
December 31, 2008, an amount equal to the amount of
insurance premium expenses and costs otherwise allowed
as a deduction in computing base income, and that were
paid, accrued, or incurred, directly or indirectly, to
a person who would be a member of the same unitary
business group but for the fact that the person is
prohibited under Section 1501(a)(27) from being
included in the unitary business group because he or
she is ordinarily required to apportion business
income under different subsections of Section 304. The
addition modification required by this subparagraph
shall be reduced to the extent that dividends were
included in base income of the unitary group for the
same taxable year and received by the taxpayer or by a
member of the taxpayer's unitary business group
(including amounts included in gross income under
Sections 951 through 964 of the Internal Revenue Code
and amounts included in gross income under Section 78
of the Internal Revenue Code) with respect to the
stock of the same person to whom the premiums and costs
were directly or indirectly paid, incurred, or
accrued. The preceding sentence does not apply to the

HB5306 - 43 - LRB103 37926 CES 68058 b
extent that the same dividends caused a reduction to
the addition modification required under Section
203(b)(2)(E-12) or Section 203(b)(2)(E-13) of this
Act;
(E-15) For taxable years beginning after December
31, 2008, any deduction for dividends paid by a
captive real estate investment trust that is allowed
to a real estate investment trust under Section
857(b)(2)(B) of the Internal Revenue Code for
dividends paid;
(E-16) An amount equal to the credit allowable to
the taxpayer under Section 218(a) of this Act,
determined without regard to Section 218(c) of this
Act;
(E-17) For taxable years ending on or after
December 31, 2017, an amount equal to the deduction
allowed under Section 199 of the Internal Revenue Code
for the taxable year;
(E-18) for taxable years beginning after December
31, 2018, an amount equal to the deduction allowed
under Section 250(a)(1)(A) of the Internal Revenue
Code for the taxable year;
(E-19) for taxable years ending on or after June
30, 2021, an amount equal to the deduction allowed
under Section 250(a)(1)(B)(i) of the Internal Revenue
Code for the taxable year;

HB5306 - 44 - LRB103 37926 CES 68058 b
(E-20) for taxable years ending on or after June
30, 2021, an amount equal to the deduction allowed
under Sections 243(e) and 245A(a) of the Internal
Revenue Code for the taxable year.
and by deducting from the total so obtained the sum of the
following amounts:
(F) An amount equal to the amount of any tax
imposed by this Act which was refunded to the taxpayer
and included in such total for the taxable year;
(G) An amount equal to any amount included in such
total under Section 78 of the Internal Revenue Code;
(H) In the case of a regulated investment company,
an amount equal to the amount of exempt interest
dividends as defined in subsection (b)(5) of Section
852 of the Internal Revenue Code, paid to shareholders
for the taxable year;
(I) With the exception of any amounts subtracted
under subparagraph (J), an amount equal to the sum of
all amounts disallowed as deductions by (i) Sections
171(a)(2) and 265(a)(2) and amounts disallowed as
interest expense by Section 291(a)(3) of the Internal
Revenue Code, and all amounts of expenses allocable to
interest and disallowed as deductions by Section
265(a)(1) of the Internal Revenue Code; and (ii) for
taxable years ending on or after August 13, 1999,
Sections 171(a)(2), 265, 280C, 291(a)(3), and

HB5306 - 45 - LRB103 37926 CES 68058 b
832(b)(5)(B)(i) of the Internal Revenue Code, plus,
for tax years ending on or after December 31, 2011,
amounts disallowed as deductions by Section 45G(e)(3)
of the Internal Revenue Code and, for taxable years
ending on or after December 31, 2008, any amount
included in gross income under Section 87 of the
Internal Revenue Code and the policyholders' share of
tax-exempt interest of a life insurance company under
Section 807(a)(2)(B) of the Internal Revenue Code (in
the case of a life insurance company with gross income
from a decrease in reserves for the tax year) or
Section 807(b)(1)(B) of the Internal Revenue Code (in
the case of a life insurance company allowed a
deduction for an increase in reserves for the tax
year); the provisions of this subparagraph are exempt
from the provisions of Section 250;
(J) An amount equal to all amounts included in
such total which are exempt from taxation by this
State either by reason of its statutes or Constitution
or by reason of the Constitution, treaties or statutes
of the United States; provided that, in the case of any
statute of this State that exempts income derived from
bonds or other obligations from the tax imposed under
this Act, the amount exempted shall be the interest
net of bond premium amortization;
(K) An amount equal to those dividends included in

HB5306 - 46 - LRB103 37926 CES 68058 b
such total which were paid by a corporation which
conducts business operations in a River Edge
Redevelopment Zone or zones created under the River
Edge Redevelopment Zone Act and conducts substantially
all of its operations in a River Edge Redevelopment
Zone or zones. This subparagraph (K) is exempt from
the provisions of Section 250;
(L) An amount equal to those dividends included in
such total that were paid by a corporation that
conducts business operations in a federally designated
Foreign Trade Zone or Sub-Zone and that is designated
a High Impact Business located in Illinois; provided
that dividends eligible for the deduction provided in
subparagraph (K) of paragraph 2 of this subsection
shall not be eligible for the deduction provided under
this subparagraph (L);
(M) For any taxpayer that is a financial
organization within the meaning of Section 304(c) of
this Act, an amount included in such total as interest
income from a loan or loans made by such taxpayer to a
borrower, to the extent that such a loan is secured by
property which is eligible for the River Edge
Redevelopment Zone Investment Credit. To determine the
portion of a loan or loans that is secured by property
eligible for a Section 201(f) investment credit to the
borrower, the entire principal amount of the loan or

HB5306 - 47 - LRB103 37926 CES 68058 b
loans between the taxpayer and the borrower should be
divided into the basis of the Section 201(f)
investment credit property which secures the loan or
loans, using for this purpose the original basis of
such property on the date that it was placed in service
in the River Edge Redevelopment Zone. The subtraction
modification available to the taxpayer in any year
under this subsection shall be that portion of the
total interest paid by the borrower with respect to
such loan attributable to the eligible property as
calculated under the previous sentence. This
subparagraph (M) is exempt from the provisions of
Section 250;
(M-1) For any taxpayer that is a financial
organization within the meaning of Section 304(c) of
this Act, an amount included in such total as interest
income from a loan or loans made by such taxpayer to a
borrower, to the extent that such a loan is secured by
property which is eligible for the High Impact
Business Investment Credit. To determine the portion
of a loan or loans that is secured by property eligible
for a Section 201(h) investment credit to the
borrower, the entire principal amount of the loan or
loans between the taxpayer and the borrower should be
divided into the basis of the Section 201(h)
investment credit property which secures the loan or

HB5306 - 48 - LRB103 37926 CES 68058 b
loans, using for this purpose the original basis of
such property on the date that it was placed in service
in a federally designated Foreign Trade Zone or
Sub-Zone located in Illinois. No taxpayer that is
eligible for the deduction provided in subparagraph
(M) of paragraph (2) of this subsection shall be
eligible for the deduction provided under this
subparagraph (M-1). The subtraction modification
available to taxpayers in any year under this
subsection shall be that portion of the total interest
paid by the borrower with respect to such loan
attributable to the eligible property as calculated
under the previous sentence;
(N) Two times any contribution made during the
taxable year to a designated zone organization to the
extent that the contribution (i) qualifies as a
charitable contribution under subsection (c) of
Section 170 of the Internal Revenue Code and (ii)
must, by its terms, be used for a project approved by
the Department of Commerce and Economic Opportunity
under Section 11 of the Illinois Enterprise Zone Act
or under Section 10-10 of the River Edge Redevelopment
Zone Act. This subparagraph (N) is exempt from the
provisions of Section 250;
(O) An amount equal to: (i) 85% for taxable years
ending on or before December 31, 1992, or, a

HB5306 - 49 - LRB103 37926 CES 68058 b
percentage equal to the percentage allowable under
Section 243(a)(1) of the Internal Revenue Code of 1986
for taxable years ending after December 31, 1992, of
the amount by which dividends included in taxable
income and received from a corporation that is not
created or organized under the laws of the United
States or any state or political subdivision thereof,
including, for taxable years ending on or after
December 31, 1988, dividends received or deemed
received or paid or deemed paid under Sections 951
through 965 of the Internal Revenue Code, exceed the
amount of the modification provided under subparagraph
(G) of paragraph (2) of this subsection (b) which is
related to such dividends, and including, for taxable
years ending on or after December 31, 2008, dividends
received from a captive real estate investment trust;
plus (ii) 100% of the amount by which dividends,
included in taxable income and received, including,
for taxable years ending on or after December 31,
1988, dividends received or deemed received or paid or
deemed paid under Sections 951 through 964 of the
Internal Revenue Code and including, for taxable years
ending on or after December 31, 2008, dividends
received from a captive real estate investment trust,
from any such corporation specified in clause (i) that
would but for the provisions of Section 1504(b)(3) of

HB5306 - 50 - LRB103 37926 CES 68058 b
the Internal Revenue Code be treated as a member of the
affiliated group which includes the dividend
recipient, exceed the amount of the modification
provided under subparagraph (G) of paragraph (2) of
this subsection (b) which is related to such
dividends. For taxable years ending on or after June
30, 2021, (i) for purposes of this subparagraph, the
term "dividend" does not include any amount treated as
a dividend under Section 1248 of the Internal Revenue
Code, and (ii) this subparagraph shall not apply to
dividends for which a deduction is allowed under
Section 245(a) of the Internal Revenue Code. This
subparagraph (O) is exempt from the provisions of
Section 250 of this Act;
(P) An amount equal to any contribution made to a
job training project established pursuant to the Tax
Increment Allocation Redevelopment Act;
(Q) An amount equal to the amount of the deduction
used to compute the federal income tax credit for
restoration of substantial amounts held under claim of
right for the taxable year pursuant to Section 1341 of
the Internal Revenue Code;
(R) On and after July 20, 1999, in the case of an
attorney-in-fact with respect to whom an interinsurer
or a reciprocal insurer has made the election under
Section 835 of the Internal Revenue Code, 26 U.S.C.

HB5306 - 51 - LRB103 37926 CES 68058 b
835, an amount equal to the excess, if any, of the
amounts paid or incurred by that interinsurer or
reciprocal insurer in the taxable year to the
attorney-in-fact over the deduction allowed to that
interinsurer or reciprocal insurer with respect to the
attorney-in-fact under Section 835(b) of the Internal
Revenue Code for the taxable year; the provisions of
this subparagraph are exempt from the provisions of
Section 250;
(S) For taxable years ending on or after December
31, 1997, in the case of a Subchapter S corporation, an
amount equal to all amounts of income allocable to a
shareholder subject to the Personal Property Tax
Replacement Income Tax imposed by subsections (c) and
(d) of Section 201 of this Act, including amounts
allocable to organizations exempt from federal income
tax by reason of Section 501(a) of the Internal
Revenue Code. This subparagraph (S) is exempt from the
provisions of Section 250;
(T) For taxable years 2001 and thereafter, for the
taxable year in which the bonus depreciation deduction
is taken on the taxpayer's federal income tax return
under subsection (k) of Section 168 of the Internal
Revenue Code and for each applicable taxable year
thereafter, an amount equal to "x", where:
(1) "y" equals the amount of the depreciation

HB5306 - 52 - LRB103 37926 CES 68058 b
deduction taken for the taxable year on the
taxpayer's federal income tax return on property
for which the bonus depreciation deduction was
taken in any year under subsection (k) of Section
168 of the Internal Revenue Code, but not
including the bonus depreciation deduction;
(2) for taxable years ending on or before
December 31, 2005, "x" equals "y" multiplied by 30
and then divided by 70 (or "y" multiplied by
0.429); and
(3) for taxable years ending after December
31, 2005:
(i) for property on which a bonus
depreciation deduction of 30% of the adjusted
basis was taken, "x" equals "y" multiplied by
30 and then divided by 70 (or "y" multiplied
by 0.429);
(ii) for property on which a bonus
depreciation deduction of 50% of the adjusted
basis was taken, "x" equals "y" multiplied by
1.0;
(iii) for property on which a bonus
depreciation deduction of 100% of the adjusted
basis was taken in a taxable year ending on or
after December 31, 2021, "x" equals the
depreciation deduction that would be allowed

HB5306 - 53 - LRB103 37926 CES 68058 b
on that property if the taxpayer had made the
election under Section 168(k)(7) of the
Internal Revenue Code to not claim bonus
depreciation on that property; and
(iv) for property on which a bonus
depreciation deduction of a percentage other
than 30%, 50% or 100% of the adjusted basis
was taken in a taxable year ending on or after
December 31, 2021, "x" equals "y" multiplied
by 100 times the percentage bonus depreciation
on the property (that is, 100(bonus%)) and
then divided by 100 times 1 minus the
percentage bonus depreciation on the property
(that is, 100(1-bonus%)).
The aggregate amount deducted under this
subparagraph in all taxable years for any one piece of
property may not exceed the amount of the bonus
depreciation deduction taken on that property on the
taxpayer's federal income tax return under subsection
(k) of Section 168 of the Internal Revenue Code. This
subparagraph (T) is exempt from the provisions of
Section 250;
(U) If the taxpayer sells, transfers, abandons, or
otherwise disposes of property for which the taxpayer
was required in any taxable year to make an addition
modification under subparagraph (E-10), then an amount

HB5306 - 54 - LRB103 37926 CES 68058 b
equal to that addition modification.
If the taxpayer continues to own property through
the last day of the last tax year for which a
subtraction is allowed with respect to that property
under subparagraph (T) and for which the taxpayer was
required in any taxable year to make an addition
modification under subparagraph (E-10), then an amount
equal to that addition modification.
The taxpayer is allowed to take the deduction
under this subparagraph only once with respect to any
one piece of property.
This subparagraph (U) is exempt from the
provisions of Section 250;
(V) The amount of: (i) any interest income (net of
the deductions allocable thereto) taken into account
for the taxable year with respect to a transaction
with a taxpayer that is required to make an addition
modification with respect to such transaction under
Section 203(a)(2)(D-17), 203(b)(2)(E-12),
203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
the amount of such addition modification, (ii) any
income from intangible property (net of the deductions
allocable thereto) taken into account for the taxable
year with respect to a transaction with a taxpayer
that is required to make an addition modification with
respect to such transaction under Section

HB5306 - 55 - LRB103 37926 CES 68058 b
203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
203(d)(2)(D-8), but not to exceed the amount of such
addition modification, and (iii) any insurance premium
income (net of deductions allocable thereto) taken
into account for the taxable year with respect to a
transaction with a taxpayer that is required to make
an addition modification with respect to such
transaction under Section 203(a)(2)(D-19), Section
203(b)(2)(E-14), Section 203(c)(2)(G-14), or Section
203(d)(2)(D-9), but not to exceed the amount of that
addition modification. This subparagraph (V) is exempt
from the provisions of Section 250;
(W) An amount equal to the interest income taken
into account for the taxable year (net of the
deductions allocable thereto) with respect to
transactions with (i) a foreign person who would be a
member of the taxpayer's unitary business group but
for the fact that the foreign person's business
activity outside the United States is 80% or more of
that person's total business activity and (ii) for
taxable years ending on or after December 31, 2008, to
a person who would be a member of the same unitary
business group but for the fact that the person is
prohibited under Section 1501(a)(27) from being
included in the unitary business group because he or
she is ordinarily required to apportion business

HB5306 - 56 - LRB103 37926 CES 68058 b
income under different subsections of Section 304, but
not to exceed the addition modification required to be
made for the same taxable year under Section
203(b)(2)(E-12) for interest paid, accrued, or
incurred, directly or indirectly, to the same person.
This subparagraph (W) is exempt from the provisions of
Section 250;
(X) An amount equal to the income from intangible
property taken into account for the taxable year (net
of the deductions allocable thereto) with respect to
transactions with (i) a foreign person who would be a
member of the taxpayer's unitary business group but
for the fact that the foreign person's business
activity outside the United States is 80% or more of
that person's total business activity and (ii) for
taxable years ending on or after December 31, 2008, to
a person who would be a member of the same unitary
business group but for the fact that the person is
prohibited under Section 1501(a)(27) from being
included in the unitary business group because he or
she is ordinarily required to apportion business
income under different subsections of Section 304, but
not to exceed the addition modification required to be
made for the same taxable year under Section
203(b)(2)(E-13) for intangible expenses and costs
paid, accrued, or incurred, directly or indirectly, to

HB5306 - 57 - LRB103 37926 CES 68058 b
the same foreign person. This subparagraph (X) is
exempt from the provisions of Section 250;
(Y) For taxable years ending on or after December
31, 2011, in the case of a taxpayer who was required to
add back any insurance premiums under Section
203(b)(2)(E-14), such taxpayer may elect to subtract
that part of a reimbursement received from the
insurance company equal to the amount of the expense
or loss (including expenses incurred by the insurance
company) that would have been taken into account as a
deduction for federal income tax purposes if the
expense or loss had been uninsured. If a taxpayer
makes the election provided for by this subparagraph
(Y), the insurer to which the premiums were paid must
add back to income the amount subtracted by the
taxpayer pursuant to this subparagraph (Y). This
subparagraph (Y) is exempt from the provisions of
Section 250;
(Z) The difference between the nondeductible
controlled foreign corporation dividends under Section
965(e)(3) of the Internal Revenue Code over the
taxable income of the taxpayer, computed without
regard to Section 965(e)(2)(A) of the Internal Revenue
Code, and without regard to any net operating loss
deduction. This subparagraph (Z) is exempt from the
provisions of Section 250; and

HB5306 - 58 - LRB103 37926 CES 68058 b
(AA) For taxable years beginning on or after
January 1, 2023, for any cannabis establishment
operating in this State and licensed under the
Cannabis Regulation and Tax Act or any cannabis
cultivation center or medical cannabis dispensing
organization operating in this State and licensed
under the Compassionate Use of Medical Cannabis
Program Act, an amount equal to the deductions that
were disallowed under Section 280E of the Internal
Revenue Code for the taxable year and that would not be
added back under this subsection. The provisions of
this subparagraph (AA) are exempt from the provisions
of Section 250.
(BB) For taxable years beginning on or after
January 1, 2025, for any hemp business establishment
operating in this State and licensed under the
Industrial Hemp Act, an amount equal to 50% of the
income generated by the sale products made by minority
and other specific priority population owned
businesses. The provisions of this subparagraph are
exempt from the provisions of Section 250. For
purposes of this paragraph, the term "minority and
other specific priority population owned businesses"
may include, but shall not be limited to, businesses
51% or more owned by groups such as women, parents,
African-Americans, Puerto Ricans, Hispanics, Asian

HB5306 - 59 - LRB103 37926 CES 68058 b
Americans, veterans, the elderly, hemp justice or hemp
social equity participants as defined by the
Industrial Hemp Act, persons who are clients of
services provided by other State agencies, individuals
identifying as LGBTQ, persons with disabilities,
intravenous drug users, persons with AIDS or who are
HIV infected, and such other specific populations as
the Department may from time to time identify.
(3) Special rule. For purposes of paragraph (2)(A),
"gross income" in the case of a life insurance company,
for tax years ending on and after December 31, 1994, and
prior to December 31, 2011, shall mean the gross
investment income for the taxable year and, for tax years
ending on or after December 31, 2011, shall mean all
amounts included in life insurance gross income under
Section 803(a)(3) of the Internal Revenue Code.
(c) Trusts and estates.
(1) In general. In the case of a trust or estate, base
income means an amount equal to the taxpayer's taxable
income for the taxable year as modified by paragraph (2).
(2) Modifications. Subject to the provisions of
paragraph (3), the taxable income referred to in paragraph
(1) shall be modified by adding thereto the sum of the
following amounts:
(A) An amount equal to all amounts paid or accrued

HB5306 - 60 - LRB103 37926 CES 68058 b
to the taxpayer as interest or dividends during the
taxable year to the extent excluded from gross income
in the computation of taxable income;
(B) In the case of (i) an estate, $600; (ii) a
trust which, under its governing instrument, is
required to distribute all of its income currently,
$300; and (iii) any other trust, $100, but in each such
case, only to the extent such amount was deducted in
the computation of taxable income;
(C) An amount equal to the amount of tax imposed by
this Act to the extent deducted from gross income in
the computation of taxable income for the taxable
year;
(D) The amount of any net operating loss deduction
taken in arriving at taxable income, other than a net
operating loss carried forward from a taxable year
ending prior to December 31, 1986;
(E) For taxable years in which a net operating
loss carryback or carryforward from a taxable year
ending prior to December 31, 1986 is an element of
taxable income under paragraph (1) of subsection (e)
or subparagraph (E) of paragraph (2) of subsection
(e), the amount by which addition modifications other
than those provided by this subparagraph (E) exceeded
subtraction modifications in such taxable year, with
the following limitations applied in the order that

HB5306 - 61 - LRB103 37926 CES 68058 b
they are listed:
(i) the addition modification relating to the
net operating loss carried back or forward to the
taxable year from any taxable year ending prior to
December 31, 1986 shall be reduced by the amount
of addition modification under this subparagraph
(E) which related to that net operating loss and
which was taken into account in calculating the
base income of an earlier taxable year, and
(ii) the addition modification relating to the
net operating loss carried back or forward to the
taxable year from any taxable year ending prior to
December 31, 1986 shall not exceed the amount of
such carryback or carryforward;
For taxable years in which there is a net
operating loss carryback or carryforward from more
than one other taxable year ending prior to December
31, 1986, the addition modification provided in this
subparagraph (E) shall be the sum of the amounts
computed independently under the preceding provisions
of this subparagraph (E) for each such taxable year;
(F) For taxable years ending on or after January
1, 1989, an amount equal to the tax deducted pursuant
to Section 164 of the Internal Revenue Code if the
trust or estate is claiming the same tax for purposes
of the Illinois foreign tax credit under Section 601

HB5306 - 62 - LRB103 37926 CES 68058 b
of this Act;
(G) An amount equal to the amount of the capital
gain deduction allowable under the Internal Revenue
Code, to the extent deducted from gross income in the
computation of taxable income;
(G-5) For taxable years ending after December 31,
1997, an amount equal to any eligible remediation
costs that the trust or estate deducted in computing
adjusted gross income and for which the trust or
estate claims a credit under subsection (l) of Section
201;
(G-10) For taxable years 2001 and thereafter, an
amount equal to the bonus depreciation deduction taken
on the taxpayer's federal income tax return for the
taxable year under subsection (k) of Section 168 of
the Internal Revenue Code; and
(G-11) If the taxpayer sells, transfers, abandons,
or otherwise disposes of property for which the
taxpayer was required in any taxable year to make an
addition modification under subparagraph (G-10), then
an amount equal to the aggregate amount of the
deductions taken in all taxable years under
subparagraph (R) with respect to that property.
If the taxpayer continues to own property through
the last day of the last tax year for which a
subtraction is allowed with respect to that property

HB5306 - 63 - LRB103 37926 CES 68058 b
under subparagraph (R) and for which the taxpayer was
allowed in any taxable year to make a subtraction
modification under subparagraph (R), then an amount
equal to that subtraction modification.
The taxpayer is required to make the addition
modification under this subparagraph only once with
respect to any one piece of property;
(G-12) An amount equal to the amount otherwise
allowed as a deduction in computing base income for
interest paid, accrued, or incurred, directly or
indirectly, (i) for taxable years ending on or after
December 31, 2004, to a foreign person who would be a
member of the same unitary business group but for the
fact that the foreign person's business activity
outside the United States is 80% or more of the foreign
person's total business activity and (ii) for taxable
years ending on or after December 31, 2008, to a person
who would be a member of the same unitary business
group but for the fact that the person is prohibited
under Section 1501(a)(27) from being included in the
unitary business group because he or she is ordinarily
required to apportion business income under different
subsections of Section 304. The addition modification
required by this subparagraph shall be reduced to the
extent that dividends were included in base income of
the unitary group for the same taxable year and

HB5306 - 64 - LRB103 37926 CES 68058 b
received by the taxpayer or by a member of the
taxpayer's unitary business group (including amounts
included in gross income pursuant to Sections 951
through 964 of the Internal Revenue Code and amounts
included in gross income under Section 78 of the
Internal Revenue Code) with respect to the stock of
the same person to whom the interest was paid,
accrued, or incurred.
This paragraph shall not apply to the following:
(i) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person who
is subject in a foreign country or state, other
than a state which requires mandatory unitary
reporting, to a tax on or measured by net income
with respect to such interest; or
(ii) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person if
the taxpayer can establish, based on a
preponderance of the evidence, both of the
following:
(a) the person, during the same taxable
year, paid, accrued, or incurred, the interest
to a person that is not a related member, and
(b) the transaction giving rise to the
interest expense between the taxpayer and the
person did not have as a principal purpose the

HB5306 - 65 - LRB103 37926 CES 68058 b
avoidance of Illinois income tax, and is paid
pursuant to a contract or agreement that
reflects an arm's-length interest rate and
terms; or
(iii) the taxpayer can establish, based on
clear and convincing evidence, that the interest
paid, accrued, or incurred relates to a contract
or agreement entered into at arm's-length rates
and terms and the principal purpose for the
payment is not federal or Illinois tax avoidance;
or
(iv) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person if
the taxpayer establishes by clear and convincing
evidence that the adjustments are unreasonable; or
if the taxpayer and the Director agree in writing
to the application or use of an alternative method
of apportionment under Section 304(f).
Nothing in this subsection shall preclude the
Director from making any other adjustment
otherwise allowed under Section 404 of this Act
for any tax year beginning after the effective
date of this amendment provided such adjustment is
made pursuant to regulation adopted by the
Department and such regulations provide methods
and standards by which the Department will utilize

HB5306 - 66 - LRB103 37926 CES 68058 b
its authority under Section 404 of this Act;
(G-13) An amount equal to the amount of intangible
expenses and costs otherwise allowed as a deduction in
computing base income, and that were paid, accrued, or
incurred, directly or indirectly, (i) for taxable
years ending on or after December 31, 2004, to a
foreign person who would be a member of the same
unitary business group but for the fact that the
foreign person's business activity outside the United
States is 80% or more of that person's total business
activity and (ii) for taxable years ending on or after
December 31, 2008, to a person who would be a member of
the same unitary business group but for the fact that
the person is prohibited under Section 1501(a)(27)
from being included in the unitary business group
because he or she is ordinarily required to apportion
business income under different subsections of Section
304. The addition modification required by this
subparagraph shall be reduced to the extent that
dividends were included in base income of the unitary
group for the same taxable year and received by the
taxpayer or by a member of the taxpayer's unitary
business group (including amounts included in gross
income pursuant to Sections 951 through 964 of the
Internal Revenue Code and amounts included in gross
income under Section 78 of the Internal Revenue Code)

HB5306 - 67 - LRB103 37926 CES 68058 b
with respect to the stock of the same person to whom
the intangible expenses and costs were directly or
indirectly paid, incurred, or accrued. The preceding
sentence shall not apply to the extent that the same
dividends caused a reduction to the addition
modification required under Section 203(c)(2)(G-12) of
this Act. As used in this subparagraph, the term
"intangible expenses and costs" includes: (1)
expenses, losses, and costs for or related to the
direct or indirect acquisition, use, maintenance or
management, ownership, sale, exchange, or any other
disposition of intangible property; (2) losses
incurred, directly or indirectly, from factoring
transactions or discounting transactions; (3) royalty,
patent, technical, and copyright fees; (4) licensing
fees; and (5) other similar expenses and costs. For
purposes of this subparagraph, "intangible property"
includes patents, patent applications, trade names,
trademarks, service marks, copyrights, mask works,
trade secrets, and similar types of intangible assets.
This paragraph shall not apply to the following:
(i) any item of intangible expenses or costs
paid, accrued, or incurred, directly or
indirectly, from a transaction with a person who
is subject in a foreign country or state, other
than a state which requires mandatory unitary

HB5306 - 68 - LRB103 37926 CES 68058 b
reporting, to a tax on or measured by net income
with respect to such item; or
(ii) any item of intangible expense or cost
paid, accrued, or incurred, directly or
indirectly, if the taxpayer can establish, based
on a preponderance of the evidence, both of the
following:
(a) the person during the same taxable
year paid, accrued, or incurred, the
intangible expense or cost to a person that is
not a related member, and
(b) the transaction giving rise to the
intangible expense or cost between the
taxpayer and the person did not have as a
principal purpose the avoidance of Illinois
income tax, and is paid pursuant to a contract
or agreement that reflects arm's-length terms;
or
(iii) any item of intangible expense or cost
paid, accrued, or incurred, directly or
indirectly, from a transaction with a person if
the taxpayer establishes by clear and convincing
evidence, that the adjustments are unreasonable;
or if the taxpayer and the Director agree in
writing to the application or use of an
alternative method of apportionment under Section

HB5306 - 69 - LRB103 37926 CES 68058 b
304(f);
Nothing in this subsection shall preclude the
Director from making any other adjustment
otherwise allowed under Section 404 of this Act
for any tax year beginning after the effective
date of this amendment provided such adjustment is
made pursuant to regulation adopted by the
Department and such regulations provide methods
and standards by which the Department will utilize
its authority under Section 404 of this Act;
(G-14) For taxable years ending on or after
December 31, 2008, an amount equal to the amount of
insurance premium expenses and costs otherwise allowed
as a deduction in computing base income, and that were
paid, accrued, or incurred, directly or indirectly, to
a person who would be a member of the same unitary
business group but for the fact that the person is
prohibited under Section 1501(a)(27) from being
included in the unitary business group because he or
she is ordinarily required to apportion business
income under different subsections of Section 304. The
addition modification required by this subparagraph
shall be reduced to the extent that dividends were
included in base income of the unitary group for the
same taxable year and received by the taxpayer or by a
member of the taxpayer's unitary business group

HB5306 - 70 - LRB103 37926 CES 68058 b
(including amounts included in gross income under
Sections 951 through 964 of the Internal Revenue Code
and amounts included in gross income under Section 78
of the Internal Revenue Code) with respect to the
stock of the same person to whom the premiums and costs
were directly or indirectly paid, incurred, or
accrued. The preceding sentence does not apply to the
extent that the same dividends caused a reduction to
the addition modification required under Section
203(c)(2)(G-12) or Section 203(c)(2)(G-13) of this
Act;
(G-15) An amount equal to the credit allowable to
the taxpayer under Section 218(a) of this Act,
determined without regard to Section 218(c) of this
Act;
(G-16) For taxable years ending on or after
December 31, 2017, an amount equal to the deduction
allowed under Section 199 of the Internal Revenue Code
for the taxable year;
and by deducting from the total so obtained the sum of the
following amounts:
(H) An amount equal to all amounts included in
such total pursuant to the provisions of Sections
402(a), 402(c), 403(a), 403(b), 406(a), 407(a) and 408
of the Internal Revenue Code or included in such total
as distributions under the provisions of any

HB5306 - 71 - LRB103 37926 CES 68058 b
retirement or disability plan for employees of any
governmental agency or unit, or retirement payments to
retired partners, which payments are excluded in
computing net earnings from self employment by Section
1402 of the Internal Revenue Code and regulations
adopted pursuant thereto;
(I) The valuation limitation amount;
(J) An amount equal to the amount of any tax
imposed by this Act which was refunded to the taxpayer
and included in such total for the taxable year;
(K) An amount equal to all amounts included in
taxable income as modified by subparagraphs (A), (B),
(C), (D), (E), (F) and (G) which are exempt from
taxation by this State either by reason of its
statutes or Constitution or by reason of the
Constitution, treaties or statutes of the United
States; provided that, in the case of any statute of
this State that exempts income derived from bonds or
other obligations from the tax imposed under this Act,
the amount exempted shall be the interest net of bond
premium amortization;
(L) With the exception of any amounts subtracted
under subparagraph (K), an amount equal to the sum of
all amounts disallowed as deductions by (i) Sections
171(a)(2) and 265(a)(2) of the Internal Revenue Code,
and all amounts of expenses allocable to interest and

HB5306 - 72 - LRB103 37926 CES 68058 b
disallowed as deductions by Section 265(a)(1) of the
Internal Revenue Code; and (ii) for taxable years
ending on or after August 13, 1999, Sections
171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the
Internal Revenue Code, plus, (iii) for taxable years
ending on or after December 31, 2011, Section
45G(e)(3) of the Internal Revenue Code and, for
taxable years ending on or after December 31, 2008,
any amount included in gross income under Section 87
of the Internal Revenue Code; the provisions of this
subparagraph are exempt from the provisions of Section
250;
(M) An amount equal to those dividends included in
such total which were paid by a corporation which
conducts business operations in a River Edge
Redevelopment Zone or zones created under the River
Edge Redevelopment Zone Act and conducts substantially
all of its operations in a River Edge Redevelopment
Zone or zones. This subparagraph (M) is exempt from
the provisions of Section 250;
(N) An amount equal to any contribution made to a
job training project established pursuant to the Tax
Increment Allocation Redevelopment Act;
(O) An amount equal to those dividends included in
such total that were paid by a corporation that
conducts business operations in a federally designated

HB5306 - 73 - LRB103 37926 CES 68058 b
Foreign Trade Zone or Sub-Zone and that is designated
a High Impact Business located in Illinois; provided
that dividends eligible for the deduction provided in
subparagraph (M) of paragraph (2) of this subsection
shall not be eligible for the deduction provided under
this subparagraph (O);
(P) An amount equal to the amount of the deduction
used to compute the federal income tax credit for
restoration of substantial amounts held under claim of
right for the taxable year pursuant to Section 1341 of
the Internal Revenue Code;
(Q) For taxable year 1999 and thereafter, an
amount equal to the amount of any (i) distributions,
to the extent includible in gross income for federal
income tax purposes, made to the taxpayer because of
his or her status as a victim of persecution for racial
or religious reasons by Nazi Germany or any other Axis
regime or as an heir of the victim and (ii) items of
income, to the extent includible in gross income for
federal income tax purposes, attributable to, derived
from or in any way related to assets stolen from,
hidden from, or otherwise lost to a victim of
persecution for racial or religious reasons by Nazi
Germany or any other Axis regime immediately prior to,
during, and immediately after World War II, including,
but not limited to, interest on the proceeds

HB5306 - 74 - LRB103 37926 CES 68058 b
receivable as insurance under policies issued to a
victim of persecution for racial or religious reasons
by Nazi Germany or any other Axis regime by European
insurance companies immediately prior to and during
World War II; provided, however, this subtraction from
federal adjusted gross income does not apply to assets
acquired with such assets or with the proceeds from
the sale of such assets; provided, further, this
paragraph shall only apply to a taxpayer who was the
first recipient of such assets after their recovery
and who is a victim of persecution for racial or
religious reasons by Nazi Germany or any other Axis
regime or as an heir of the victim. The amount of and
the eligibility for any public assistance, benefit, or
similar entitlement is not affected by the inclusion
of items (i) and (ii) of this paragraph in gross income
for federal income tax purposes. This paragraph is
exempt from the provisions of Section 250;
(R) For taxable years 2001 and thereafter, for the
taxable year in which the bonus depreciation deduction
is taken on the taxpayer's federal income tax return
under subsection (k) of Section 168 of the Internal
Revenue Code and for each applicable taxable year
thereafter, an amount equal to "x", where:
(1) "y" equals the amount of the depreciation
deduction taken for the taxable year on the

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taxpayer's federal income tax return on property
for which the bonus depreciation deduction was
taken in any year under subsection (k) of Section
168 of the Internal Revenue Code, but not
including the bonus depreciation deduction;
(2) for taxable years ending on or before
December 31, 2005, "x" equals "y" multiplied by 30
and then divided by 70 (or "y" multiplied by
0.429); and
(3) for taxable years ending after December
31, 2005:
(i) for property on which a bonus
depreciation deduction of 30% of the adjusted
basis was taken, "x" equals "y" multiplied by
30 and then divided by 70 (or "y" multiplied
by 0.429);
(ii) for property on which a bonus
depreciation deduction of 50% of the adjusted
basis was taken, "x" equals "y" multiplied by
1.0;
(iii) for property on which a bonus
depreciation deduction of 100% of the adjusted
basis was taken in a taxable year ending on or
after December 31, 2021, "x" equals the
depreciation deduction that would be allowed
on that property if the taxpayer had made the

HB5306 - 76 - LRB103 37926 CES 68058 b
election under Section 168(k)(7) of the
Internal Revenue Code to not claim bonus
depreciation on that property; and
(iv) for property on which a bonus
depreciation deduction of a percentage other
than 30%, 50% or 100% of the adjusted basis
was taken in a taxable year ending on or after
December 31, 2021, "x" equals "y" multiplied
by 100 times the percentage bonus depreciation
on the property (that is, 100(bonus%)) and
then divided by 100 times 1 minus the
percentage bonus depreciation on the property
(that is, 100(1-bonus%)).
The aggregate amount deducted under this
subparagraph in all taxable years for any one piece of
property may not exceed the amount of the bonus
depreciation deduction taken on that property on the
taxpayer's federal income tax return under subsection
(k) of Section 168 of the Internal Revenue Code. This
subparagraph (R) is exempt from the provisions of
Section 250;
(S) If the taxpayer sells, transfers, abandons, or
otherwise disposes of property for which the taxpayer
was required in any taxable year to make an addition
modification under subparagraph (G-10), then an amount
equal to that addition modification.

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If the taxpayer continues to own property through
the last day of the last tax year for which a
subtraction is allowed with respect to that property
under subparagraph (R) and for which the taxpayer was
required in any taxable year to make an addition
modification under subparagraph (G-10), then an amount
equal to that addition modification.
The taxpayer is allowed to take the deduction
under this subparagraph only once with respect to any
one piece of property.
This subparagraph (S) is exempt from the
provisions of Section 250;
(T) The amount of (i) any interest income (net of
the deductions allocable thereto) taken into account
for the taxable year with respect to a transaction
with a taxpayer that is required to make an addition
modification with respect to such transaction under
Section 203(a)(2)(D-17), 203(b)(2)(E-12),
203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
the amount of such addition modification and (ii) any
income from intangible property (net of the deductions
allocable thereto) taken into account for the taxable
year with respect to a transaction with a taxpayer
that is required to make an addition modification with
respect to such transaction under Section
203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or

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203(d)(2)(D-8), but not to exceed the amount of such
addition modification. This subparagraph (T) is exempt
from the provisions of Section 250;
(U) An amount equal to the interest income taken
into account for the taxable year (net of the
deductions allocable thereto) with respect to
transactions with (i) a foreign person who would be a
member of the taxpayer's unitary business group but
for the fact the foreign person's business activity
outside the United States is 80% or more of that
person's total business activity and (ii) for taxable
years ending on or after December 31, 2008, to a person
who would be a member of the same unitary business
group but for the fact that the person is prohibited
under Section 1501(a)(27) from being included in the
unitary business group because he or she is ordinarily
required to apportion business income under different
subsections of Section 304, but not to exceed the
addition modification required to be made for the same
taxable year under Section 203(c)(2)(G-12) for
interest paid, accrued, or incurred, directly or
indirectly, to the same person. This subparagraph (U)
is exempt from the provisions of Section 250;
(V) An amount equal to the income from intangible
property taken into account for the taxable year (net
of the deductions allocable thereto) with respect to

HB5306 - 79 - LRB103 37926 CES 68058 b
transactions with (i) a foreign person who would be a
member of the taxpayer's unitary business group but
for the fact that the foreign person's business
activity outside the United States is 80% or more of
that person's total business activity and (ii) for
taxable years ending on or after December 31, 2008, to
a person who would be a member of the same unitary
business group but for the fact that the person is
prohibited under Section 1501(a)(27) from being
included in the unitary business group because he or
she is ordinarily required to apportion business
income under different subsections of Section 304, but
not to exceed the addition modification required to be
made for the same taxable year under Section
203(c)(2)(G-13) for intangible expenses and costs
paid, accrued, or incurred, directly or indirectly, to
the same foreign person. This subparagraph (V) is
exempt from the provisions of Section 250;
(W) in the case of an estate, an amount equal to
all amounts included in such total pursuant to the
provisions of Section 111 of the Internal Revenue Code
as a recovery of items previously deducted by the
decedent from adjusted gross income in the computation
of taxable income. This subparagraph (W) is exempt
from Section 250;
(X) an amount equal to the refund included in such

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total of any tax deducted for federal income tax
purposes, to the extent that deduction was added back
under subparagraph (F). This subparagraph (X) is
exempt from the provisions of Section 250;
(Y) For taxable years ending on or after December
31, 2011, in the case of a taxpayer who was required to
add back any insurance premiums under Section
203(c)(2)(G-14), such taxpayer may elect to subtract
that part of a reimbursement received from the
insurance company equal to the amount of the expense
or loss (including expenses incurred by the insurance
company) that would have been taken into account as a
deduction for federal income tax purposes if the
expense or loss had been uninsured. If a taxpayer
makes the election provided for by this subparagraph
(Y), the insurer to which the premiums were paid must
add back to income the amount subtracted by the
taxpayer pursuant to this subparagraph (Y). This
subparagraph (Y) is exempt from the provisions of
Section 250;
(Z) For taxable years beginning after December 31,
2018 and before January 1, 2026, the amount of excess
business loss of the taxpayer disallowed as a
deduction by Section 461(l)(1)(B) of the Internal
Revenue Code; and
(AA) For taxable years beginning on or after

HB5306 - 81 - LRB103 37926 CES 68058 b
January 1, 2023, for any cannabis establishment
operating in this State and licensed under the
Cannabis Regulation and Tax Act or any cannabis
cultivation center or medical cannabis dispensing
organization operating in this State and licensed
under the Compassionate Use of Medical Cannabis
Program Act, an amount equal to the deductions that
were disallowed under Section 280E of the Internal
Revenue Code for the taxable year and that would not be
added back under this subsection. The provisions of
this subparagraph (AA) are exempt from the provisions
of Section 250.
(BB) For taxable years beginning on or after
January 1, 2025, for any hemp business establishment
operating in this State and licensed under the
Industrial Hemp Act, an amount equal to 50% of the
income generated by the sale products made by minority
and other specific priority population owned
businesses. The provisions of this subparagraph (BB)
are exempt from the provisions of Section 250. For
purposes of this paragraph, the term "minority and
other specific priority population owned businesses"
may include, but shall not be limited to, businesses
51% or more owned by groups such as women, parents,
African-Americans, Puerto Ricans, Hispanics, Asian
Americans, veterans, the elderly, hemp justice or hemp

HB5306 - 82 - LRB103 37926 CES 68058 b
social equity participants as defined by the
Industrial Hemp Act, persons who are clients of
services provided by other State agencies, individuals
identifying as LGBTQ, persons with disabilities,
intravenous drug users, persons with AIDS or who are
HIV infected, and such other specific populations as
the Department may from time to time identify.
(3) Limitation. The amount of any modification
otherwise required under this subsection shall, under
regulations prescribed by the Department, be adjusted by
any amounts included therein which were properly paid,
credited, or required to be distributed, or permanently
set aside for charitable purposes pursuant to Internal
Revenue Code Section 642(c) during the taxable year.
(d) Partnerships.
(1) In general. In the case of a partnership, base
income means an amount equal to the taxpayer's taxable
income for the taxable year as modified by paragraph (2).
(2) Modifications. The taxable income referred to in
paragraph (1) shall be modified by adding thereto the sum
of the following amounts:
(A) An amount equal to all amounts paid or accrued
to the taxpayer as interest or dividends during the
taxable year to the extent excluded from gross income
in the computation of taxable income;

HB5306 - 83 - LRB103 37926 CES 68058 b
(B) An amount equal to the amount of tax imposed by
this Act to the extent deducted from gross income for
the taxable year;
(C) The amount of deductions allowed to the
partnership pursuant to Section 707 (c) of the
Internal Revenue Code in calculating its taxable
income;
(D) An amount equal to the amount of the capital
gain deduction allowable under the Internal Revenue
Code, to the extent deducted from gross income in the
computation of taxable income;
(D-5) For taxable years 2001 and thereafter, an
amount equal to the bonus depreciation deduction taken
on the taxpayer's federal income tax return for the
taxable year under subsection (k) of Section 168 of
the Internal Revenue Code;
(D-6) If the taxpayer sells, transfers, abandons,
or otherwise disposes of property for which the
taxpayer was required in any taxable year to make an
addition modification under subparagraph (D-5), then
an amount equal to the aggregate amount of the
deductions taken in all taxable years under
subparagraph (O) with respect to that property.
If the taxpayer continues to own property through
the last day of the last tax year for which a
subtraction is allowed with respect to that property

HB5306 - 84 - LRB103 37926 CES 68058 b
under subparagraph (O) and for which the taxpayer was
allowed in any taxable year to make a subtraction
modification under subparagraph (O), then an amount
equal to that subtraction modification.
The taxpayer is required to make the addition
modification under this subparagraph only once with
respect to any one piece of property;
(D-7) An amount equal to the amount otherwise
allowed as a deduction in computing base income for
interest paid, accrued, or incurred, directly or
indirectly, (i) for taxable years ending on or after
December 31, 2004, to a foreign person who would be a
member of the same unitary business group but for the
fact the foreign person's business activity outside
the United States is 80% or more of the foreign
person's total business activity and (ii) for taxable
years ending on or after December 31, 2008, to a person
who would be a member of the same unitary business
group but for the fact that the person is prohibited
under Section 1501(a)(27) from being included in the
unitary business group because he or she is ordinarily
required to apportion business income under different
subsections of Section 304. The addition modification
required by this subparagraph shall be reduced to the
extent that dividends were included in base income of
the unitary group for the same taxable year and

HB5306 - 85 - LRB103 37926 CES 68058 b
received by the taxpayer or by a member of the
taxpayer's unitary business group (including amounts
included in gross income pursuant to Sections 951
through 964 of the Internal Revenue Code and amounts
included in gross income under Section 78 of the
Internal Revenue Code) with respect to the stock of
the same person to whom the interest was paid,
accrued, or incurred.
This paragraph shall not apply to the following:
(i) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person who
is subject in a foreign country or state, other
than a state which requires mandatory unitary
reporting, to a tax on or measured by net income
with respect to such interest; or
(ii) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person if
the taxpayer can establish, based on a
preponderance of the evidence, both of the
following:
(a) the person, during the same taxable
year, paid, accrued, or incurred, the interest
to a person that is not a related member, and
(b) the transaction giving rise to the
interest expense between the taxpayer and the
person did not have as a principal purpose the

HB5306 - 86 - LRB103 37926 CES 68058 b
avoidance of Illinois income tax, and is paid
pursuant to a contract or agreement that
reflects an arm's-length interest rate and
terms; or
(iii) the taxpayer can establish, based on
clear and convincing evidence, that the interest
paid, accrued, or incurred relates to a contract
or agreement entered into at arm's-length rates
and terms and the principal purpose for the
payment is not federal or Illinois tax avoidance;
or
(iv) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person if
the taxpayer establishes by clear and convincing
evidence that the adjustments are unreasonable; or
if the taxpayer and the Director agree in writing
to the application or use of an alternative method
of apportionment under Section 304(f).
Nothing in this subsection shall preclude the
Director from making any other adjustment
otherwise allowed under Section 404 of this Act
for any tax year beginning after the effective
date of this amendment provided such adjustment is
made pursuant to regulation adopted by the
Department and such regulations provide methods
and standards by which the Department will utilize

HB5306 - 87 - LRB103 37926 CES 68058 b
its authority under Section 404 of this Act; and
(D-8) An amount equal to the amount of intangible
expenses and costs otherwise allowed as a deduction in
computing base income, and that were paid, accrued, or
incurred, directly or indirectly, (i) for taxable
years ending on or after December 31, 2004, to a
foreign person who would be a member of the same
unitary business group but for the fact that the
foreign person's business activity outside the United
States is 80% or more of that person's total business
activity and (ii) for taxable years ending on or after
December 31, 2008, to a person who would be a member of
the same unitary business group but for the fact that
the person is prohibited under Section 1501(a)(27)
from being included in the unitary business group
because he or she is ordinarily required to apportion
business income under different subsections of Section
304. The addition modification required by this
subparagraph shall be reduced to the extent that
dividends were included in base income of the unitary
group for the same taxable year and received by the
taxpayer or by a member of the taxpayer's unitary
business group (including amounts included in gross
income pursuant to Sections 951 through 964 of the
Internal Revenue Code and amounts included in gross
income under Section 78 of the Internal Revenue Code)

HB5306 - 88 - LRB103 37926 CES 68058 b
with respect to the stock of the same person to whom
the intangible expenses and costs were directly or
indirectly paid, incurred or accrued. The preceding
sentence shall not apply to the extent that the same
dividends caused a reduction to the addition
modification required under Section 203(d)(2)(D-7) of
this Act. As used in this subparagraph, the term
"intangible expenses and costs" includes (1) expenses,
losses, and costs for, or related to, the direct or
indirect acquisition, use, maintenance or management,
ownership, sale, exchange, or any other disposition of
intangible property; (2) losses incurred, directly or
indirectly, from factoring transactions or discounting
transactions; (3) royalty, patent, technical, and
copyright fees; (4) licensing fees; and (5) other
similar expenses and costs. For purposes of this
subparagraph, "intangible property" includes patents,
patent applications, trade names, trademarks, service
marks, copyrights, mask works, trade secrets, and
similar types of intangible assets;
This paragraph shall not apply to the following:
(i) any item of intangible expenses or costs
paid, accrued, or incurred, directly or
indirectly, from a transaction with a person who
is subject in a foreign country or state, other
than a state which requires mandatory unitary

HB5306 - 89 - LRB103 37926 CES 68058 b
reporting, to a tax on or measured by net income
with respect to such item; or
(ii) any item of intangible expense or cost
paid, accrued, or incurred, directly or
indirectly, if the taxpayer can establish, based
on a preponderance of the evidence, both of the
following:
(a) the person during the same taxable
year paid, accrued, or incurred, the
intangible expense or cost to a person that is
not a related member, and
(b) the transaction giving rise to the
intangible expense or cost between the
taxpayer and the person did not have as a
principal purpose the avoidance of Illinois
income tax, and is paid pursuant to a contract
or agreement that reflects arm's-length terms;
or
(iii) any item of intangible expense or cost
paid, accrued, or incurred, directly or
indirectly, from a transaction with a person if
the taxpayer establishes by clear and convincing
evidence, that the adjustments are unreasonable;
or if the taxpayer and the Director agree in
writing to the application or use of an
alternative method of apportionment under Section

HB5306 - 90 - LRB103 37926 CES 68058 b
304(f);
Nothing in this subsection shall preclude the
Director from making any other adjustment
otherwise allowed under Section 404 of this Act
for any tax year beginning after the effective
date of this amendment provided such adjustment is
made pursuant to regulation adopted by the
Department and such regulations provide methods
and standards by which the Department will utilize
its authority under Section 404 of this Act;
(D-9) For taxable years ending on or after
December 31, 2008, an amount equal to the amount of
insurance premium expenses and costs otherwise allowed
as a deduction in computing base income, and that were
paid, accrued, or incurred, directly or indirectly, to
a person who would be a member of the same unitary
business group but for the fact that the person is
prohibited under Section 1501(a)(27) from being
included in the unitary business group because he or
she is ordinarily required to apportion business
income under different subsections of Section 304. The
addition modification required by this subparagraph
shall be reduced to the extent that dividends were
included in base income of the unitary group for the
same taxable year and received by the taxpayer or by a
member of the taxpayer's unitary business group

HB5306 - 91 - LRB103 37926 CES 68058 b
(including amounts included in gross income under
Sections 951 through 964 of the Internal Revenue Code
and amounts included in gross income under Section 78
of the Internal Revenue Code) with respect to the
stock of the same person to whom the premiums and costs
were directly or indirectly paid, incurred, or
accrued. The preceding sentence does not apply to the
extent that the same dividends caused a reduction to
the addition modification required under Section
203(d)(2)(D-7) or Section 203(d)(2)(D-8) of this Act;
(D-10) An amount equal to the credit allowable to
the taxpayer under Section 218(a) of this Act,
determined without regard to Section 218(c) of this
Act;
(D-11) For taxable years ending on or after
December 31, 2017, an amount equal to the deduction
allowed under Section 199 of the Internal Revenue Code
for the taxable year;
and by deducting from the total so obtained the following
amounts:
(E) The valuation limitation amount;
(F) An amount equal to the amount of any tax
imposed by this Act which was refunded to the taxpayer
and included in such total for the taxable year;
(G) An amount equal to all amounts included in
taxable income as modified by subparagraphs (A), (B),

HB5306 - 92 - LRB103 37926 CES 68058 b
(C) and (D) which are exempt from taxation by this
State either by reason of its statutes or Constitution
or by reason of the Constitution, treaties or statutes
of the United States; provided that, in the case of any
statute of this State that exempts income derived from
bonds or other obligations from the tax imposed under
this Act, the amount exempted shall be the interest
net of bond premium amortization;
(H) Any income of the partnership which
constitutes personal service income as defined in
Section 1348(b)(1) of the Internal Revenue Code (as in
effect December 31, 1981) or a reasonable allowance
for compensation paid or accrued for services rendered
by partners to the partnership, whichever is greater;
this subparagraph (H) is exempt from the provisions of
Section 250;
(I) An amount equal to all amounts of income
distributable to an entity subject to the Personal
Property Tax Replacement Income Tax imposed by
subsections (c) and (d) of Section 201 of this Act
including amounts distributable to organizations
exempt from federal income tax by reason of Section
501(a) of the Internal Revenue Code; this subparagraph
(I) is exempt from the provisions of Section 250;
(J) With the exception of any amounts subtracted
under subparagraph (G), an amount equal to the sum of

HB5306 - 93 - LRB103 37926 CES 68058 b
all amounts disallowed as deductions by (i) Sections
171(a)(2) and 265(a)(2) of the Internal Revenue Code,
and all amounts of expenses allocable to interest and
disallowed as deductions by Section 265(a)(1) of the
Internal Revenue Code; and (ii) for taxable years
ending on or after August 13, 1999, Sections
171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the
Internal Revenue Code, plus, (iii) for taxable years
ending on or after December 31, 2011, Section
45G(e)(3) of the Internal Revenue Code and, for
taxable years ending on or after December 31, 2008,
any amount included in gross income under Section 87
of the Internal Revenue Code; the provisions of this
subparagraph are exempt from the provisions of Section
250;
(K) An amount equal to those dividends included in
such total which were paid by a corporation which
conducts business operations in a River Edge
Redevelopment Zone or zones created under the River
Edge Redevelopment Zone Act and conducts substantially
all of its operations from a River Edge Redevelopment
Zone or zones. This subparagraph (K) is exempt from
the provisions of Section 250;
(L) An amount equal to any contribution made to a
job training project established pursuant to the Real
Property Tax Increment Allocation Redevelopment Act;

HB5306 - 94 - LRB103 37926 CES 68058 b
(M) An amount equal to those dividends included in
such total that were paid by a corporation that
conducts business operations in a federally designated
Foreign Trade Zone or Sub-Zone and that is designated
a High Impact Business located in Illinois; provided
that dividends eligible for the deduction provided in
subparagraph (K) of paragraph (2) of this subsection
shall not be eligible for the deduction provided under
this subparagraph (M);
(N) An amount equal to the amount of the deduction
used to compute the federal income tax credit for
restoration of substantial amounts held under claim of
right for the taxable year pursuant to Section 1341 of
the Internal Revenue Code;
(O) For taxable years 2001 and thereafter, for the
taxable year in which the bonus depreciation deduction
is taken on the taxpayer's federal income tax return
under subsection (k) of Section 168 of the Internal
Revenue Code and for each applicable taxable year
thereafter, an amount equal to "x", where:
(1) "y" equals the amount of the depreciation
deduction taken for the taxable year on the
taxpayer's federal income tax return on property
for which the bonus depreciation deduction was
taken in any year under subsection (k) of Section
168 of the Internal Revenue Code, but not

HB5306 - 95 - LRB103 37926 CES 68058 b
including the bonus depreciation deduction;
(2) for taxable years ending on or before
December 31, 2005, "x" equals "y" multiplied by 30
and then divided by 70 (or "y" multiplied by
0.429); and
(3) for taxable years ending after December
31, 2005:
(i) for property on which a bonus
depreciation deduction of 30% of the adjusted
basis was taken, "x" equals "y" multiplied by
30 and then divided by 70 (or "y" multiplied
by 0.429);
(ii) for property on which a bonus
depreciation deduction of 50% of the adjusted
basis was taken, "x" equals "y" multiplied by
1.0;
(iii) for property on which a bonus
depreciation deduction of 100% of the adjusted
basis was taken in a taxable year ending on or
after December 31, 2021, "x" equals the
depreciation deduction that would be allowed
on that property if the taxpayer had made the
election under Section 168(k)(7) of the
Internal Revenue Code to not claim bonus
depreciation on that property; and
(iv) for property on which a bonus

HB5306 - 96 - LRB103 37926 CES 68058 b
depreciation deduction of a percentage other
than 30%, 50% or 100% of the adjusted basis
was taken in a taxable year ending on or after
December 31, 2021, "x" equals "y" multiplied
by 100 times the percentage bonus depreciation
on the property (that is, 100(bonus%)) and
then divided by 100 times 1 minus the
percentage bonus depreciation on the property
(that is, 100(1-bonus%)).
The aggregate amount deducted under this
subparagraph in all taxable years for any one piece of
property may not exceed the amount of the bonus
depreciation deduction taken on that property on the
taxpayer's federal income tax return under subsection
(k) of Section 168 of the Internal Revenue Code. This
subparagraph (O) is exempt from the provisions of
Section 250;
(P) If the taxpayer sells, transfers, abandons, or
otherwise disposes of property for which the taxpayer
was required in any taxable year to make an addition
modification under subparagraph (D-5), then an amount
equal to that addition modification.
If the taxpayer continues to own property through
the last day of the last tax year for which a
subtraction is allowed with respect to that property
under subparagraph (O) and for which the taxpayer was

HB5306 - 97 - LRB103 37926 CES 68058 b
required in any taxable year to make an addition
modification under subparagraph (D-5), then an amount
equal to that addition modification.
The taxpayer is allowed to take the deduction
under this subparagraph only once with respect to any
one piece of property.
This subparagraph (P) is exempt from the
provisions of Section 250;
(Q) The amount of (i) any interest income (net of
the deductions allocable thereto) taken into account
for the taxable year with respect to a transaction
with a taxpayer that is required to make an addition
modification with respect to such transaction under
Section 203(a)(2)(D-17), 203(b)(2)(E-12),
203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
the amount of such addition modification and (ii) any
income from intangible property (net of the deductions
allocable thereto) taken into account for the taxable
year with respect to a transaction with a taxpayer
that is required to make an addition modification with
respect to such transaction under Section
203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
203(d)(2)(D-8), but not to exceed the amount of such
addition modification. This subparagraph (Q) is exempt
from Section 250;
(R) An amount equal to the interest income taken

HB5306 - 98 - LRB103 37926 CES 68058 b
into account for the taxable year (net of the
deductions allocable thereto) with respect to
transactions with (i) a foreign person who would be a
member of the taxpayer's unitary business group but
for the fact that the foreign person's business
activity outside the United States is 80% or more of
that person's total business activity and (ii) for
taxable years ending on or after December 31, 2008, to
a person who would be a member of the same unitary
business group but for the fact that the person is
prohibited under Section 1501(a)(27) from being
included in the unitary business group because he or
she is ordinarily required to apportion business
income under different subsections of Section 304, but
not to exceed the addition modification required to be
made for the same taxable year under Section
203(d)(2)(D-7) for interest paid, accrued, or
incurred, directly or indirectly, to the same person.
This subparagraph (R) is exempt from Section 250;
(S) An amount equal to the income from intangible
property taken into account for the taxable year (net
of the deductions allocable thereto) with respect to
transactions with (i) a foreign person who would be a
member of the taxpayer's unitary business group but
for the fact that the foreign person's business
activity outside the United States is 80% or more of

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that person's total business activity and (ii) for
taxable years ending on or after December 31, 2008, to
a person who would be a member of the same unitary
business group but for the fact that the person is
prohibited under Section 1501(a)(27) from being
included in the unitary business group because he or
she is ordinarily required to apportion business
income under different subsections of Section 304, but
not to exceed the addition modification required to be
made for the same taxable year under Section
203(d)(2)(D-8) for intangible expenses and costs paid,
accrued, or incurred, directly or indirectly, to the
same person. This subparagraph (S) is exempt from
Section 250;
(T) For taxable years ending on or after December
31, 2011, in the case of a taxpayer who was required to
add back any insurance premiums under Section
203(d)(2)(D-9), such taxpayer may elect to subtract
that part of a reimbursement received from the
insurance company equal to the amount of the expense
or loss (including expenses incurred by the insurance
company) that would have been taken into account as a
deduction for federal income tax purposes if the
expense or loss had been uninsured. If a taxpayer
makes the election provided for by this subparagraph
(T), the insurer to which the premiums were paid must

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add back to income the amount subtracted by the
taxpayer pursuant to this subparagraph (T). This
subparagraph (T) is exempt from the provisions of
Section 250; and
(U) For taxable years beginning on or after
January 1, 2023, for any cannabis establishment
operating in this State and licensed under the
Cannabis Regulation and Tax Act or any cannabis
cultivation center or medical cannabis dispensing
organization operating in this State and licensed
under the Compassionate Use of Medical Cannabis
Program Act, an amount equal to the deductions that
were disallowed under Section 280E of the Internal
Revenue Code for the taxable year and that would not be
added back under this subsection. The provisions of
this subparagraph (U) are exempt from the provisions
of Section 250.
(V) For taxable years beginning on or after
January 1, 2025, for any hemp business establishment
operating in this State and licensed under the
Industrial Hemp Act, an amount equal to 20% of the
income generated by the sale products made by minority
and other specific priority population owned
businesses. The provisions of this subparagraph are
exempt from the provisions of Section 250. For
purposes of this paragraph, the term "minority and

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other specific priority population owned businesses"
may include, but shall not be limited to, businesses
51% or more owned by groups such as women, parents,
African-Americans, Puerto Ricans, Hispanics, Asian
Americans, veterans, the elderly, hemp justice or hemp
social equity participants as defined by the
Industrial Hemp Act, persons who are clients of
services provided by other State agencies, individuals
identifying as LGBTQ, persons with disabilities,
intravenous drug users, persons with AIDS or who are
HIV infected, and such other specific populations as
the Department may from time to time identify.
(e) Gross income; adjusted gross income; taxable income.
(1) In general. Subject to the provisions of paragraph
(2) and subsection (b)(3), for purposes of this Section
and Section 803(e), a taxpayer's gross income, adjusted
gross income, or taxable income for the taxable year shall
mean the amount of gross income, adjusted gross income or
taxable income properly reportable for federal income tax
purposes for the taxable year under the provisions of the
Internal Revenue Code. Taxable income may be less than
zero. However, for taxable years ending on or after
December 31, 1986, net operating loss carryforwards from
taxable years ending prior to December 31, 1986, may not
exceed the sum of federal taxable income for the taxable

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year before net operating loss deduction, plus the excess
of addition modifications over subtraction modifications
for the taxable year. For taxable years ending prior to
December 31, 1986, taxable income may never be an amount
in excess of the net operating loss for the taxable year as
defined in subsections (c) and (d) of Section 172 of the
Internal Revenue Code, provided that when taxable income
of a corporation (other than a Subchapter S corporation),
trust, or estate is less than zero and addition
modifications, other than those provided by subparagraph
(E) of paragraph (2) of subsection (b) for corporations or
subparagraph (E) of paragraph (2) of subsection (c) for
trusts and estates, exceed subtraction modifications, an
addition modification must be made under those
subparagraphs for any other taxable year to which the
taxable income less than zero (net operating loss) is
applied under Section 172 of the Internal Revenue Code or
under subparagraph (E) of paragraph (2) of this subsection
(e) applied in conjunction with Section 172 of the
Internal Revenue Code.
(2) Special rule. For purposes of paragraph (1) of
this subsection, the taxable income properly reportable
for federal income tax purposes shall mean:
(A) Certain life insurance companies. In the case
of a life insurance company subject to the tax imposed
by Section 801 of the Internal Revenue Code, life

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insurance company taxable income, plus the amount of
distribution from pre-1984 policyholder surplus
accounts as calculated under Section 815a of the
Internal Revenue Code;
(B) Certain other insurance companies. In the case
of mutual insurance companies subject to the tax
imposed by Section 831 of the Internal Revenue Code,
insurance company taxable income;
(C) Regulated investment companies. In the case of
a regulated investment company subject to the tax
imposed by Section 852 of the Internal Revenue Code,
investment company taxable income;
(D) Real estate investment trusts. In the case of
a real estate investment trust subject to the tax
imposed by Section 857 of the Internal Revenue Code,
real estate investment trust taxable income;
(E) Consolidated corporations. In the case of a
corporation which is a member of an affiliated group
of corporations filing a consolidated income tax
return for the taxable year for federal income tax
purposes, taxable income determined as if such
corporation had filed a separate return for federal
income tax purposes for the taxable year and each
preceding taxable year for which it was a member of an
affiliated group. For purposes of this subparagraph,
the taxpayer's separate taxable income shall be

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determined as if the election provided by Section
243(b)(2) of the Internal Revenue Code had been in
effect for all such years;
(F) Cooperatives. In the case of a cooperative
corporation or association, the taxable income of such
organization determined in accordance with the
provisions of Section 1381 through 1388 of the
Internal Revenue Code, but without regard to the
prohibition against offsetting losses from patronage
activities against income from nonpatronage
activities; except that a cooperative corporation or
association may make an election to follow its federal
income tax treatment of patronage losses and
nonpatronage losses. In the event such election is
made, such losses shall be computed and carried over
in a manner consistent with subsection (a) of Section
207 of this Act and apportioned by the apportionment
factor reported by the cooperative on its Illinois
income tax return filed for the taxable year in which
the losses are incurred. The election shall be
effective for all taxable years with original returns
due on or after the date of the election. In addition,
the cooperative may file an amended return or returns,
as allowed under this Act, to provide that the
election shall be effective for losses incurred or
carried forward for taxable years occurring prior to

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the date of the election. Once made, the election may
only be revoked upon approval of the Director. The
Department shall adopt rules setting forth
requirements for documenting the elections and any
resulting Illinois net loss and the standards to be
used by the Director in evaluating requests to revoke
elections. Public Act 96-932 is declaratory of
existing law;
(G) Subchapter S corporations. In the case of: (i)
a Subchapter S corporation for which there is in
effect an election for the taxable year under Section
1362 of the Internal Revenue Code, the taxable income
of such corporation determined in accordance with
Section 1363(b) of the Internal Revenue Code, except
that taxable income shall take into account those
items which are required by Section 1363(b)(1) of the
Internal Revenue Code to be separately stated; and
(ii) a Subchapter S corporation for which there is in
effect a federal election to opt out of the provisions
of the Subchapter S Revision Act of 1982 and have
applied instead the prior federal Subchapter S rules
as in effect on July 1, 1982, the taxable income of
such corporation determined in accordance with the
federal Subchapter S rules as in effect on July 1,
1982; and
(H) Partnerships. In the case of a partnership,

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taxable income determined in accordance with Section
703 of the Internal Revenue Code, except that taxable
income shall take into account those items which are
required by Section 703(a)(1) to be separately stated
but which would be taken into account by an individual
in calculating his taxable income.
(3) Recapture of business expenses on disposition of
asset or business. Notwithstanding any other law to the
contrary, if in prior years income from an asset or
business has been classified as business income and in a
later year is demonstrated to be non-business income, then
all expenses, without limitation, deducted in such later
year and in the 2 immediately preceding taxable years
related to that asset or business that generated the
non-business income shall be added back and recaptured as
business income in the year of the disposition of the
asset or business. Such amount shall be apportioned to
Illinois using the greater of the apportionment fraction
computed for the business under Section 304 of this Act
for the taxable year or the average of the apportionment
fractions computed for the business under Section 304 of
this Act for the taxable year and for the 2 immediately
preceding taxable years.
(f) Valuation limitation amount.
(1) In general. The valuation limitation amount

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referred to in subsections (a)(2)(G), (c)(2)(I) and
(d)(2)(E) is an amount equal to:
(A) The sum of the pre-August 1, 1969 appreciation
amounts (to the extent consisting of gain reportable
under the provisions of Section 1245 or 1250 of the
Internal Revenue Code) for all property in respect of
which such gain was reported for the taxable year;
plus
(B) The lesser of (i) the sum of the pre-August 1,
1969 appreciation amounts (to the extent consisting of
capital gain) for all property in respect of which
such gain was reported for federal income tax purposes
for the taxable year, or (ii) the net capital gain for
the taxable year, reduced in either case by any amount
of such gain included in the amount determined under
subsection (a)(2)(F) or (c)(2)(H).
(2) Pre-August 1, 1969 appreciation amount.
(A) If the fair market value of property referred
to in paragraph (1) was readily ascertainable on
August 1, 1969, the pre-August 1, 1969 appreciation
amount for such property is the lesser of (i) the
excess of such fair market value over the taxpayer's
basis (for determining gain) for such property on that
date (determined under the Internal Revenue Code as in
effect on that date), or (ii) the total gain realized
and reportable for federal income tax purposes in

HB5306 - 108 - LRB103 37926 CES 68058 b
respect of the sale, exchange or other disposition of
such property.
(B) If the fair market value of property referred
to in paragraph (1) was not readily ascertainable on
August 1, 1969, the pre-August 1, 1969 appreciation
amount for such property is that amount which bears
the same ratio to the total gain reported in respect of
the property for federal income tax purposes for the
taxable year, as the number of full calendar months in
that part of the taxpayer's holding period for the
property ending July 31, 1969 bears to the number of
full calendar months in the taxpayer's entire holding
period for the property.
(C) The Department shall prescribe such
regulations as may be necessary to carry out the
purposes of this paragraph.
(g) Double deductions. Unless specifically provided
otherwise, nothing in this Section shall permit the same item
to be deducted more than once.
(h) Legislative intention. Except as expressly provided by
this Section there shall be no modifications or limitations on
the amounts of income, gain, loss or deduction taken into
account in determining gross income, adjusted gross income or
taxable income for federal income tax purposes for the taxable

HB5306 - 109 - LRB103 37926 CES 68058 b
year, or in the amount of such items entering into the
computation of base income and net income under this Act for
such taxable year, whether in respect of property values as of
August 1, 1969 or otherwise.
(Source: P.A. 102-16, eff. 6-17-21; 102-558, eff. 8-20-21;
102-658, eff. 8-27-21; 102-813, eff. 5-13-22; 102-1112, eff.
12-21-22; 103-8, eff. 6-7-23; 103-478, eff. 1-1-24; revised
9-26-23.)
Section 10. The Liquor Control Act of 1934 is amended by
adding Section 6-29.2 as follows:
(235 ILCS 5/6-29.2 new)
Sec. 6-29.2. Hemp products.
(a) Hemp extract, hemp cannabinoid products, and any other
ingredient or product derived from hemp made in compliance
with State law or the originating jurisdiction shall be
considered fit for human consumption and shall not be
considered injurious to health or deleterious for human
consumption.
(b) License holders under this Act may buy, import,
manufacture, produce, possess, hold, distribute, transport,
transfer, sell, serve, sample, dispense, deliver, merchandise,
and advertise, hemp cannabinoid products and any other act in
compliance with this Section.
(c) Nothing in this Act:

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(1) prohibits the issuance of a license or permit to a
person also holding a hemp business establishment license
authorizing the manufacture, distribution, or retail sale
of cannabinoid products as described in the Industrial
Hemp Act;
(2) allows any agreement between a licensing authority
and license or permit holder that prohibits the license or
permit holder from also holding a hemp manufacturer,
distributor, or retailer license; or
(3) allows the revocation or suspension of a license
or permit, or the imposition of a penalty on a license or
permit holder, due to the license or permit holder also
holding a hemp business license.
(d) For purposes of this Section, "hemp business license"
means a hemp distributor, hemp cultivator, hemp processor,
hemp retailer, or hemp food establishment license issued under
the Industrial Hemp Act.
(e) For purposes of this Section, "hemp cannabinoid
product" means a finished product for sale to hemp-cannabinoid
users or medical patients within the State that contains
cannabinoids derived from industrial hemp and is intended for
human consumption, and meets the packaging, labeling, and
testing requirements of the Industrial Hemp Act.
(f) For purposes of this Section, "hemp extract" means a
substance or compound intended for ingestion or inhalations
that is derived from or contains hemp and that does not contain

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other controlled substances.
Section 15. The Industrial Hemp Act is amended by changing
Sections 5, 10, 15, 17, 18, 19, 20, and 25 and by adding
Sections 3, 7, 8, 8-5, 11, 16, 18.5, 18.10, 21, 22, 22.5,
22.10, 22.15, 23, 23.10, 23.15, 23.20, 23.25, 23.30, 23.35,
24, 26, 27, 28, 30, 35, 40, 45, 50, 55, 60, 65, 80, and 100 as
follows:
(505 ILCS 89/3 new)
Sec. 3. Findings.
(a) In the interest of allowing law enforcement to focus
on violent and property crimes, generating revenue for
education, substance abuse prevention and treatment, freeing
public resources to invest in communities and other public
purposes, and individual freedom, the General Assembly finds
and declares that the use of hemp-derived cannabinoids should
be legal for persons 21 years of age or older and should be
taxed and regulated in a manner similar to beer, wine,
spirits, and cannabis.
(b) In the interest of the health and public safety of the
residents of the State, the General Assembly further finds and
declares that hemp-derived cannabinoids should be regulated in
a manner similar to beer, wine, spirits, and cannabis so that:
(1) Persons will have to show proof of age before
purchasing hemp-derived cannabinoids.

HB5306 - 112 - LRB103 37926 CES 68058 b
(2) Selling, distributing or transferring hemp-derived
cannabinoids to minors and other persons under 21 years of
age shall be illegal, except for limited circumstances
where the transfer is made by a parent or guardian to their
children, or the transfer is to a medical patient under
the Compassionate Use of Medical Cannabis Program Act.
(3) Driving under the influence of hemp-derived
cannabinoids, operating a watercraft under the influence
of hemp-derived cannabinoids and operating a snowmobile
under the influence of hemp-derived cannabinoids shall be
illegal.
(4) Legitimate, taxpaying businesspeople, and not
criminal actors, will conduct the sales of hemp-derived
cannabinoids.
(5) Hemp-derived cannabinoids sold in the State will
be tested, labeled and subject to additional regulation to
ensure that purchasers are informed and protected.
(6) Purchasers will be informed of known health risks
associated with the use of hemp-derived cannabinoids, as
concluded by evidence-based, peer reviewed research.
(c) It is necessary to ensure consistency and fairness in
the application of this Act throughout the State and that,
therefore, the matters by this Act are, except as specified in
this Act, matters of statewide concern.
(d) This Act shall not diminish the State's duties and
commitment to purchasers and businesses that operate under the

HB5306 - 113 - LRB103 37926 CES 68058 b
Cannabis Regulation and Tax Act, nor alter the protections
granted to them.
(e) This Act shall not diminish the State's duties and
commitment to seriously ill patients registered under the
Compassionate Use of Medical Cannabis Program Act, nor alter
the protections granted to them.
(f) Supporting and encouraging labor neutrality in the
hemp-derived cannabinoid industry and employee workplace
safety is desirable, and employer workplace policies shall be
interpreted broadly to protect employee safety.
(505 ILCS 89/5)
Sec. 5. Definitions. In this Act:
"Batch" means a specific quantity of a specific
cannabinoid product that is manufactured at the same time and
using the same methods, equipment, and ingredients, that is
uniform and intended to meet specifications for identity,
strength, purity, and composition, and that is manufactured,
packaged, and labeled according to a single batch production
record executed and documented during the same cycle of
manufacture and produced by a continuous process.
"Batch cycle" means a specific quantity of a specific
cannabinoid product that is manufactured using the same
methods, equipment, and ingredients, that is uniform and
intended to meet specifications for identity, strength,
purity, and composition, and that is manufactured, packaged,

HB5306 - 114 - LRB103 37926 CES 68058 b
and labeled according to a batch cycle production record
executed and documented during the same cycle of manufacture.
"Broad spectrum" means a hemp concentrate, or hemp
cannabinoid product containing multiple hemp-derived
cannabinoids, terpenes, and other naturally occurring
compounds, processed with the intentional removal of delta-9
Tetrahydrocannabinol.
"Cannabinoid menu item" means a restaurant-type food that
incorporates ready-to-eat cannabinoids included on a menu or
menu board or offered as a self-service food or food on
display.
"Cannabinoid retail tax" means a tax of 5% that is
assessed on the final retail sale on qualified products.
"Cottage hemp-cannabinoid products" means a type of
hemp-cannabinoid product available for human consumption
(including time and temperature controlled foods as defined in
Section 1-201.10 of the Food Code that utilize intermediate
hemp products as an input and is produced by a cottage hemp
food operator. Cottage hemp-cannabinoid products can only be
sold directly to hemp cannabinoid users or medical patients
within the State and must contain delta-9 THC levels below
0.3% by weight.
"Cottage hemp food operator" means an individual who
produces food or drink, other than foods and drinks listed as
prohibited by Section 4 of the Food Handling Regulation
Enforcement Act, that incorporate intermediate hemp products

HB5306 - 115 - LRB103 37926 CES 68058 b
in a kitchen located in that person's primary domestic
residence or another appropriately designed and equipped
kitchen on a farm for direct sale by the individual, a family
member or employee. Cottage food operators must disclose that
prepared ready-to-eat hemp cannabinoid products are "cottage"
and adhere to the labeling & disclosure requirements as
outlined in the act. Cottage hemp food operators are limited
to using the equivalent of 1,000g of delta-9 THC contained in
intermediate hemp products on an annual basis and must
register with a hemp distributor, who is responsible for
collecting and remitting hemp-cannabinoid taxes on behalf of
the cottage hemp food operator. Cottage hemp food products
cannot be sold to other hemp business establishments.
"Department" means the Department of Agriculture (IDOA),
the Department of Public Health (IDPH), or the Illinois
Department of Financial and Professional Regulation (IDFPR)
from which the concerned hemp cannabinoid business
establishment secured its registration.
"Director" means the Director of Agriculture with
jurisdiction over the licensee or registrant as specified in
this Act.
"Disproportionately impacted area" means a census tract or
comparable geographic area as determined by the Department of
Commerce and Economic Opportunity, that meets at least one of
the following criteria:
(1) 20% or more of the households in the area have

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incomes at or below 185% of the poverty guidelines updated
periodically in the federal register by the federal
Department of Health and Human Services under the
authority of Section 9902 of the Community Services Block
Grant Program;
(2) 75% or more of the children in the area
participate in the national school lunch program according
to reported statistics from the State Board of Education;
(3) at least 20% of the households in the area receive
assistance under the Supplemental Nutrition Assistance
Program; or
(4) the area has an average unemployment rate, as
determined by the Department of Employment Security, that
is more than 120% of the national employment average, as
determined by the federal Department of Labor, for a
period of at least 2 consecutive calendar years preceding
the date of the application and has high rates or arrest,
conviction, and incarceration related to the sale,
possession, use, cultivation, manufacture, or transport of
cannabis as defined under the Cannabis Regulation and Tax
Act.
"Expiration date" or "use by date" means the month and
year as determined by the manufacturer, packer, or
distributor on the basis of tests or other information
showing that the product, until that date, under the
conditions of handling, storage, preparation, and use per

HB5306 - 117 - LRB103 37926 CES 68058 b
label directions will, when consumed, contain not less
than the quantity of each ingredient as set forth on its
label.
"Full-panel test" means a test that includes potency
testing and tests for contaminants, such as pesticides,
heavy metals, yeast, mold, and residual solvents.
"Full spectrum" means a hemp concentrate or hemp
cannabinoid product containing multiple hemp-derived
cannabinoids, terpenes, and other naturally occurring
compounds, processed without intentional complete removal
of any compound and without the addition of isolated
cannabinoids.
"Hemp" or "industrial hemp" means the plant Cannabis
sativa L. and any part of that plant, whether growing or not,
with a delta-9 tetrahydrocannabinol concentration of not more
than 0.3 percent on a dry weight basis that has been cultivated
under a license issued under this Act or is otherwise lawfully
present in this State and includes any intermediate or
finished product made or derived from industrial hemp.
"Hemp business establishment" or "industrial hemp business
establishment" means a hemp cultivator, hemp processor, hemp
distributor, hemp retailer, hemp food establishment or cottage
hemp food operator.
"Hemp-cannabinoid" means the chemical constituents of
industrial hemp plants that are naturally occurring and
derived from hemp plants with less than 0.3% delta-9 THC as

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tested on a dry weight basis.
"Hemp-cannabinoid product" means a finished product for
sale to hemp-cannabinoid users or medical patients within the
State that contains cannabinoids derived from industrial hemp,
is intended for human consumption, and meets the packaging,
labeling, and testing requirements of this Act.
"Hemp-cannabinoid user" means a member of the general
public who buys or uses goods and who is protected by laws
against unfair or fraudulent practices in the marketplace.
"Hemp concentrate" means the extracts and resins of a hemp
plant or hemp plant parts, including the extracts or resins of
a hemp plant or hemp plant parts that are refined to increase
or decrease the presence of targeted cannabinoids.
"Hemp cultivator" means a State farm or facility operated
by an organization or business that is licensed by the
Department of Agriculture to grow industrial hemp. Hemp
cultivator facilities can be located outdoors, in greenhouses
or indoors and can be located on residentially zoned
properties in accordance with permitted agricultural use
guidelines from local zoning ordinances.
"Hemp distributor" means a facility operated by an
organization or business that is licensed by the Department of
Financial and Professional Regulation to distribute or sell
live hemp products and hemp-cannabinoid products to other hemp
business establishments.
"Hemp extract" means a substance or compound intended for

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ingestion or inhalations that is derived from or contains hemp
and that does not contain other controlled substances.
"Hemp food establishment" means a facility regulated by
the Department of Public Health (IDPH) that incorporates
intermediate hemp products in the manufacturing, processing or
preparation of pre-packaged or ready-to-eat hemp cannabinoid
products intended for human ingestion and which meets the
requirements of this Act. Hemp food establishments that obtain
a hemp retailer license, are licensed as retail food
establishments and who adhere to the additional requirements
of this act can sell ready-to-eat hemp cannabinoid products to
hemp cannabinoid users or medical patients.
"Hemp justice participant" means an individual who is an
State resident and has been convicted of a non-violent felony
relating to a controlled substance under State or federal law
related to cannabis within the last 10 years before the
enactment of this statute that is prohibited by either Section
297C of the 2018 Farm Bill to participate in an industrial hemp
program or by Section 297D(a) of the 2018 Farm Bill to produce
hemp under any regulations or guidelines.
"Hemp microgreens" means immature hemp seedlings grown for
human consumption that are harvested above the soil or
substrate line, prior to flowering, and not more than 14 days
after germination and no more than five inches in height
"Hemp processor" means a facility operated by an
organization or business that is licensed by the Department of

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Agriculture to convert raw industrial hemp material into
processed hemp products or intermediate hemp products.
Processing includes the extraction, synthesis or concentration
of constituent chemicals and compounds from raw hemp or
intermediate hemp products.
"Hemp production plan" means a plan submitted by the
Department to the Secretary of the United States Department of
Agriculture pursuant to the federal Agriculture Improvement
Act of 2018, Public Law 115-334, and consistent with the
Domestic Hemp Production Program pursuant to 7 CFR Part 990
wherein the Department establishes its desire to have primary
regulatory authority over the production of hemp.
"Hemp retailer" means a retailer operated by an
organization or business that is licensed by the Department of
Financial and Professional Regulation to sell live hemp
products, or hemp-cannabinoid products to hemp cannabinoid
users or medical patients. Hemp retailers are responsible for
collecting and remitting hemp-cannabinoid taxes.
"Hemp social equity participant" means an individual who
is a State resident or business entity in the State that meets
one or a combination of any the following criteria: (1) an
applicant with at least 51% ownership and control by one or
more individuals who have resided for at least 5 of the
preceding 10 years in a disproportionately impacted area, (2)
an applicant with at least 51% ownership and control by one or
more individuals who: (i) have been arrested for, convicted

HB5306 - 121 - LRB103 37926 CES 68058 b
of, or adjudicated delinquent for any offense that is eligible
for expungement under the Cannabis Regulation and Tax Act; or
(ii) is a member of an impacted family.
"Human consumption" means inhalation or ingestion and does
not include topical application.
"IDFPR" means the Department of Financial & Professional
Regulation that regulates hemp retailers to ensure the
protection of public consumers.
"IDPH" means the Department of Public Health that
regulates hemp food establishments in order to set food safety
standards and monitor food products.
"Illinois hemp" means industrial hemp grown, processed or
produced by hemp business establishments licensed and located
within the State under this Act. The "Illinois hemp"
designation can be applied to live hemp products, raw hemp
products, intermediate hemp products and hemp-cannabinoid
products. In order to maintain the "Illinois hemp"
designation, hemp-cannabinoid and intermediate hemp products
must be produced in the State and cannot incorporate any form
of imported hemp. In the event that federal rules disallow
certain provisions of these rules (e.g., hemp program justice
participants or individuals with non-violent state or federal
controlled substance felony convictions within the last 10
years who are prohibited from participating in industrial hemp
programs or possessing ownership or controlling management
stake in an hemp business establishment), "Illinois hemp"

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business establishments will have the option to legally
produce, process and distribute "Illinois hemp" within the
State provided that they do not export "Illinois hemp".
"Imported hemp" means industrial hemp that incorporates
raw hemp or intermediate hemp products not produced in
Illinois.
"Ingestion" means the process of consuming cannabinoid
products through the mouth, whether by swallowing into the
gastrointestinal system or through tissue absorption.
"Inhalation" means the process of consuming cannabinoid
products through the mouth or nasal passages into the
respiratory system.
"Intermediate hemp products" means products that are made
from processed hemp that can only be sold to hemp business
establishments to be used as ingredients for other
intermediate hemp products or final hemp-cannabinoid products
for human consumption (ingestion or inhalation). The 0.3%
delta-9 THC limit does not apply for intermediate hemp
products.
"Isolate-based" means a hemp concentrate or hemp
cannabinoid product containing isolated hemp-derived
cannabinoids as the only cannabinoid source.
"Labor peace agreement" means an agreement between a hemp
business establishment and any labor organization recognized
under the federal Labor Relations Act, referred to in this Act
as a bona fide labor organization, that prohibits labor

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organizations and members from engaging in picketing, work
stoppages, boycotts, and any other economic interference with
the hemp business establishment. This agreement means that the
hemp business establishment has agreed not to disrupt efforts
by the bona fide labor organization to communicate with, and
attempt to organize and represent, the hemp business
establishment's employees. The agreement shall provide a bona
fide labor organization access at reasonable times to areas in
which the hemp business establishment's employees work, for
the purpose of meeting with employees to discuss their right
to representation, employment rights under State law, and
terms and conditions of employment. This type of agreement
shall not mandate a particular method of election or
certification of the bona fide labor organization.
"IDOA" means the Illinois Department of Agriculture.
"Land area" means a farm as defined in Section 1-60 of the
Property Tax Code, land otherwise properly zoned for hemp
cultivation in this State or land or facilities under the
control of an institution of higher education.
"Live hemp products" means living plants, plant cuttings,
viable seeds or tissue culture that can be used to propagate
new industrial hemp plants. A representative sample of the
live hemp material must test under 0.3 percent delta-9 THC by
weight using high performance liquid chromatography (HPLC) or
comparable technologies capable of identifying delta-9 THC
separately from other cannabinoids. Live hemp material can

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only be sold or transferred to other hemp cultivators or
medical patients.
"Manufacturing" means preparing or packaging products
consisting of or containing hemp extract intended for human
consumption.
"Medical patient" means an individual that has been issued
a medical card under the Compassionate Use of Medical Cannabis
Program Act. Medical patients are allowed to purchase live
hemp products and to grow at their residence under the
Cannabis Regulation and Tax Act. Medical patients under the
age of 21 are authorized to purchase Hemp-cannabinoid
products.
"Menu" or "menu board" means the primary writing of the
establishment from which a customer makes an order selection,
including, but not limited to, breakfast, lunch and dinner
menus, dessert menus, beverage menus, other specialty menus,
electronic menus, and menus on the Internet.
"Ornamental hemp" means mature or immature hemp plants
that are not grown for human consumption and will not be
harvested for any purposes except disposal.
"Person" means any individual, partnership, firm,
corporation, company, society, association, the State or any
department, agency, or subdivision thereof, or any other
entity.
"Potency test" means a test on hemp-derived products that
measures the number and amount of cannabinoids, such as THC,

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in a sample.
"Process" means the conversion of raw industrial hemp
plant material into a form that is presently legal to import
from outside the United States under federal law.
"Processor" or "extractor" means the establishment that
removes the hemp extract oil from the hemp plant or refines or
isomerizes the hemp extract oil into other cannabinoids.
"Processed hemp products" means products that are derived
from industrial hemp that are made for purposes other than
human consumption. They include hemp fibers, hemp hurd,
hempcrete, hemp fuels, hemp topicals and lotions, as well as
other products, like clothing, plastics, paper or textiles
that use or may incorporate elements of industrial hemp.
"Raw hemp products" means products that are derived from
industrial hemp that are not processed or refined with any
solvents or chemical reactions. Raw hemp includes hulled hemp
seed, hemp seed protein powder, hemp seed oil, hemp stalks,
hemp leaves, and artwork incorporating hemp by-products. Raw
hemp products can be sold by any legal business entity within
the State, can be purchased by any member of the general public
and are not subject to hemp-cannabinoid product taxes.
"Ready-to-eat hemp-cannabinoid products" means a type of
hemp-cannabinoid product available for human consumption
(including time and temperature controlled foods as defined in
Section 1-201.10 of the federal Food Code) that use
intermediate hemp products as an input as is produced as a

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single serving in a retail food establishment. Ready-to-eat
hemp products must be registered per the guidelines of this
Act and can only be sold directly to hemp cannabinoid users or
medical patients within the State.
"Retail sale" or "at retail" means any sale of cannabinoid
products that would be subject to the Retailer's Occupation
Tax Act.
"Serving" or "serving size" means the amount of product
intended to be consumed in a single serving as declared on the
label expressed in a common household measure. A serving size
may be indicated by marking or scoring on packaging or
labeling.
"THC" means delta-9 tetrahydrocannabinol. The definition
of THC does not include CBD, CBG, CBN, delta-7 THC, delta-8
THC, delta-10 THC, THCa, THCv, THCva, and other yet to be
discovered cannabinoids.
(Source: P.A. 102-690, eff. 12-17-21.)
(505 ILCS 89/7 new)
Sec. 7. Lawful user and lawful product.
(a) For the purposes of this Act and to clarify the
legislative findings on the lawful use of hemp-derived
cannabinoids, a person shall not be considered an unlawful
user or addicted to narcotics solely as a result of their
possession or use of hemp-derived cannabinoids in accordance
with this Act.

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(b) Hemp extract used as a food ingredient or for any food
products that are possessed, distributed, or sold in
compliance with this Act shall not be considered adulterated
or misbranded food products and shall be considered food.
(c) The Department shall permit the sale or transfer of
stripped stalks, fiber, dried roots, nonviable seeds, seed
oils, floral material, and plant extracts and other marketable
hemp products in compliance with this Act to members of the
general public, both within and outside the State in
compliance with this Act.
(d) Lawful products may be transported by consumers.
Lawful products may not be used as the basis to pull over or
inspect a vehicle.
(e) Unless otherwise stated in this Act, the effective
date is January 1, 2025. Notwithstanding the foregoing,
persons shall be able to legally possess, cultivate,
transport, distribute, process, sell, and buy food products
(including beverages) which contain a delta-9 THC
concentration of not more than 0.3 percent by weight upon
passage of this Act.
(505 ILCS 89/8 new)
Sec. 8. Unlawful user; persons under 21 years of age.
(a) Nothing in this Act is intended to permit the transfer
of hemp cannabinoid product, with or without remuneration, to
a person under 21 years of age, or to allow a person under 21

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years of age to purchase, possess, use, process, transport, or
consume hemp-cannabinoid products unless the person is:
(1) Over the age of 18 and in possession of a valid
medical card;
(2) or over the age of 18 and in possession of a valid
military ID; or
(3) Under the supervision of a parent or legal
guardian.
(b) Notwithstanding section 8-0(a)a-b, nothing in this Act
authorizes a person who is under 21 years of age to possess
hemp-cannabinoid products. A person under 21 years of age with
hemp cannabinoid products in his or her possession is guilty
of a civil law violation as outlined in Section 4 of the
Cannabis Control Act.
Notwithstanding the foregoing, an individual over the age
of 18 and in possession of a valid medical card, or over the
age of 18 and in possession of a valid military ID, or a parent
or guardian may purchase, possess, process, or transport
hemp-cannabinoid products.
(c) If the person under the age of 21 was driving a motor
vehicle at the time of the offense, the Secretary of State may
suspend or revoke the driving privileges of any person for a
violation of this Section under Section 6-206 of the Vehicle
Code.
(505 ILCS 89/8-5 new)

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Sec. 8-5. Unlawful user; limitations and penalties.
(a) This Act does not permit any person to engage in, and
does not prevent the imposition of any civil, criminal, or
other penalties for engaging in, any of the following conduct:
(1) Undertaking any task under the influence of hemp
cannabinoid products when doing so would constitute
negligence, professional malpractice, or professional
misconduct.
(2) Possessing hemp cannabinoid products in the
following places:
(A) on a school bus, unless permitted for a
qualifying patient or caregiver pursuant to the
Compassionate Use of Medical Cannabis Program Act;
(B) on the grounds of any preschool or primary or
secondary school, unless permitted for a qualifying
patient or caregiver pursuant to the Compassionate Use
of Medical Cannabis Program Act;
(C) any correctional facility; or
(D) a private residence that is used at any time to
provide licensed childcare or other similar social
service care on the premises;
(3) Using hemp cannabinoid products:
(A) on a school bus, unless permitted for a
qualifying patient or caregiver pursuant to the
Compassionate Use of Medical Cannabis Program Act;
(B) on the grounds of any preschool or primary or

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secondary school, unless permitted for a qualifying
patient or caregiver pursuant to the Compassionate Use
of Medical Cannabis Program Act;
(C) any correctional facility;
(D) any motor vehicle; or
(E) a private residence that is used at any time to
provide licensed childcare or other similar social
service care on the premises.
(4) Smoking hemp in any place where smoking is
prohibited under the Smoke Free Illinois Act;
(5) Operating, navigating, or being in actual physical
control of any motor vehicle, aircraft, watercraft, or
snowmobile while using or under the influence of hemp
cannabinoid products in violation of Sections 11-501 or
11-502.1 of the Vehicle Code, Section 5-16 of the Boat
Registration and Safety Act, or Section 5-7 of the
Snowmobile Registration and Safety Act;
(6) Facilitating the use of hemp cannabinoid products
by any person who is not allowed to use cannabis under this
Act or the Compassionate Use of Medical Cannabis Program
Act.
(7) Transferring hemp cannabinoid products to any
person contrary to this Act or the Compassionate Use of
Medical Cannabis Program Act.
(8) The use of hemp by a law enforcement officer,
corrections officer, probation officer, or firefighter

HB5306 - 131 - LRB103 37926 CES 68058 b
while on duty. Nothing in this Act prevents a public
employer of law enforcement officers, corrections
officers, probation officers, paramedics, or firefighters
from prohibiting or taking disciplinary action for the
consumption, possession, sales, purchase, or delivery of
hemp or hemp-infused substances while on duty, unless
provided for in the employer's policies. However, an
employer may not take adverse employment action against an
employee based solely on the lawful possession or
consumption of hemp or hemp-infused substances by members
of the employee's household. To the extent that this
Section conflicts with any applicable collective
bargaining agreement, the provisions of the collective
bargaining agreement shall prevail. Further, nothing in
this Act shall be construed to limit in any way the right
to collectively bargain over the subject matters contained
in this Act.
(9) The use of hemp cannabinoid products by a person
who has a school bus permit or a commercial driver's
license while on duty. As used in this Section, "public
place" means any place where a person could reasonably be
expected to be observed by others. "Public place" includes
all parts of buildings owned in whole or in part, or
leased, by the State or a unit of local government.
"Public place" includes all areas in a park, recreation
area, wildlife area, or playground owned in whole or in

HB5306 - 132 - LRB103 37926 CES 68058 b
part, leased, or managed by the State or a unit of local
government. "Public place" does not include a private
residence unless the private residence is used to provide
licensed childcare, foster care, or other similar social
service care on the premises.
(b) Nothing in this Act shall be construed to prevent
the arrest or prosecution of a person for reckless driving
or driving under the influence of hemp cannabinoid
products, operating a watercraft under the influence of
hemp cannabinoid products, or operating a snowmobile under
the influence of hemp cannabinoid products if probable
cause exists.
(c) Nothing in this Act shall prevent a private
business from restricting or prohibiting the use of hemp
cannabinoid products on its property, including areas
where motor vehicles are parked.
(d) Nothing in this Act shall be construed to allow an
individual or business entity to violate the provisions of
federal law, including colleges or universities that must
abide by the Drug-Free Schools and Communities Act
Amendments of 1989, that require campuses to be drug free.
(505 ILCS 89/10)
Sec. 10. Licenses and registration.
(a) (Blank) No person shall cultivate industrial hemp in
this State without a license issued by the Department.

HB5306 - 133 - LRB103 37926 CES 68058 b
(b) (Blank) The application for a license shall include:
(1) the name and address of the applicant;
(2) the legal description of the land area, including
Global Positioning System coordinates, to be used to
cultivate industrial hemp; and
(3) if federal law requires a research purpose for the
cultivation of industrial hemp, a description of one or
more research purposes planned for the cultivation of
industrial hemp which may include the study of the growth,
cultivation, or marketing of industrial hemp; however, the
research purpose requirement shall not be construed to
limit the commercial sale of industrial hemp.
(b-5) (Blank) A person shall not process industrial hemp
in this State without registering with the Department on a
form prescribed by the Department.
(c) (Blank) The Department may determine, by rule, the
duration of a license or registration; application,
registration, and license fees; and the requirements for
license or registration renewal.
(d) Each applicant for an industrial hemp business
establishment license shall submit a signed, complete,
accurate and legible application form provided by the
appropriate Department. The IDOA shall regulate hemp
cultivation and hemp processing licenses. The IDFPR shall
regulate hemp distributors and hemp retailers. The IDPH shall
regulate hemp food establishments. The applicant shall provide

HB5306 - 134 - LRB103 37926 CES 68058 b
the following for the appropriate license being sought:
(1) For all applicants, the name, address, phone
number, and email address of the person or entity applying
for the license.
(2) For all applicants, the type of business or
organization (corporation, LLC, or partnership, etc.) as
well as the entity's EIN.
(3) For all applicants, business name and address, if
different than the ones submitted in response to paragraph
(1) of subsection (d). This shall include the full name of
the business, address of the principal business location,
and the full name and title of the key participants.
(4) For hemp cultivator applicants, the legal
description of the land area, including global positioning
system coordinates of each contiguous land area, to be
used to cultivate industrial hemp.
(5) Optionally, for hemp cultivator applicants, a map
of the land area on which the applicant plans to grow
industrial hemp, showing the boundaries and dimensions of
the growing area in acres or square feet or a
self-reporting of the hemp acreage of the cultivation to
the nearest whole acre.
(6) For all applicants, the applicable fee prescribed
by this Act.
(7) For hemp cultivator applicants, the varieties of
industrial hemp that are intended for cultivation.

HB5306 - 135 - LRB103 37926 CES 68058 b
(8) For hemp cultivator applicants, an acknowledgment
and consent to the Department collecting, maintaining, and
providing to USDA directly and through the USDA's online
platform, any required data, including but not limited to;
status, contact, disposal reporting, background checks if
required by the USDA, and real-time information for each
hemp licensee licensed or authorized in the State.
(9) For hemp cultivator applicants, if federal law
requires a research purpose for the cultivation of
industrial hemp and the applicant, a description of one or
more research purposes planned for the cultivation of
industrial hemp which may include the study of the growth,
cultivation, or marketing of industrial hemp; however, the
research purpose requirement shall not be construed to
limit the commercial sale of industrial hemp.
(10) The nature of the processing by the registrant,
should the applicant wish to process industrial hemp.
(11) The Department may encourage hemp business
establishment applicants to enter into a labor peace
agreement with a bona fide labor organization.
(e) Within 30 calendar days after receipt of a completed
application and the associated fee, the Department will either
issue a license or deny the application. Incomplete
applications or applications that do not meet the requirements
for licensure or registration will be denied. A rejected and
an additional application fee will be collected for corrected

HB5306 - 136 - LRB103 37926 CES 68058 b
or new applications.
(f) License or registration shall be good for a maximum of
1 calendar year from the date of issuance.
(g) An applicant or licensee shall submit the following
nonrefundable fees with each license application submitted, in
the form of a certified check or money order payable to the
licensing agency, or by such other means as approved by the
Department. The registration, application, and renewal fee for
any hemp business establishment shall be no more than $500 for
each annual license. Notwithstanding the foregoing, a hemp
cultivator entity shall pay a flat annual fee of $100 for a
license and license renewal.
(h) Qualifying academic research institutions shall pay a
flat annual fee of $100 for license and license renewal.
(i) Qualifying government research and demonstration
entities shall pay a flat annual fee of $100 for a license and
license renewal. The Department is exempt from this fee when
registering as a qualifying government research and
demonstration entity.
(j) For social equity applicants, the Department shall
waive 50% of any nonrefundable permit application fees, any
nonrefundable fees associated with operating a hemp business
establishment, and financial requirements for social equity
applicant who is applying for its first hemp business
establishment permit.
(k) If the Department determines that an applicant who

HB5306 - 137 - LRB103 37926 CES 68058 b
applied as a social equity applicant is not eligible for such
status, the applicant shall be provided an additional 10 days
to provide alternative evidence that he or she qualifies as a
social equity applicant. Alternatively, the applicant may pay
the remainder of the waived fee and be considered as a
non-social equity applicant. If the applicant cannot do
either, then the Departments may keep the initial permit fee.
(l) The Department shall issue an unlimited number of
licenses for each type of hemp business establishment.
(m) The Department shall not limit the number of licenses
an individual may hold.
(n) Any entity, including businesses licensed under the
Cannabis Regulation and Tax Act and the Compassionate Use of
Medical Cannabis Program Act, may hold any or all hemp
business establishment license, except for a cottage food
operation license.
(o) A hemp business establishment license can be obtained
by an out-of-state entity, provided that the applicant on the
application agrees to submit to tax nexus within the State and
agrees to comply with the provisions under this Act for
jurisdictional, regulatory and enforcement purposes.
(p) A hemp business establishment's license shall only
operate at the location listed on their license.
A Hemp Business Establishment who wishes to change
locations must submit a new application for the new location.
(q) As a condition of its license, hemp business

HB5306 - 138 - LRB103 37926 CES 68058 b
establishments shall:
(1) operate in compliance with this Act;
(2) operate in accordance with the representations
made in its application and license materials;
(3) ensure that any building used by the Hemp Business
Establishment is free from infestation by insects, rodents
or pests; and
(4) ensure that any building or equipment used by the
hemp business establishment for the storage or sale of
live hemp, hemp-cannabinoid products, industrial hemp,
hemp-cannabinoid products and ready-to-eat
hemp-cannabinoid products are maintained in a clean and
sanitary condition appropriate for the products being held
and sold.
(r) No person except those holding the appropriate hemp
business establishment license and subject to the regulations
established by the Department shall cultivate, grow, process,
sell or infuse hemp, hemp-cannabinoid products for commercial
purposes.
(s) The Department may refuse to issue a license to any of
the following:
(1) anyone who fails to disclose or states falsely any
information called for in the application;
(2) any principal officer, board member or persons
having a financial or voting interest of 5% or greater on
the license who is delinquent in (i) filing any required

HB5306 - 139 - LRB103 37926 CES 68058 b
tax returns or (ii) paying any amounts owed to the State of
Illinois; or
(3) anyone whose business address is zoned
residential.
(Source: P.A. 102-690, eff. 12-17-21.)
(505 ILCS 89/11 new)
Sec. 11. Recordkeeping and reports.
(a) It is the duty of the hemp business establishment to
keep at its licensed address or place of business, to be
located within the State or digitally, complete and accurate
records of all sales or other dispositions of live hemp
products, intermediate hemp products and hemp-cannabinoid
products sold, whether for itself or for another.
(b) The hemp business establishment must keep an actual
record of all sales and must report tax at the applicable
rates, based on sales as reflected in the retailer's records.
Books and records must be maintained in sufficient detail so
that all receipts reported with respect to hemp products can
be supported.
(c) At least 30 calendar days prior to harvest, to the best
of the licensee's ability, each cultivator licensee shall file
a harvest report on a form provided by the Department, that
includes the expected harvest dates for industrial hemp
cultivated by the licensee. Should the harvest dates change in
excess of 5 calendar days, the licensee shall notify the

HB5306 - 140 - LRB103 37926 CES 68058 b
Department of the new expected harvest date.
(d) No later than February 1 of each year, each cultivator
licensee shall submit an industrial hemp cultivator final
report to the Department that includes:
(1) total acres or square feet of industrial hemp
planted in the previous calendar year;
(2) a description of each variety planted and
harvested in the previous calendar year;
(3) total acres or square feet harvested in the
previous calendar year; and
(4) total yield in the appropriate measurement, such
as tonnage, seeds per acre, or other measurement approved
by the Department.
(e) The Department will provide the information in this
Section to the USDA within 30 calendar days of its receipt.
(f) Cultivator licensees shall report hemp planting
acreage to the Farm Service Agency (FSA). This report shall be
submitted to the FSA within 30 calendar days after the
completion of planting of an outdoor crop site, or within 30
calendar days after the first planting of hemp in the calendar
year in an indoor cultivation site. At a minimum, the
following information shall be reported:
(1) street address for each crop site;
(2) geospatial location for each crop site;
(3) acreage of each crop site; and
(4) licensee identifying information.

HB5306 - 141 - LRB103 37926 CES 68058 b
(g) Each hemp business establishment is required to retain
records sufficient to support deductions on the ground that
deliveries of live hemp products, intermediate hemp products
and hemp-cannabinoid products were made outside of the State,
records shall include satisfactory evidence of delivery to and
receipt by out-of-state consignees.
(h) Where a hemp business establishment sells live hemp
products, intermediate hemp products, or hemp-cannabinoid
products to another hemp business establishment that is not
cottage hemp food operator, the seller shall render to the
buyer an invoice describing the hemp product sold (including
the tax rate category applicable to the product sold), the
date of sale, and the quantity sold. Duplicate copies of all
such invoices must be made and preserved by such distributor
for audit purposes.
(i) Where a distributor sells intermediate hemp products
to a cottage hemp food operator, each original and duplicate
invoice pertaining to such sale must be printed, stamped, or
bear in writing, the following language: "Payment of Illinois
hemp tax made by vendor issuing this invoice".
(j) Hemp business establishment records may be maintained
electronically or physically for 3 years and be available for
inspection by the Department upon request, unless the
Department, in writing, authorizes their destruction or
disposal at an earlier date.
(k) If a hemp distributor closes due to insolvency,

HB5306 - 142 - LRB103 37926 CES 68058 b
revocation, bankruptcy or for any other reasons, all records
must be preserved at the expense of the hemp distributing
organization for at least 3 years in a form and location in the
State acceptable to the Department, whose approval shall not
be unreasonably withheld. The hemp distributing organization
shall keep the records longer if requested by the Department
for good cause. Upon request by the Department, the hemp
distributing organization shall notify the Department of the
location where the hemp retailing records are stored or
transferred.
(l) Hemp food establishment records must be maintained
electronically for 3 years and be available for inspection by
the Department upon request. Required records include the
following:
(1) operating procedures and recipes;
(2) inventory records, policies and procedures;
(3) batch creation logs of intermediate hemp products;
and
(4) dosing records of ready-to-eat products.
(505 ILCS 89/15)
Sec. 15. Rules.
(a) The Department shall submit to the Secretary of the
United States Department of Agriculture a hemp production plan
under which the Department monitors and regulates the
production of industrial hemp in this State. The Department

HB5306 - 143 - LRB103 37926 CES 68058 b
shall adopt rules incorporating the hemp production plan,
including application and licensing requirements.
(b) (Blank) The rules set by the Department shall include
one yearly inspection of a licensed industrial hemp
cultivation operation and allow for additional unannounced
inspections of a licensed industrial hemp cultivation
operation at the Department's discretion.
(c) (Blank) The Department shall adopt rules necessary for
the administration and enforcement of this Act in accordance
with all applicable State and federal laws and regulations,
including rules concerning standards and criteria for
licensure and registration, for the payment of applicable
fees, signage, and for forms required for the administration
of this Act.
(d) (Blank) The Department shall adopt rules for the
testing of the industrial hemp THC levels and the disposal of
plant matter exceeding lawful THC levels, including an option
for a cultivator to retest for a minor violation, with the
retest threshold determined by the Department and set in rule.
Those rules may provide for the use of seed certified to meet
the THC levels mandated by this Act as an alternative to
testing.
(e) The application form shall be determined by the
Department and set by rule within 180 days of the effective
date of this Act.
(f) The Department shall adopt rules necessary for the

HB5306 - 144 - LRB103 37926 CES 68058 b
administration and enforcement of this Act, including rules
concerning the payment of applicable fees and forms required
for the administration of applying for licenses issued under
this Act. The fee for any hemp business license or renewal
shall not exceed $500.
(g) The Department shall adopt rules concerning the review
of SOPs for hemp food establishments.
(h) The rules set by the appropriate regulatory Department
may include one yearly inspection of a licensed hemp business
establishment and allow for additional unannounced inspections
of a licensed hemp business establishment upon good cause.
(i) The Department shall not limit the quantity of any
hemp licenses. The hemp business establishment license
application process shall be open indefinitely and the
Department must approve or deny all license applications
within 30 calendar days.
(j) The Department shall expressly permit individuals who
are disallowed from holding an Illinois hemp license by
Section 297B(e)(3)(B)(i) of the Agricultural Marketing Act of
1946 to hold a hemp business license, work for a hemp business
establishment, and produce Illinois hemp.
(k) Any rules adopted by a Department shall not be more
restrictive than this Act.
(Source: P.A. 102-690, eff. 12-17-21.)
(505 ILCS 89/16 new)

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Sec. 16. Other violations; criminal penalties.
(a) Subject to the provisions of this Act, the Department
may:
(1) Examine, inspect, and investigate the premises,
operations, and records of hemp business establishment
applicants and licensees.
(2) Conduct investigations of possible violations of
this Act pertaining to hemp business establishment
applicants and licensees.
(3) Conduct hearings on proceedings to refuse to issue
or renew licenses or to revoke, suspend, place on
probation, reprimand or otherwise discipline a license
holder under this Act or take other non-disciplinary
action for good cause specified in writing.
(b) It is the duty of the Department to administer and
enforce the provisions of this Act relating to licensing and
oversight of hemp business establishments unless otherwise
provided in this Act. Notwithstanding the provisions of this
Act, a person who does any of the following regarding a product
regulated under this Act is guilty of a misdemeanor and may be
required to pay of a fine of not more than $3,000:
(1) knowingly alters or otherwise falsifies testing
results;
(2) intentionally alters or falsifies any information
required to be included on the label of any hemp
cannabinoid product; or

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(3) intentionally makes a false material statement to
the Department of Public Health, Department of
Agriculture, or the Department of Financial and
Professional Regulation.
(c) Notwithstanding the provisions of this Act, a hemp
business establishment that does any of the following on the
premises of a registered retailer or another business that
sells retail goods to customers is guilty of a misdemeanor and
may be required to pay a fine of not more than $3,000:
(1) sells a hemp cannabinoid product knowing that the
product does not comply with the limits on the amount or
types of cannabinoids that a product may contain;
(2) intentionally sells a hemp cannabinoid product
knowing that the product does not comply with the
applicable testing, packaging, or labeling requirements;
or
(3) sells a hemp cannabinoid product to a person under
the age of 21, except that it is an affirmative defense to
a charge under this clause if the defendant proves by a
preponderance of the evidence that the defendant
reasonably and in good faith relied on proof of age as
described in the next section below.
(d) No hemp business establishment shall intentionally
hold itself out to be a "dispensary", "marijuana dispensary",
"dispensing organization", or any kind of cannabis business
establishment unless such entity holds a valid cannabis

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business establishment license. A person who intentionally
falsely holds itself out to be a cannabis business
establishment is guilty of a misdemeanor and may be required
to pay of a fine of not less than $10,000.
(505 ILCS 89/17)
Sec. 17. Administrative hearings; judicial review.
(a) Administrative hearings involving licensees under this
Act shall be conducted under the Department's rules governing
formal administrative proceedings.
(b) Notwithstanding any other provisions of the Act, the
following administrative fines may be imposed by the
Department upon any person who violates any provision of this
Act:
(1) a penalty of $2,500 for a first violation;
(2) a penalty of $5,000 for a second violation at the
same location within 2 years of the first violation; and
(3) a penalty of $10,000 for a third or subsequent
violation at the same location within 2 years of the
second violation.
(c) Monies collected by the Department under this Section
shall be deposited into the Industrial Hemp Regulatory Fund.
Any penalty of $5,000 or greater that is not paid within 120
days of issuance of notice from the Department shall be
submitted to the Department of Revenue for collection as
provided under the State Collection Act of 1986.

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(d) All final administrative decisions of the Department
are subject to judicial review under the Administrative Review
Law. The term "administrative decision" has the meaning
ascribed to that term in Section 3-101 of the Code of Civil
Procedure.
(e) Notwithstanding the provisions of this Act, the
Department may, after notice and a reasonable period to cure,
and the conduct of an administrative hearing, revoke, cancel,
or suspend the license of any hemp cannabinoid business
establishment that violates any of the provisions of this Act
more than 3 times in a calendar year.
(Source: P.A. 100-1091, eff. 8-26-18.)
(505 ILCS 89/18)
Sec. 18. Industrial Hemp Regulatory Fund.
(a) There is created in the State treasury a special fund
to be known as the Industrial Hemp Regulatory Fund. All taxes
paid and all fees and fines collected by the Department under
this Act shall be deposited into the Industrial Hemp
Regulatory Fund. Moneys in the Fund shall be utilized by the
Department for the purposes of implementation, administration,
and enforcement of this Act.
(b) The General Assembly finds that in order to address
the disparities in diversely owned businesses, aggressive
approaches and targeted technical assistance resources to
support social equity entrepreneurs are required. To carry

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this intent, the Hemp Social Equity Fund is created to
directly address the impact of economic disinvestment,
violence and the historical overuse of criminal justice
response to community and individual needs by providing
resources, funding and technical assistance for hemp social
equity applicants to setup, build and create ownership in hemp
business establishments.
(c) 15% of all monies in the Fund shall be used by the
Department of Agriculture for the purposes of implementation,
administration, and enforcement of this Act. 15% of all monies
in the Fund shall be used by the Department of Public Health
for the purposes of implementation, administration, and
enforcement of this Act. 15% of all monies in the Fund shall be
used by the Department of Financial and Professional
Regulation for the purposes of implementation, administration,
and enforcement of this Act. 55% of all monies deposited into
the Industrial Hemp Regulatory Fund shall be immediately
deposited into the Hemp Social Equity Fund and be used by the
IDOA exclusively for the following purposes:
(1) To provide no-interest rate loans to qualified
social equity applicants to pay for ordinary and necessary
expenses to start and operate a hemp business
establishment permitted by this Act;
(2) To provide grants to qualified social equity
applicants to pay for ordinary and necessary expenses to
start and operate a hemp business establishment permitted

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by this Act.
(3) To compensate the Department of Commerce and
Economic Opportunity for any costs related to the
provision of low-interest loans and grants to qualified
social equity applicants;
(4) To pay for education, outreach, and technical
assistance that may be provided or targeted to attract and
support social equity applicants.
(5) To support urban and rural farming, medicinal and
food security, and hemp-related criminal justice reform.
(d) Notwithstanding any other law to the contrary, the
Hemp Social Equity Fund is not subject to sweeps,
administrative chargebacks, or any other fiscal or budgetary
maneuver that would in any way transfer any amounts from the
Hemp Social Equity Fund into any other fund of the State.
(Source: P.A. 100-1091, eff. 8-26-18.)
(505 ILCS 89/18.5 new)
Sec. 18.5. Availability studies.
(a) The Director shall commission and publish one or more
disparity and availability studies that:
(1) evaluate the risks and benefits of cannabinoids;
(2) evaluate the availability of hemp and cannabis
products to minors;
(3) evaluate economic development attributable to hemp
and hemp derived cannabinoids across the State, especially

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in communities who have been most impacted by the war on
drugs;
(4) evaluate whether there exists discrimination in
the State's hemp industry, and if so, evaluates the impact
of such discrimination on the State and includes
recommendations to the Department of Agriculture for
reducing or eliminating any identified barriers to entry
in the hemp market. Such disparity and availability
studies shall examine each license type issued pursuant to
Section 10 of this Act and shall be initiated within 180
days from the issuance of the first of each license
authorized by those Sections. The report must include the
Task Force's legislative recommendations regarding further
cannabinoid research, the use and availability of
cannabinoid products and cannabis products among minors,
and the impact of cannabinoid products on minority and
women-owned business creation. Additionally, the report
must contain an analysis of the effectiveness of each
recommendation. This analysis will assess the potential
impact and outcomes of the proposed legislative measures.
Finally, the Task Force will make rule recommendations as
part of the report. The results of each disparity and
availability study shall be reported to the General
Assembly and the Governor no later than 12 months after
the commission of each study.
(b) The Director shall forward a copy of its findings and

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recommendations to the Department of Financial and
Professional Regulation, the Department of Agriculture, the
Department of Commerce and Economic Opportunity, the General
Assembly, and the Governor.
(c) The Department of Agriculture may compile, collect, or
otherwise gather data necessary for the administration of this
Act and to carry out the Director's duty relating to the
recommendation of policy changes. The Department of
Agriculture may direct the Department of Financial and
Professional Regulation, Department of Public Health,
Department of Human Services, and Department of Commerce and
Economic Opportunity to assist in the compilation, collection,
and data gathering authorized pursuant to this subsection. The
Director shall compile all of the data into a single report and
submit the report to the Governor and the General Assembly and
publish the report on its website.
(d) The Director may use a third party to complete the
responsibilities of this Section. If the Director elects to
use a third party to complete any element of this Section,
preference shall be given to entities with experience in
increasing diversity in the hemp or cannabis industry and
making policy recommendations to the General Assembly.
(505 ILCS 89/18.10 new)
Sec. 18.10. Loans and grants to social equity hemp
applicants.

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(a) The Department of Commerce and Economic Opportunity
shall establish grant and loan programs, subject to
appropriations from the Hemp Social Equity Fund, for the
purpose of providing financial assistance, loans, grants and
technical assistance to social equity applicants.
(b) The Department of Commerce and Economic Opportunity
has the power to:
(1) Provide hemp social equity loans and grants from
appropriations from the Hemp Social Equity Fund to assist
qualified social equity applicants in gaining entry to,
and successfully operating in, the State's regulated
hemp-derived cannabinoid marketplace.
(2) Enter into agreements that set forth terms and
conditions of the financial assistance, accept funds, or
grants and engage in cooperation with private entities and
agencies of State or local government to carry out the
purposes of this Section.
(3) Fix, determine, charge and collect any premiums,
fees, charges, costs and expenses, including application
fees, commitment fees, program fees, financing charges, or
publication fees in connection with its activities under
this Section.
(4) Coordinate assistance under these loan programs
with activities of the Department of Financial and
Professional Regulation, the Department of Agriculture and
other agencies as needed to maximize the effectiveness and

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efficiency of this Act.
(5) Provide staff, administrative and related support
required to administer this Section.
(6) Take whatever actions are necessary or appropriate
to protect the State's interest in the event of
bankruptcy, default, foreclosure, or noncompliance with
the terms and conditions of financial assistance provided
under this Section, including the ability to recapture
funds if the recipient is found to be noncompliant with
the terms and conditions of the financial assistance
agreement.
(7) Establish application, notification, contract, and
other forms, procedures or rules deemed necessary and
appropriate.
(8) Use vendors or contract work to carry out the
purposes of this Act.
(c) Loans made under this Section shall:
(1) only be made if the project furthers the goals set
forth in this Act; and
(2) be in such principal amount and form and contain
such terms and provisions with respect to security,
insurance, reporting, delinquency charges, default
remedies, and other matters as the Department shall
determine appropriate to protect the public interest and
to be consistent with the purposes of this Section. The
terms and provisions may be less than required for similar

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loans not covered by this Section.
(d) Grants made under this Section shall be awarded on a
competitive and annual basis under the Grant Accountability
and Transparency Act. Grants made under this Section shall
further and promote the goals of this Act, including promotion
of social equity applicants, job training and workforce
development, and technical assistance to social equity
applicants.
(e) Beginning January 1, 2025 and each year thereafter,
the Department shall annually report to the Governor and the
General Assembly on the outcomes and effectiveness of this
Section that shall include the following:
(1) The number of persons or businesses receiving
financial assistance under this Section.
(2) The amount in financial assistance awarded in the
aggregate, in addition to the amount of loans made that
are outstanding and the amount of grants awarded.
(3) The location of the project engaged in by the
person or business.
(4) The number of new jobs and other forms of economic
output created as a result of the financial assistance.
(f) The Department of Commerce and Economic Opportunity
shall include engagement with individuals with limited English
proficiency as part of its outreach provided or targeted to
attract and support social equity applicants.

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(505 ILCS 89/19)
Sec. 19. Immunity. Except for willful or wanton
misconduct, a person employed by a the Department with
jurisdiction over a licensee issued and administered under
this Act shall not be subject to criminal or civil penalties
for taking any action under this Act when the actions are
within the scope of his or her employment. Representation and
indemnification of Department employees shall be provided to
Department employees as set forth in Section 2 of the State
Employee Indemnification Act.
(Source: P.A. 100-1091, eff. 8-26-18.)
(505 ILCS 89/20)
Sec. 20. Hemp products.
(a) Nothing in this Act shall alter the legality of hemp or
hemp products that are presently legal to possess or own. The
Department shall not promulgate any rules altering the
legality of the same.
(b) Hemp extract intended for human consumption or hemp
cannabinoid products shall not be manufactured, processed,
packaged, held, or prepared in a private home or in a room used
as living or sleeping quarters, except as otherwise permitted
in this Act.
(c) All hemp extract and hemp cannabinoid products for
human consumption shall be manufactured by a source that meets
local and state health standards from the jurisdiction of

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origin.
(d) The maximum THC per serving of a hemp-cannabinoid
products for human consumption is 50 milligrams.
(Source: P.A. 100-1091, eff. 8-26-18.)
(505 ILCS 89/21 new)
Sec. 21. Age verification.
(a) Hemp-cannabinoid consumers must be at least 21 years
of age to purchase, transport, or consume hemp-cannabinoids
products, be over 18 and present a valid medical card, or over
the age of 18 and in possession of a valid military ID.
(b) The giving or sampling of hemp extract or hemp
cannabinoid products intended for human consumption by a hemp
food establishment or any person to any person under the age of
21 is prohibited.
(c) Hemp food establishments shall exercise diligence in
the management and supervision of their premises and in the
supervision and training of their employees to prevent the
underage sale of these products.
Prior to initiating a sale or otherwise providing hemp
cannabinoid product to an individual, an employee of a
retailer must verify that the individual is (i) at least 21
years of age, (ii) is over 18 and presents a valid medical
card, or over the age of 18 and in possession of a valid
military ID;
(d) Proof of age may be established only by verifying the

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birthdate and age on one of the following:
(1) a valid driver's license or identification card
issued by the State, another state, or a province of
Canada and including the photograph and date of birth of
the licensed person;
(2) a valid Tribal identification card/indigenous
reservation government identification card;
(3) a valid passport issued by the United States;
(4) in the case of a foreign national, by a valid
passport;
(5) consular identification card;
(6) temporary visitor driver's license;
(7) Chicago city key identification;
(8) international election identification cards;
(9) visa; or
(10) green card.
(e) A registered retailer may seize a form of
identification listed under subsection (b) of this Section if
the registered retailer has reasonable grounds to believe that
the form of identification has been altered or falsified or is
being used to violate any law. A registered retailer that
seizes a form of identification as authorized under this
paragraph must deliver it to a law enforcement agency within
14 days of seizing it.
(505 ILCS 89/22 new)

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Sec. 22. Hemp cannabinoid product packaging and labeling.
(a) The Department shall be authorized to audit and
inspect labels for compliance with this Act.
In the event of any violation of this section, the
Department may issue a citation against the offender as
official notice of the offense committed and to require the
offender to correct the offense within 180 days.
(b) Unless otherwise specified in this Act, each
hemp-cannabinoid product, with the exception of ready-to-eat
hemp cannabinoid and cottage hemp-cannabinoid products shall
be labeled before sale and each label shall be securely
affixed to the package and shall state in legible English:
(1) The name and mailing address of the manufacturer.
(2) The common or usual name of the item and the name
of the hemp-cannabinoid product.
(3) The "use by" date.
(4) A list of any hemp-derived cannabinoid exceeding 1
mg per serving.
(5) All other ingredients of the item, including any
colors, artificial flavors and preservatives, listed in
descending order by predominance of weight shown with
common or usual names. However, ingredients listed on the
label may be combined into similar categories including
but not limited to hemp extract or emulsion, natural
colors, artificial colors, natural flavors, or artificial
flavors.

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(6) For hemp-cannabinoid products:
(A) the date of testing and the identification of
the independent testing laboratory; and
(B) a pass/fail rating based on the laboratory's
microbiological, mycotoxins, and pesticide and solvent
residue analysis.
(7) For ready to eat hemp-cannabinoid products:
(A) the date of the intermediate hemp product
testing, packaging and the identification of the
independent testing laboratory; and
(B) a pass/fail rating based on the laboratory's
microbiological, mycotoxins, and pesticide and solvent
residue analysis of the Intermediate Hemp Product.
(8) The required packaging elements of Section
22(b)(5-7) may be satisfied by means of a QR code linking
to a website where the information is available for a
consumer.
(c) Packaging for packaged hemp-cannabinoid products must
not contain information that:
(1) is materially false;
(2) depicts a person under 21 years of age consuming
hemp-cannabinoids;
(3) includes images designed or likely to appeal to
minors, including cartoons, toys, animals, or children, or
any other likeness to images, characters, or phrases that
are popularly used to advertise to children, or any

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packaging or labeling that bears reasonable resemblance to
any product available for consumption as a commercially
available candy; or
(4) contains any seal, flag, crest, coat of arms, or
other insignia likely to mislead the purchaser to believe
that the product has been endorsed, made, or used by the
State or any of its representatives except where
authorized by this Act.
(d) All packaged hemp-cannabinoid products must contain
warning statements specified in subsection (e) of this
Section, of a size that is legible and readily visible to a
consumer inspecting a package, which may not be covered or
obscured in any way. Notwithstanding the foregoing, batch and
lot information printed on packaging that is printed on the
labeling shall not be considered to cover or obscure the
label.
(e) Hemp cannabinoid products must have warning statements
on the packaging in a form and manner that clearly
communicates the following:
(1) That the product contains hemp derived
cannabinoids.
(2) A warning to consumers not to use if pregnant or
breastfeeding.
(3) A warning not to use if operating a motor vehicle
or machinery.
(4) The product is for use by adults 21 or over.

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(f) Hemp cannabinoid products of the following product
types must have warning statements on the packaging in a form
and manner that clearly communicates the following:
(1) Hemp-cannabinoid products for inhalation must
contain a statement that clearly communicates smoking is
hazardous to your health.
(2) Hemp-cannabinoid products for ingestion must
contain a statement that communicates the effects of
cannabinoids may be delayed.
(3) Hemp-cannabinoids products for ingestion must
contain a statement that communicates this product was
produced in a facility that may also process common food
allergens or a list of known allergens in the product.
(4) That the required packaging elements of subsection
(b) of this Section may be satisfied by means of a QR code
linking to a website where the information is available
for a consumer.
(g) Hemp extract intended for human consumption must have
warning statements on the packaging in a form and manner that
clearly communicating the following:
(1) If cannabinoids are marketed, for every
cannabinoid with more than 1mg per serving, the number of
milligrams of each cannabinoid per serving and the serving
size must be declared on the label.
(2) The label and advertisement shall not contain
claims indicating the product is intended for diagnosis,

HB5306 - 163 - LRB103 37926 CES 68058 b
cure, mitigation, treatment, or prevention of disease,
unless such claims are approved by the FDA; and if
unapproved claims are included, then the product shall be
considered misbranded.
(3) Hemp extract intended solely for inhalation must
communicate the product is not intended for ingestion and
for consumers not to eat.
(h) Hemp extract intended for human consumption that is
not clearly labeled as intended for inhalation or ingestion
must meet all of the requirements for hemp products intended
for both inhalation and ingestion. If there are different
requirements for hemp products intended for inhalation and
hemp products intended for ingestion, the stricter standard
shall apply.
(505 ILCS 89/22.5 new)
Sec. 22.5. Ready-to-eat cannabinoid product packaging and
labeling.
(a) Hemp food establishments must ensure that the total
milligram content of each type of cannabinoid exceeding 1 mg
contained in each ready-to-eat hemp cannabinoid menu item is
listed on the menu board adjacent to the name or the price of
the associated menu item.
(b) Hemp food establishments must ensure that served
ready-to-eat hemp cannabinoid menu items include a label that
indicates:

HB5306 - 164 - LRB103 37926 CES 68058 b
(1) total milligram content of the served item; and
(2) QR code to links to a web page containing:
(A) a copy of the testing results of the
intermediate hemp product used;
(B) a copy of the dosing SOP; and
(C) a copy of a representative compliance test for
the recipe.
(c) Ready to eat hemp cannabinoid products may not be
shipped out of State.
(505 ILCS 89/22.10 new)
Sec. 22.10. Labeling for certain product packaging and
labeling products.
(a) The following types of hemp cannabinoid products are
exempted from the requirements of Section 22-0:
(1) broad spectrum hemp-cannabinoid products;
(2) full-spectrum hemp cannabinoid products;
(3) isolate-based hemp cannabinoid products;
(4) cannabinoid products sold for research purposes;
(5) cannabinoid products with less than .5mg delta-9
Tetrahydrocannabinol per serving; and
(6) topical products.
(b) The Department shall be authorized to audit and
inspect labels for compliance with this Act.
In the event of any violation of this Section, the
Department may issue a citation against the offender as

HB5306 - 165 - LRB103 37926 CES 68058 b
official notice of the offense committed and to require the
offender to correct the offense within 180 days.
(c) The hemp-cannabinoid products in subsection (a) of
this Section shall be labeled before sale and each label shall
be securely affixed to the package and shall state in legible
English:
(1) The name and mailing address of the manufacturer.
(2) The common or usual name of the item and the name
of the hemp-cannabinoid product.
(3) The "use by" date.
(4) A list of any hemp-derived cannabinoids exceeding
1 mg per serving;
(5) For hemp-cannabinoid products:
(A) The date of testing and the identification of
the independent testing laboratory.
(B) A pass/fail rating based on the laboratory's
microbiological, mycotoxins, and pesticide and solvent
residue analysis.
(7) All other ingredients of the item, including any
colors, artificial flavors and preservatives, listed in
descending order by predominance of weight shown with
common or usual names. However, ingredients listed on the
label may be combined into similar categories including
but not limited to hemp extract or emulsion, natural
colors, artificial colors, natural flavors, or artificial
flavors.

HB5306 - 166 - LRB103 37926 CES 68058 b
(8) The required packaging elements of subsection (d)
of this Section may be satisfied by means of a QR code
linking to a website where the information is available
for a consumer.
(d) The label and advertisement shall not contain claims
indicating the product is intended for diagnosis, cure,
mitigation, treatment, or prevention of disease, unless such
claims are approved by the FDA; and if unapproved claims are
included, then the product shall be considered misbranded.
(e) The hemp-cannabinoid products in subsection (a) of
this Section shall have warning statements on the packaging
that clearly indicates the following:
(1) The product contains hemp derived cannabinoids.
(2) A warning to consumers not to use if pregnant or
breastfeeding.
(3) The product is for use by adults 21 or over unless
under the supervision of a parent or guardian.
(4) The required packaging elements of this subsection
may be satisfied by means of a QR code linking to a website
where the warnings are available for a consumer.
(f) The following types of hemp cannabinoid products are
exempted from the requirements of this Section: processed
hemp, live hemp products, raw hemp products, processed-hemp
products, and cottage hemp-cannabinoid products.

HB5306 - 167 - LRB103 37926 CES 68058 b
(505 ILCS 89/22.15 new)
Sec. 22.15. Labeling for intermediate hemp products.
(a) Intermediate hemp cannabinoid products shall be
labeled and each label shall be securely affixed to the
package and shall state in legible English:
(1) The name and mailing address of the manufacturer.
(2) The common or usual name of the item and the name
of the intermediate hemp-cannabinoid product.
(3) The "use by" date.
(4) The storage instructions.
(5) The batch information.
(6) The net weight.
(7) A list of any hemp-derived cannabinoid exceeding 1
mg/g of potency.
(8) The total amount of each cannabinoid with a
potency exceeding 1mg/g per container.
(9) All other ingredients of the item, including any
colors, artificial flavors and preservatives, listed in
descending order by predominance of weight shown with
common or usual names.
(10) For intermediate hemp-cannabinoid products:
(A) The date of testing and the identification of
the independent testing laboratory.
(B) A pass/fail rating based on the laboratory's
microbiological, mycotoxins, and pesticide and solvent
residue analysis.

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(11) The required packaging elements paragraphs of
(7)-(10) of this subsection (a) may be satisfied by means
of a QR code linking to a website where the information is
available for a consumer.
(b) Intermediate hemp cannabinoid products must have
warning statements on the packaging in a form and manner that
clearly communicating the following:
(1) This product contains hemp derived cannabinoids.
(2) A warning for use as an ingredient.
(3) A warning that the product is not for consumptions
without dilution.
(4) Poison control contact information.
(505 ILCS 89/23 new)
Sec. 23. Laboratory approval.
(a) No laboratory shall be approved to handle, test or
analyze hemp unless the laboratory:
(1) is accredited to the ISO/IEC 17025 standard by a
private non-profit laboratory accrediting organization, or
can demonstrate that it has a current working relationship
with an accrediting organization and receives final
accreditation within one year of applying to be an
approved laboratory with the Department;
(2) is independent from all other persons involved in
the hemp industry in the State, which shall mean that no
person with a direct or indirect interest in the

HB5306 - 169 - LRB103 37926 CES 68058 b
laboratory shall have a direct or indirect financial,
management, or other interest in a hemp business
establishment license;
(3) has employed at least one person to oversee and be
responsible for the laboratory testing who has earned,
from a college or university accredited by a national or
regional certifying authority, at least:
(A) a master's level degree in chemical or
biological sciences and a minimum of 2 years
post-degree laboratory experience; or
(B) a bachelor's degree in chemical or biological
sciences and a minimum of 4 years post-degree
laboratory experience; and
(4) has procedures requiring hemp testing adherence to
standards of performance for detecting delta-9 THC
concentration, including the measurement of uncertainty
(MU).
(b) The Department may request a copy of the most recent
annual inspection report granting accreditation or any annual
report thereafter.
(c) All laboratories with a valid DEA registration, a
current cannabis laboratory license issued by the Department,
or a valid ISO 17025 certification are considered approved.
(505 ILCS 89/23.10 new)
Sec. 23.10. Testing requirements.

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(a) Industrial hemp sampled for testing may be transported
to the approved laboratory.
(b) The industrial hemp shall be tested using a reliable
method, including those approved by the USDA, to detect
delta-9 THC concentration levels of the sampled hemp. Reliable
methods of testing shall include gas chromatography or a
high-performance liquid chromatography technique.
(c) No more than 30 days prior to harvest, hemp
cultivators shall submit to an approved laboratory a sample of
industrial hemp to verify that the delta-9 THC concentration
does not exceed 0.3% on a dry weight basis.
(1) A sample shall be sent for each separate strain and/or
for each separate growing area at the Department's
discretion.
(2) A sample will consist of at least one ounce, weighed at
the time of harvest, and consist of full bud(s), along
with any attached leaves and stems,
(3) Quantitative laboratory determination of THC
concentration on a dry weight basis will be performed.
(d) A test result with a THC concentration on a dry weight
basis that exceeds 0.3% but is less than 0.7% may be retested
at the expense of the licensee. A request for a retest by the
licensee must be received by the Department within 3 days
after initial receipt of the original test results by the
licensee.
(e) All harvested industrial hemp receiving a sample test

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result with a delta-9 THC concentration on a dry weight basis
that exceeds 0.3% and is not retested at the request of the
licensee shall be destroyed.
(f) All harvested industrial hemp receiving both a sample
test result and a sample retest result with delta-9 THC
concentrations on a dry weight basis that exceeds 0.3% shall
be destroyed.
(g) All harvested industrial hemp receiving a sample test
result with a delta-9 THC concentration on a dry weight basis
that equals or exceeds 1.0% shall be destroyed.
(h) All harvested industrial hemp awaiting test results
shall be stored by the licensee or processor and shall not be
processed or transported until test results are obtained and
the industrial hemp is released by the Department.
(i) The Department shall have the authority to set and
collect fees for hemp testing conducted by the Department.
Such fees shall be deposited into the Industrial Hemp
Regulatory Fund.
(505 ILCS 89/23.15 new)
Sec. 23.15. Laboratory testing of intermediate hemp
products.
(a) Immediately after the manufacturing or processing of
any intermediate hemp product, each batch shall be tested by
an approved laboratory for:
(i) microbiological contaminants;

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(ii) mycotoxins;
(iii) pesticide active ingredients;
(iv) residual solvents; and
(v) an active ingredient analysis.
(b) The laboratory shall immediately return or dispose of
any intermediate hemp product upon the completion of any
testing, use or research. If intermediate hemp is disposed of,
it shall be done in compliance with this Act.
(c) If a sample of the intermediate hemp product does not
pass the microbiological, mycotoxin, pesticide chemical
residue or solvent residual test, based on the standards
established by the Department of Agriculture, the following
shall apply:
(1) If the sample failed the pesticide chemical
residue test, the entire batch from which the sample was
taken shall, if applicable, be recalled as provided by
rule.
(2) If the sample failed any other test, the batch may
be used to make a CO2-based or solvent-based extract.
After processing, the CO2-based or solvent-based extract
must still pass all required tests.
(d) The laboratory shall maintain the laboratory test
results for at least 3 years and make them available at the
Department of Agriculture's request.
(e) The hemp processor or hemp distributor shall provide
to a hemp business establishment the laboratory test results

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for each batch of intermediate hemp products purchased by the
hemp business establishment, upon request. Each hemp business
establishment must have these laboratory results available
online or in-person upon request of the purchasers.
(505 ILCS 89/23.20 new)
Sec. 23.20. Laboratory testing for hemp-cannabinoid
products utilizing hemp cannabinoids directly extracted from
raw hemp or untested intermediate-hemp products and
hemp-cannabinoid products for human inhalation.
(a) Hemp processors, hemp distributors, and hemp food
establishments must begin a new batch cycle every time a
specific hemp-cannabinoid product is made. A manufacturer of a
product regulated under this Section shall be tested by the
approved laboratory for:
(1) potency;
(2) microbiological contaminants;
(3) mycotoxins;
(4) pesticide active ingredients;
(5) residual solvents; and
(6) an active ingredient analysis.
(b) The laboratory shall immediately return or dispose of
any hemp-cannabinoid product upon the completion of any
testing, use or research. If the hemp-cannabinoid product is
disposed of, it shall be done in compliance with any rules
adopted by the Department of Agriculture.

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(c) If a sample of the hemp-cannabinoid does not pass the
microbiological, mycotoxin, pesticide chemical residue, or
solvent residual test, based on the standards established by
the Department of Agriculture, which shall be no stricter than
the standards listed below, the stricter shall apply.
(d) Products intended for human consumption shall be
considered adulterated if contaminants are detected at levels
greater than the limits listed in this Section. Contaminant
limits under this Section do not constitute authorization to
use or apply any of the following contaminants during hemp
cultivation or processing.
(1) The following substances are prohibited in
intermediate hemp products, hemp extract, and hemp
cannabinoid products:
(A) Abamectin, 300 parts per billion for
ingestion; 100 parts per billion for inhalation.
(B) Acephate, 3,000 parts per billion for
ingestion; 100 parts per billion for inhalation.
(C) Acequinocyl, 2,000 parts per billion for
ingestion; 100 parts per billion for inhalation.
(D) Acetamiprid, 3,000 parts per billion for
ingestion; 100 parts per billion for inhalation.
(E) Aldicarb, 100 parts per billion for ingestion
or inhalation.
(F) Azoxystrobin, 3,000 parts per billion for
ingestion; 100 parts per billion for inhalation.

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(G) Bifenazate, 3,000 parts per billion for
ingestion; 100 parts per billion for inhalation.
(H) Bifenthrin, 500 parts per billion for
ingestion; 100 parts per billion for inhalation.
(I) Boscalid, 3,000 parts per billion for
ingestion; 100 parts per billion for inhalation.
(J) Captan, 3,000 parts per billion for ingestion;
700 parts per billion for inhalation.
(K) Carbaryl, 500 parts per billion for ingestion;
500 parts per billion for inhalation.
(L) Carbofuran, 100 parts per billion for
ingestion or inhalation.
(M) Chlorantraniliprole, 3,000 parts per billion
for ingestion; 1,000 parts per billion for inhalation.
(N) Chlordane, 100 parts per billion for ingestion
or inhalation.
(O) Chlorfenapyr, 100 parts per billion for
ingestion or inhalation.
(P) Chlormequat chloride, 3,000 parts per billion
for ingestion; 1,000 parts per billion for inhalation.
(Q) Chlorpyrifos, 100 parts per billion for
ingestion or inhalation.
(R) Clofentezine, 500 parts per billion for
ingestion; 200 parts per billion for inhalation.
(S) Coumaphos, 100 parts per billion for ingestion
or inhalation.

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(T) Cyfluthrin, 1,000 parts per billion for
ingestion; 500 parts per billion for inhalation.
(U) Cypermethrin, 1,000 parts per billion for
ingestion; 500 parts per billion for inhalation.
(V) Daminozide, 100 parts per billion for
ingestion or inhalation.
(W) DDVP (Dichlorvos), 100 parts per billion for
ingestion or inhalation.
(X) Diazinon, 200 parts per billion for ingestion;
100 parts per billion for inhalation.
(Y) Dimethoate, 100 parts per billion for
ingestion or inhalation.
(Z) Dimethomorph, 3,000 parts per billion for
ingestion; 200 parts per billion for inhalation.
(AA) Ethoprop(hos), 100 parts per billion for
ingestion or inhalation.
(BB) Etofenprox, 100 parts per billion for
ingestion or inhalation.
(CC) Etoxazole, 1,500 parts per billion for
ingestion; 100 parts per billion for inhalation.
(DD) Fenhexamid, 3,000 parts per billion for
ingestion; 100 parts per billion for inhalation.
(EE) Fenoxycarb, 100 parts per billion for
ingestion or inhalation.
(FF) Fenpyroximate, 2,000 parts per billion for
ingestion; 100 parts per billion for inhalation.

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(GG) Fipronil, 100 parts per billion for ingestion
or inhalation.
(HH) Flonicamid, 2,000 parts per billion for
ingestion; 100 parts per billion for inhalation.
(II) Fludioxonil, 3,000 parts per billion for
ingestion; 100 parts per billion for inhalation.
(JJ) Hexythiazox, 2,000 parts per billion for
ingestion; 100 parts per billion for inhalation.
(KK) Imazalil, 100 parts per billion for ingestion
or inhalation.
(LL) Imidacloprid, 3,000 parts per billion for
ingestion; 400 parts per billion for inhalation.
(MM) Kresoxim-methyl, 1,000 parts per billion for
ingestion; 100 parts per billion for inhalation.
(NN) Malathion, 2,000 parts per billion for
ingestion; 200 parts per billion for inhalation.
(OO) Metalaxyl, 3,000 parts per billion for
ingestion; 100 parts per billion for inhalation.
(PP) Methiocarb, 100 parts per billion for
ingestion or inhalation.
(QQ) Methomyl, 100 parts per billion for ingestion
or inhalation.
(RR) Methyl parathion, 100 parts per billion for
ingestion or inhalation.
(SS) Mevinphos, 100 parts per billion for
ingestion or inhalation.

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(TT) (Myclobutanil, 3,000 parts per billion for
ingestion; prohibited at any concentration for
inhalation.
(UU) Naled, 500 parts per billion for ingestion;
250 parts per billion for inhalation.
(VV) Oxamyl, 500 parts per billion for ingestion
or inhalation.
(WW) Paclobutrazol, 100 parts per billion for
ingestion or inhalation.
(XX) Pentachloronitrobenzene, 200 parts per
billion for ingestion; 150 parts per billion for
inhalation.
(YY) Permethrin, 1,000 parts per billion for
ingestion; 100 parts per billion for inhalation.
(ZZ) Phosmet, 200 parts per billion for ingestion;
100 parts per billion for inhalation.
(AAA) Piperonyl butoxide, 3,000 parts per billion
for ingestion or inhalation.
(BBB) Prallethrin, 400 parts per billion for
ingestion; 100 parts per billion for inhalation.
(CCC) Propiconazole, 1,000 parts per billion for
ingestion; 100 parts per billion for inhalation.
(DDD) Propoxur, 100 parts per billion for
ingestion or inhalation.
(EEE) Pyrethrins, 1,000 parts per billion for
ingestion; 500 parts per billion for inhalation.

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(FFF) Pyridaben, 3,000 parts per billion for
ingestion; 200 parts per billion for inhalation.
(GGG) Spinetoram, 3,000 parts per billion for
ingestion; 200 parts per billion for inhalation.
(HHH) Spinosad A & D, 3,000 parts per billion for
ingestion; 100 parts per billion for inhalation.
(III) Spiromesifen, 3,000 parts per billion for
ingestion; 100 parts per billion for inhalation.
(JJJ) Spirotetramat, 3,000 parts per billion for
ingestion; 100 parts per billion for inhalation.
(KKK) Spiroxamine, 100 parts per billion for
ingestion or inhalation.
(LLL) Tebuconazole, 1,000 parts per billion for
ingestion; 100 parts per billion for inhalation.
(MMM) Thiacloprid, 100 parts per billion for
ingestion; 100 parts per billion for inhalation.
(NNN) Thiamethoxam, 1,000 parts per billion for
ingestion; 500 parts per billion for inhalation.
(OOO) Trifloxystrobin, 3,000 parts per billion for
ingestion; 100 parts per billion for inhalation.
(2) Residual solvent limits for ingestion or
inhalation:
(A) 1,2-Dichloroethane, 2 parts per million.
(B) 1,1-Dichloroethene, 8 parts per million.
(C) Acetone, 750 parts per million.
(D) Acetonitrile, 60 parts per million.

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(E) Benzene, 1 part per million.
(F) Butane, 5,000 parts per million.
(G) Chloroform, 2 parts per million.
(H) Ethanol, 5,000 parts per million.
(I) Ethyl Acetate, 400 parts per million.
(J) Ethyl Ether, 500 parts per million.
(K) Ethylene Oxide, 5 parts per million.
(L) Heptane, 5,000 parts per million.
(M) Hexane, 250 parts per million.
(N) Isopropyl Alcohol, 500 parts per million.
(O) Methanol, 250 parts per million.
(P) Methylene Chloride, 125 parts per million.
(Q) Pentane, 750 parts per million.
(R) Propane, 5,000 parts per million.
(S) Toluene, 150 parts per million.
(T) Trichloroethylene 25 parts per million.
(U) Xylenes, Total (ortho-, meta-, para-), 150
parts per million.
(3) Metals limits are:
(A) Cadmium, 500 parts per billion for ingestion;
200 parts per billion for inhalation.
(B) Lead, 500 parts per billion for ingestion or
inhalation.
(C) Arsenic, 1,500 parts per billion for
ingestion; 200 parts per billion for inhalation.
(D) Mercury, 3,000 parts per billion for

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ingestion; 200 parts per billion for inhalation.
(4) Biological limits for ingestion or inhalation:
(A) Shiga toxin-producing escherichia coli (STEC
E. coli) and other pathogenic E. coli, 1 CFU per gram.
(B) Salmonella, 1 CFU per gram.
(C) Aspergillus niger, aspergillus fumigatus,
aspergillus flavus, aspergillus terreus, 1 CFU per
gram.
(5) Mycotoxin limits are:
(A) Total aflatoxin (B1, B2, G1, G2), 20 parts per
billion for ingestion or inhalation.
(B) Ochratoxin, 20 parts per billion for ingestion
or inhalation.
(6) The total combined yeast and mold limit is 100,000
CFU per gram for ingestion or inhalation.
(7) The cannabinoid limits are delta-9
tetrahydrocannabinol concentration shall not exceed 0.3%
by weight.
(8) If a testing sample is found to contain levels of
any pathogen, toxicant, residual solvent, metal, or
pesticide not enumerated in this Section or by State law,
then the hemp extract shall be considered adulterated.
(9) Devices used during the inhalation process must
not introduce contaminants over the limits listed in this
Section into the hemp extract product.
(e) If the sample failed the pesticide chemical residue

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test, the entire batch from which the sample was taken shall,
if applicable, be recalled as provided by rule.
(f) If the sample failed any other test, the batch may be
used to make a CO2-based or solvent-based extract. After
processing, the CO2-based or solvent-based extract must still
pass all required tests.
(g) The Department of Agriculture shall establish
standards for microbial, mycotoxin, pesticide residue, solvent
residue, or other standards for the presence of possible
contaminants which shall be no stricter than those listed in
this Section.
(h) A hemp business establishment shall provide the
laboratory test results for each batch of hemp cannabinoid
products purchased by any other hemp business establishment,
upon request.
(505 ILCS 89/23.25 new)
Sec. 23.25. Laboratory testing for hemp-cannabinoid
products for human ingestion using intermediate-hemp products.
(a) Hemp food establishments using intermediate hemp
products to create hemp-cannabinoid products for human
ingestion that have passed the testing requirements under this
Act only need to test for potency provided that all other
ingredients and inputs to be added into the hemp-cannabinoid
products are food-grade.
(b) The manufacturer of a product regulated under this

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section must submit a representative sample of the batch cycle
every time a different intermediate hemp product batch is used
to an independent, accredited laboratory, which shall be
tested by the approved laboratory for potency.
(c) The laboratory shall immediately return or dispose of
any hemp-cannabinoid product upon the completion of any
testing, use, or research. If the hemp-cannabinoid product is
disposed of, it shall be done in compliance with Department of
Agriculture rule.
(d) The hemp distributor or food establishment shall
provide to a hemp business establishment the laboratory test
results for each batch of hemp cannabinoid products purchased
by the hemp business establishment. Each hemp business
establishment must have these laboratory results available
upon request to purchasers.
(505 ILCS 89/23.30 new)
Sec. 23.30. Laboratory testing for ready-to-eat
hemp-cannabinoid products using tested intermediate-hemp
products.
(a) Retail hemp food establishments using intermediate
hemp products that have passed testing to create ready-to-eat
hemp-cannabinoid products only need to test for potency
provided that all other ingredients and inputs to be added
into the hemp-cannabinoid products are food-grade. The retail
hemp food establishment creating the ready-to-eat

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hemp-cannabinoid product for manufacturer of a product
regulated under this Section must submit a representative
sample of its registered recipe using its registered dosing
standard operating procedure ("SOP") either (i) annually or
(ii) every time a different intermediate hemp product batch is
used to an independent, accredited laboratory, which shall be
tested by the approved laboratory for potency.
(b) The laboratory shall immediately return or dispose of
any ready-to-eat hemp-cannabinoid product upon the completion
of any testing, use, or research. If the ready-to-eat
hemp-cannabinoid product is disposed of, it shall be done in
compliance with Department of Agriculture rule.
(c) The retail hemp food establishment shall provide to
its customers a copy of its registered recipe and registered
dosing SOP. The hemp distributor or food establishment shall
provide to a hemp business establishment the laboratory test
results for each batch of hemp cannabinoid products purchased
by the hemp business establishment, upon request.
(d) Each hemp business establishment must have these
laboratory results available upon request to purchasers.
(505 ILCS 89/23.35 new)
Sec. 23.35. Standard remediation procedures and
guidelines.
(a) Non-compliant hemp may only be disposed of or
remediated. Only successfully remediated crops will be allowed

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to enter the stream of commerce. All other non-compliant crops
shall be disposed.
(b) Remediation may take place using one of the following
options.
(1) Non-compliant hemp may be remediated by separating
and destroying non-compliant flowers, while retaining
stalks, leaves, and seeds.
(2) Non-compliant hemp may be remediated by shredding
the entire hemp lot to create biomass. Lots shall be kept
separate and shall not be combined during this process.
(c) The licensee, designated employee, or an approved
representative of the Department, as the Department deems
appropriate, shall remediate or dispose of non-compliant hemp.
The Department may require that a representative of the
Department be present during the remediation or disposal
process.
(d) Upon notification that a lot has tested above the
acceptable hemp THC level, the licensee shall notify the
Department of the licensee's decision to either dispose of or
remediate the non-compliant lot and the method of disposal or
remediation the licensee will use. If the licensee refuses to
dispose of or remediate the non-compliant hemp lot, the
Department will issue the licensee an order of disposal.
(e) All lots subject to remediation shall be stored,
labeled and kept apart from each other and from other
compliant hemp lots stored or held nearby.

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(f) The following procedures must be followed during the
creation of biomass:
(1) The entire lot, as reported to the Department
shall be shredded to create a homogenous and uniform
biomass.
(2) The biomass created through this process shall be
resampled and retested to ensure compliance before
entering the stream of commerce. Biomass that fails the
retesting is non-compliant hemp and shall be disposed.
(g) Remediated biomass shall be separated from any
compliant hemp stored in the area and clearly labeled as "hemp
for remediation purposes". Remediated biomass shall not leave
the labeled area until a test result showing compliance with
the acceptable hemp THC level is received or the biomass is
ready to be disposed.
(h) Remediated biomass or remediated stalks, leaves, and
seeds shall be resampled and retested to ensure compliance
before entering the stream of commerce. Remediated biomass or
remediated stalks, leaves, and seeds that fail the retesting
shall be destroyed.
(i) The resample must be taken by the sampling agent in a
manner described in USDA published guidance and must meet the
USDA requirements set forth in Sections 990.3 and 990.27 of
the Domestic Hemp Production Program and the federal Code of
Regulations.
(j) When taking the resample, the sampling agent under

HB5306 - 187 - LRB103 37926 CES 68058 b
contract with a licensee or registrant shall take remediated
biomass or remediated stalks, leaves and seeds material from
various depths, locations, and containers in the labeled and
demarcated area to collect a representative sample of the
material. At minimum, 750 mL or three standard measuring cups
of remediated biomass or remediated stalks, leaves and seeds
material shall be collected. Sampling agents may collect more
remediated biomass or remediated stalks, leaves and seeds
material based on the requirements of the testing laboratory.
If 750 mL of material is not available, the sampling agent
shall collect enough remediated biomass or remediated stalks,
leaves and seeds material for a representative sample.
(k) An original copy of the resample test results, or a
legible copy, must be retained by the licensee or an
authorized representative and available for inspection for a
period of three years from the date of receipt.
(l) Laboratories testing a resample shall use the same
testing protocols as when testing a standard sample.
(m) In the event a crop will be harvested for hemp
microgreens, the crop will not be subject to the sampling and
testing requirements described in this Section).
(1) Due to extremely low levels of cannabinoids in the
immature plants, sampling and testing of every lot hemp
microgreens is unnecessary.
(2) Licensees are solely responsible for ensuring
seeds used by the licensee for hemp microgreen production

HB5306 - 188 - LRB103 37926 CES 68058 b
are from cannabis varieties meeting the definition of
hemp.
(3) A licensed grower who produces a crop that does
not meet the criteria for an exception as a hemp
microgreen under this subsection shall either:
(A) follow the compliance, sampling and testing
requirement pursuant to this Section; or
(B) dispose of the crop in by approved methods of
disposal include plowing, tilling, or disking plant
material into the soil; mulching, composting,
chopping, or bush mowing plant material into green
manure; burning plant material; burying plant material
into the earth and covering with soil, and any other
methods approved by USDA or the Department.
(n) In the event a hemp crop will be grown for ornamental
purposes, the crop will not be subject to the sampling and
testing requirements described in this Section.
(1) Due to extremely low levels of cannabinoids in the
plants, sampling and testing of every lot of ornamental
hemp is unnecessary.
(2) Licensees are solely responsible for ensuring
seeds used by the licensee for ornamental hemp production
are from varieties meeting the definition of hemp.
(3) A licensed grower who produces a crop that does
not meet the criteria for an exception as ornamental hemp
under this subsection shall either:

HB5306 - 189 - LRB103 37926 CES 68058 b
(A) follow the compliance, sampling and testing
requirement pursuant to this Section; or
(B) dispose of the crop in by approved methods of
disposal include plowing, tilling, or disking plant
material into the soil; mulching, composting,
chopping, or bush mowing plant material into green
manure; burning plant material; burying plant material
into the earth and covering with soil, and any other
methods approved by USDA or the Department.
(o) In the event a hemp crop will be grown for grain or
fiber purposes, the crop will not be subject to the sampling
and testing requirements described in this Section.
(1) Due to extremely low levels of cannabinoids in the
plants, sampling and testing of every lot of grain and
fiber hemp is unnecessary.
(2) Licensees are solely responsible for ensuring
seeds used by the licensee for grain or fiber hemp
production are from varieties meeting the definition of
hemp.
(3) A licensed grower who produces a crop that does
not meet the criteria for an exception as grain or fiber
hemp under this subsection shall either:
(A) follow the compliance, sampling and testing
requirement pursuant to this Act; or
(B) dispose of the crop in by approved methods of
disposal include plowing, tilling, or disking plant

HB5306 - 190 - LRB103 37926 CES 68058 b
material into the soil; mulching, composting,
chopping, or bush mowing plant material into green
manure; burning plant material; burying plant material
into the earth and covering with soil, and any other
methods approved by USDA or the Department.
(505 ILCS 89/24 new)
Sec. 24. Transportation of industrial hemp.
(a) Industrial hemp that has not been processed may be
transferred by the licensee or registrant from the place of
cultivation to the place of processing at any time after
passing official THC compliance testing. Approved laboratory
personnel, Department personnel, a third party designated by
the Department, cannabis transporter licensees, sampling
agents or hemp business establishment employees may transport
hemp samples for testing to laboratories for testing purposes.
(b) There is no State restriction on the transportation of
any hemp or hemp cannabinoid product including after the
retail sale to a member of the public.
(c) A licensed or registered person shall not ship or
transport, or allow to be shipped or transported, live hemp
plants, cuttings for planting, or viable seeds from a variety
that is currently designated by the Department as a prohibited
variety or a variety of concern to any location outside the
State.
(d) A licensed person shall not sell or transfer, or

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permit the sale or transfer of, living plants or viable seeds
outside the State that is not authorized by a state agency
under the laws of the destination state.
(505 ILCS 89/25)
Sec. 25. Violation of State and federal law.
(a) Nothing in this Act shall be construed to authorize
any person to violate federal rules, regulations, or laws. If
any part of this Act conflicts with a provision of the federal
laws regarding industrial hemp, the federal provisions shall
control to the extent of the conflict.
(b) Any violations of this Act or any State or federal
criminal code may subject the licensee or registrant to
administrative penalties as set forth in this Act and may also
subject the licensee or registrant to criminal prosecution.
(c) Licensee information may be shared with law
enforcement without notice to the licensee.
(d) No hemp business establishment shall: hold itself out
to be a "dispensary", "marijuana dispensary", "dispensing
organization" or any kind of cannabis business establishment
unless such entity holds a valid cannabis business
establishment license.
(e) A licensee or registrant shall be subject to
subsection (b) if the Department determines that the licensee
or registrant has negligently violated this Act, including by
negligently:

HB5306 - 192 - LRB103 37926 CES 68058 b
(1) failing to obtain a license, registration or other
required authorization required by this Section from the
Department; or
(2) producing or processing cannabis sativa L. with a
THC concentration exceeding the acceptable hemp THC level.
Licensees do not commit a negligent violation if they make
reasonable efforts to grow hemp and the cannabis does not
have a delta-9 THC concentration of more than 1% on a dry
weight basis.
(f) A hemp licensee or registrant described in subsection
(a) shall comply with a corrective action plan established by
the Department to correct the negligent violation. The
corrective action plan
shall include the following:
(1) a reasonable date by which the licensee or
registrant shall correct the negligent violation; and
(2) a requirement that the licensee or registrant
shall periodically report to the Department on the
compliance of the licensee or registrant for a period of
not less than 2 calendar years; and
(3) announced or unannounced inspections by Department
of licensee or registrant to confirm compliance with the
corrective action plan.
(g) A licensee or registrant who violates this Act shall
not, as a result of that violation, be subject to any criminal
enforcement action by any federal, State, or local government.
(h) The Department may, on its own initiative, or after

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receipt of a complaint against a licensee or registrant,
investigate to determine whether a violation has taken place.
(i) A licensee or registrant who wants to contest the
Department's determination of a violation of the Act must do
so by submitting a request for an administrative hearing in
writing to the Department's Division of Cannabis Regulation,
attention hemp program, within 90 calendar days after
receiving notice of the violation.
(Source: P.A. 100-1091, eff. 8-26-18.)
(505 ILCS 89/26 new)
Sec. 26. Hemp cannabinoid products enforcement.
(a) The Department of Public Health, the Department of
Agriculture, and the Department of Financial and Professional
Regulation shall enforce the provisions of this Act with
regard to the hemp cannabinoid business establishments
registered under their respective authority, including the
authority to embargo products described in subsection (b).
(b) Hemp or hemp extract products must meet the
requirements of this Section. Hemp or hemp extract products
that do not meet the requirements of this Section or without
the documentation required in this Section may not be sold in
this State.
(c) Violations of this Section shall result in the
imposition of stop-sale or stop-use orders and an
administrative fine of up to $5,000 per violation payable by

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the hemp business establishment.
(d) The sale of hemp extract intended for inhalation to
persons under the age of 21, an individual under the age of 18
with a valid medical card shall result in an administrative
fine of $5,000 per occurrence.
(e) All licensees and registrants shall be subject to
inspections at the discretion of the Department to ensure
compliance with the Act. The inspections may be scheduled and
unannounced annual inspections, random inspections, and
inspections for the purposes of auditing.
(f) The Department shall provide a minimum of 5 business
days notice to the licensee for an annual of the inspection.
The notification shall inform the licensee of the scope and
process by which the annual inspection will be conducted.
(g) Failure to comply with a properly noticed inspection
shall result in the initiation of disciplinary proceedings
pursuant to this Act.
(h) For a non-random inspection, either the licensee or an
agent of the licensee shall be present for the inspection and
sampling and shall provide the inspector with unrestricted
access to all industrial hemp plants, parts, seeds, hemp
cannabinoid products, intermediate hemp products, and
harvested material, including all buildings and other
structures used for the cultivation and storage of industrial
hemp and all documents pertaining to the licensee's industrial
hemp cultivation, processing, distributing, retailing and

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business.
(505 ILCS 89/27 new)
Sec. 27. Publishing information. The Department shall make
available to the public complaints about cannabinoid products,
information regarding a pending administrative hearing or
court case under this Act, or any disciplinary action taken
against a hemp business establishment.
(505 ILCS 89/28 new)
Sec. 28. Temporary restraining order or injunction. The
Director, through the Attorney General, may file a complaint
and apply to the circuit court for, and the court upon hearing
and for cause shown may grant, a temporary restraining order
or a preliminary or permanent injunction restraining any
person from violating this Act.
(505 ILCS 89/30 new)
Sec. 30. Licensing and regulation; hemp cultivators.
(a) In this Section, "Department" means the Department of
Agriculture.
(b) No person shall cultivate industrial hemp for the
purposes of commerce in the State without first receiving an
industrial hemp cultivator license from the Department.
(c) All licensed hemp cultivators shall be responsible to
ensure that their harvest of raw hemp products and live hemp

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products test under 0.3 percent delta-9 THC.
(d) No land area may contain cannabis plants or parts of
cannabis plants that the licensee knows or has reason to know
are of a variety that will produce a plant that, when tested,
will produce more than 0.3% delta-9 THC concentration on a dry
weight basis. No licensee shall use any such variety for any
purpose associated with the cultivation of industrial hemp.
(e) There shall be no minimum land area for hemp
cultivation.
(f) All licensed hemp cultivators can sell their harvest
of raw hemp products and live hemp products that test under 0.3
percent delta-9 THC to other hemp businesses or persons.
(g) A hemp business establishment that handles or stores
live hemp products must obtain a separate hemp cultivator
license for that location.
(h) A licensed hemp business establishment shall not plant
or grow hemp on any site not listed in the application.
(i) Licensed industrial hemp cultivators are solely
responsible for procuring seeds, clones, transplants or
propagules for planting.
(j) No licensee shall harvest any portion of a hemp crop
until after the lot to be harvested has been sampled pursuant
to this Act, unless they can show good cause or receive prior
department approval in writing.
(k) There shall be no change of ownership of any hemp crop
until laboratory testing has been completed on such crop

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pursuant to this Act.
(l) All licensees and registrants are subject to audit and
inspection by the Department.
(m) Each licensee and registrant shall maintain all
records for a period of at least 3 years. "Records" includes
harvest reports, sales data including license numbers of
licensees or registrants purchasing seed, propagules or raw
industrial hemp, testing results, sampling documentation,
resampling results, disposal reports, transportation records,
and any reports made to USDA, FSA, or the Department.
(n) A licensed or registered person shall not ship or
transport cannabis seeds, plants or parts of cannabis plants
that the licensee knows or has reason to know are of a variety
that will produce a plant that, when tested, will produce more
than 0.3% delta-9 THC concentration on a dry weight basis.
(505 ILCS 89/35 new)
Sec. 35. Licensing and regulation; hemp processors.
(a) In this Section, "Department" means the Department of
Agriculture.
(b) In addition to processing hemp, licensed hemp
processors may turn hemp plant material into intermediate hemp
products, manufacture hemp products for inhalation or topical
use, and manufacture intermediate hemp products.
(c) No person shall prepare and sell wholesale packaged
cannabinoid products that are intended for inhalation or

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intermediate hemp products, unless it is licensed by the
Department as a hemp processor or hemp distributor.
(505 ILCS 89/40 new)
Sec. 40. Licensing and regulation; hemp distributors.
(a) In this Section, "Department" means the Department of
Financial and Professional Regulation.
(b) All intermediate hemp products, live hemp products and
hemp-cannabinoid products must be obtained from a hemp
business establishment licensed by the State or from another
similarly licensed out-of-state entity.
(c) No person shall prepare and sell wholesale packaged
cannabinoid products that are intended for inhalation or
intermediate cannabinoid products unless it is licensed by the
Department as a hemp processor or hemp distributor.
(505 ILCS 89/45 new)
Sec. 45. Licensing and regulation; hemp retailers.
(a) In this Section, "Department"
means the Department of
Financial and Professional Regulation.
(b) No person shall operate a hemp retail establishment
for the purpose of serving purchasers of hemp-cannabinoid
products without a license issued under this Section by the
Department.
(c) All live hemp products and hemp-cannabinoid products
must be obtained from a hemp cultivator, hemp distributor,

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hemp food establishment or another hemp retailer licensed by
the State or from another similarly licensed out-of-state
entity.
(d) Hemp retailing organizations that obtain a hemp food
establishment license may prepare and sell ready-to-eat
hemp-cannabinoid products.
(e) Hemp retailing organizations that maintain a hemp food
establishment license may host cottage hemp food operators on
the licensed home food establishment premises for special
events lasting no longer than 3 days.
(f) Out of state organizations are not allowed to sell
hemp-cannabinoid products to end-consumers within the State
unless they obtain a hemp retailer license and maintain proof
of age verification and shipping manifests for a period of 1
year.
(g) No person shall offer inhalable cannabinoid products
for sale directly to the public unless it is licensed as a hemp
retailer.
(h) Any retailer that sells hemp extract intended for
inhalation shall post a clear and conspicuous sign directly
adjacent to the display of the product that states the
following: "The sale of hemp extract intended for inhalation
to persons under the age of 21 is prohibited. Proof of age is
required for purchase".
(i) Hemp extract or hemp cannabinoid products intended for
inhalation or ingestion may not be mailed, shipped, or

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otherwise delivered to a purchaser unless, before the delivery
to the purchaser, the hemp food establishment obtains
confirmation that the purchaser is 21 years of age or older.
(505 ILCS 89/50 new)
Sec. 50. Licensing and regulation; hemp food
establishments.
(a) In this Section, "Department" means the Department of
Public Health.
(b) Hemp retailing licensees under Section 45 that obtain
a hemp food establishment license under this Section may
prepare and sell ready-to-eat hemp-cannabinoid products.
(c) No person shall operate a hemp retail establishment
for the purpose of serving purchasers of hemp-cannabinoid
products for human ingestion or ready-to-eat hemp-cannabinoid
products without a license issued under this Section by the
Department.
(d) A hemp food establishment will comply with the food
handling, preparation, packaging and labeling provisions of
the Food, Drug, and Cosmetic Act, the Food Handling Regulation
Enforcement Act, and the Sanitary Food Preparation Act.
(e) A hemp food establishment shall be under the
operational supervision of a certified food service sanitation
manager, in possession of a valid BASSET certification,
responsible vendor training, or other similar on-premises or
off-promise alcohol serving certification.

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(f) Any hemp food establishment dealing in the manufacture
and sale of food items which does not comply with the existing
State laws related to food handling or does not comply with the
health and food handling regulations of any unit of local
government having jurisdiction of such establishment may be
enjoined from doing business in the following manner: the
Department of Public Health or local departments of health may
seek an injunction in the circuit court for the county in which
such establishment is located. Such injunction, if granted,
shall prohibit such business establishments from selling
hemp-cannabinoid products for human ingestion until it
complies with any applicable State law or regulations of a
local governmental agency. However, no injunction may be
sought or granted before January 1, 2025, to enforce any rule
or regulation requiring a licensed food business to adhere to
these regulations.
(g) Ready to eat hemp-cannabinoid products are not allowed
to be imported.
(h) In order to sell ready-to-eat hemp cannabinoid
products, a hemp food establishment shall:
(1) Use only intermediate hemp products that have
passed a full-panel test in accordance with this Act.
(2) Sell no product containing more than 50mg of THC
per serving.
(3) Submit a standard operating procedure ("SOP") for
dosing to the Department for approval and registration.

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Such approval shall be granted within 30 days of
submission unless the Department provides good cause, in
writing, for withholding approval.
(4) Submit the SOP, at the hemp food establishment's
expense, to a third party testing laboratory for potency
testing to ensure 0.3% delta-9 THC compliance, once a
year.
(5) Use only the varietal or proportional varietals of
ingredients included in the tested recipe for all
subsequent batches of such recipe.
(6) Provide documentation of the annual test results
of the recipe submitted under this paragraph upon
registration and to an inspector upon request during any
inspection authorized by the Department.
(i) A hemp food establishment shall provide a valid hemp
food establishment license and the most recent food safety or
health inspection report from the approved source to the
Department upon request.
(505 ILCS 89/55 new)
Sec. 55. Licensing and regulation of cottage hemp food
operators.
(a) In this Section, "Department" means the Department of
Public Health.
(b) No person shall operate a cottage hemp food operator
for the purpose of serving purchasers of ready-to-eat

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hemp-cannabinoid products without a license issued under this
Section.
(c) The Fee for a cottage hemp food operator license shall
be $75.
(d) Applicants for a cottage hemp food operator license
shall be individuals.
(e) Businesses licensed under the Cannabis Regulation and
Tax Act or the Compassionate Use of Medical Cannabis Program
Act may not hold a hemp cottage food license.
(f) "Cottage hemp food operators" must register with a
hemp distributor on an annual basis.
(g) "Cottage hemp food operators" are responsible for
paying hemp taxes to their hemp distributor.
(h) "Cottage hemp food operators" have an annual
intermediate hemp products purchase limit equivalent to of
1,000 g (1,000,000 mg) of THC.
(i) Cottage hemp food operators must comply with all
aspects of Section 4 of the Food Handling Regulation
Enforcement Act.
(j) In order to produce cottage hemp-cannabinoid products,
the cottage hemp food operator shall:
(1) Use only intermediate hemp products from its
registered distributor that have been fully tested in
accordance with this Act.
(2) Attest to following a standard operating procedure
("SOP") submitted by its registered distributor for dosing

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to the Department for approval and registration
(3) Not dose each serving with more than 50 mg of THC.
(k) In order to sell cottage hemp-cannabinoid products,
the cottage hemp food operator shall display at the point of
sale:
(1) A QR code with to links to a web page containing:
(A) a copy of the testing results of the
intermediate hemp product used; and
(B) a copy of the registered distributor's dosing
SOP.
(2) Notice in a prominent location that states "This
product was made using tested cannabinoids but was
produced in a home kitchen not inspected by a health
department that may also process common food allergens and
may not be accurately dosed. If you have safety concerns,
contact your local health department."
(l) Cottage hemp-cannabinoid products must conform with
the labeling requirements of the Food, Drug and Cosmetic Act
and the food shall be affixed with a prominent label that
includes the following:
(1) The name of the cottage hemp food operation.
(2) The identifying registration number provided for
the cottage hemp food operation.
(3) A label displaying the total milligram content of
each type of cannabinoid exceeding 1 mg contained in each
cottage hemp-cannabinoid product.

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(4) The following phrase in prominent lettering "This
product was made using tested cannabinoids but was
produced in a home kitchen not inspected by a health
department that may also process common food allergens and
may not be accurately dosed. If you have safety concerns,
contact your local health department".
(m) Cottage hemp-cannabinoid products are not allowed to
be imported.
(n) Cottage hemp-cannabinoid products produced by a
cottage hemp food operator shall be sold directly to consumers
for their own consumption and not for resale. Sales directly
to consumers include, but are not limited to, sales at or
through:
(1) farmer's markets;
(2) fairs, festivals, public events, or online;
(3) pickup from the private home or farm of the
cottage hemp food operator, if the pickup is not
prohibited by any law of the unit of local government that
applies equally to all cottage food operations; in a
municipality with a population of 1,000,000 or more, a
cottage hemp food operator shall comply with any law of
the municipality that applies equally to all home-based
businesses;
(4) delivery to the customer;
(5) pick-up from a third-party private property with
the consent of the third-party property holder; and

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(6) hemp retail establishments.
(505 ILCS 89/60 new)
Sec. 60. Academic research institutions. Academic research
institutions shall be subject to all provisions of this Act
with the exception of the following:
(1) The fee for a license and for renewal of that
license will be $100 annually.
(2) An academic research institution is exempt from
the testing described in this Act. Potency testing shall
be conducted by academic research designated laboratory.
(3) An academic research institution shall provide the
following reports, which shall be confidential to the
extent that they reveal, or release research conducted,
unless the academic research institution provides
authorization for release:
(A) Within 72 hours after the academic research
institution receives test results, the following data
shall be provided to the Department:
(i) the test results;
(ii) photos of samples; and
(iii) documentation of sampling chain of
custody.
(B) No later than December 1 of each year, each
academic research institution shall submit an
industrial hemp academic institution research report

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to the Department that includes:
(i) Total acres or square feet of industrial
hemp planted in the current calendar year.
(ii) A description of each variety planted and
harvested in the current calendar year.
(iii) Total acres or square feet harvested in
the current calendar year.
(iv) Total yield in the appropriate
measurement, such as tonnage, seeds per acre, or
other measurement approved by the Department.
(v) A disposal report for each lot or field
harvested at the conclusion of the academic
research.
(vi) A description of the research and
research findings.
(4) Academic research institutions shall report hemp
planting acreage to the federal Department of Agriculture
Farm Service Agency as described in this Act, with the
exception that this report does not have to be broken down
by lot or planting date.
(5) Hemp grown for research purposes may not enter the
stream of commerce at any time. Hemp grown for research
purposes must be disposed of in accordance with these
administrative rules at the conclusion of the research
period.
(6) Academic research institutions shall be exempt

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from the inspection and sampling provisions in this Act.
Academic research institution sampling procedures shall
include the following:
(A) Academic research institutions shall notify
the Department at least seven business days prior to
collection of samples. The notification shall include
the name of the individual designated as the academic
sampling agent and the GPS coordinates for the samples
to be taken.
(B) Academic research institutions shall identify
and designate a sampling agent. For academic research
institutions only, a sampling agent may be an
employee.
(C) The academic sampling agent shall verify the
GPS coordinates of the growing area as compared with
the GPS coordinates submitted by the academic research
institution to Department.
(D) The sampling agent shall estimate the average
height, appearance, approximate density, condition of
the plants, and degree of maturity of the
inflorescences, or flowers and buds. The sampling
agent shall visually establish the homogeneity of the
stand to establish that the growing area is of like
variety.
(E) All samples shall be collected from the
flowering tops of the plant by cutting the top five to

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eight inches from the main stem (that includes the
leaves and flowers), terminal bud (that occurs at the
end of a stem), or central cola (cut stem that could
develop into a bud) of the flowering top of the plant.
Samples shall be collected and maintained in such a
way that there is no commingling of samples or sample
material.
(7) At the request of the academic research
institution, and with the Department's written permission,
an academic research institution may opt for
performance-based sampling protocols instead of the
provisions outlined in this Act.
(8) Consideration for performance-based sampling
protocols will include:
(A) Whether the academic research institution can
provide proof of a seed certification process or
process that identifies varieties that have
consistently demonstrated to result in compliant hemp
plants.
(B) The academic research institution's history of
producing compliant hemp plants over an extended
period of time.
(C) The academic research institution's plan to
ensure, at a confidence level of 95%, that no more than
1% of the plants in each sampling will exceed the
acceptable THC level.

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(i) Performance-based sampling protocol will be subject to
the following terms and conditions:
(1) When samples are collected, the sampling procedure
must follow the provisions of this Act.
(2) The Department reserves the right to sample and
test, or order the sampling and testing, of any hemp lot at
any time to ensure compliance with the acceptable hemp THC
level.
(3) Violations of performance-based methods will
result in academic research institutions no longer being
exempt from the sampling procedures outlined in this Act
and may result in administrative penalties as outlined in
this Act.
(505 ILCS 89/65 new)
Sec. 65. Government demonstration and research entity.
(a) Government demonstration and research entity shall be
subject to all provisions of this Act with the exception of the
following:
(1) The fee for a license shall be $100.
(2) Renewal fee shall be $100.
(3) Licenses shall be valid for a period of one year.
(4) The Department shall be exempt from the license
fee and background check.
(b) A government demonstration and research entity are
exempt from the testing described in this Act, so long as all

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hemp produced is destroyed according to the Act and the
provisions of this Section.
(c) Hemp grown for governmental research and demonstration
purposes may not enter the stream of commerce at any time.
(d) Hemp grown for governmental research and demonstration
purposes must be disposed of in accordance with this Act at the
conclusion of the demonstration or research period.
(505 ILCS 89/80 new)
Sec. 80. Cannabinoid retail tax.
(a) Unless otherwise specified in this Section, beginning
on January 1, 2025, a tax is imposed upon purchases for all
hemp-cannabinoid products (hemp-cannabinoid products for
inhalation, hemp-cannabinoid products for ingestion and
ready-to-eat hemp-cannabinoid products) at a rate of 5% of the
purchase price of the cannabinoid products.
(b) The tax shall be deposited in the Industrial Hemp
Fund.
(c) The following types of hemp cannabinoid products shall
not be taxed under this Act:
(1) full-spectrum products;
(2) broad spectrum products;
(3) isolate-based hemp-cannabinoid products;
(4) hemp-cannabinoid products sold for research
purposes;
(5) hemp-cannabinoid products with less than .5mg

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delta-9 Tetrahydrocannabinol per serving;
(6) processed hemp, live hemp products, raw hemp
products, processed-hemp products, intermediate-hemp
products and cottage hemp-cannabinoid products.
(d) The tax imposed under this Section shall be in
addition to all other occupation, privilege or excise taxes
imposed by the State or by any unit of local government.
(e) The tax imposed under this Section shall not be
imposed on any purchase by a purchaser if the hemp retailer is
prohibited by the federal or State Constitution, treaty,
convention, statute or court decision from collecting the tax
from the purchaser.
(f) The tax imposed by this Section shall be collected
from the purchaser by the hemp retailer or hemp food
establishment and shall be remitted to the Department on or
before the 20th day following the end of the preceding
calendar quarter stating the following:
(1) The hemp retailer's or hemp food establishments
name.
(2) The address of the hemp retailer's principal place
of business and the address of the principal place of
business (if that is a different address) from which the
hemp retailer engaged in the business of selling
cannabinoid products subject to tax under this Section.
(3) The total purchase price received by the hemp
retailer for hemp subject to tax under this Section.

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(4) The amount of tax due.
(5) The signature of the hemp retailer.
(6) All returns required to be filed and payments
required to be made under this Section shall be by
electronic means.
(g) Any amount that is required to be shown or reported on
any return or other document under this Section shall, if the
amount is not a whole-dollar amount, be increased to the
nearest whole-dollar amount if the fractional part of a dollar
is $0.50 or more and decreased to the nearest whole-dollar
amount if the fractional part of a dollar is less than $0.50.
If a total amount of less than $1 is payable, refundable, or
creditable, the amount shall be disregarded if it is less than
$0.50 and shall be increased to $1 if it is $0.50 or more.
(h) Any hemp retailer required to collect the tax imposed
by this Section shall be liable to the Department for the tax,
whether or not the tax has been collected by the hemp retailer,
and any such tax shall constitute a debt owed by the hemp
retailer to this State. To the extent that a hemp retailer
required to collect the tax imposed by this Act has actually
collected that tax, the tax is held in trust for the benefit of
the Department.
(i) Any hemp retailer who ceases to engage in the kind of
business that makes the person responsible for filing returns
under this Section shall file a final return under this
Section with the Department within one month after

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discontinuing the business.
(j) Hemp cannabinoid products intended for inhalation
shall not be subject to the Tobacco Products Tax.
(k) Hemp business establishments shall tax credit equal to
50% of the retail or wholesale value of minority business
owned products sold.
(505 ILCS 89/100 new)
Sec. 100. Local ordinances.
(a) Unless otherwise provided under this Act or otherwise
in accordance with State law:
(1) A unit of local government, including a home rule
unit or any non-home rule county within the unincorporated
territory of the county, may enact reasonable zoning
ordinances or resolution, not in conflict with this Act or
rules adopted pursuant to the Act, regulating hemp
business establishments. No unit of local government,
including a home rule unit or any non-home rule county
within the unincorporated territory of the county, may
prohibit home cultivation or consumption of hemp or
cannabinoid products authorized by this Act.
(2) A unit of local government, including a home rule
unit or any non-home rule county within the unincorporated
territory of the county, may enact ordinances or rules not
in conflict with this Act or with rules adopted pursuant
to this Act governing the time and manner of hemp business

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establishment operations through the use of conditional
use permits. A unit of local government, including a home
rule unit, may establish civil penalties for violation of
an ordinance or rules governing the time and manner of
operation of a hemp business establishment or a
conditional use permit in the jurisdiction of the unit of
local government. No unit of local government, including a
home rule unit or non-home rule county within an
unincorporated territory of the county, may unreasonably
restrict the time or manner of hemp business establishment
operations authorized by this Act. No unit of local
government, including a home rule unit or non-home rule
county within an unincorporated territory of the county,
may restrict the number of hemp business establishment
operations authorized by this Act.
(3) A unit of local government, including a home rule
unit or any non-home rule county within the unincorporated
territory of the county, may not enact minimum distance
limitations between hemp business establishments and
locations it deems sensitive.
(4) A unit of local government, including a home rule
unit, or any non-home rule county within the
unincorporated territory of the county may authorize or
permit the on-premises consumption of cannabinoid products
at or in a dispensing organization or retail tobacco
store, as defined in Section 10 of the Smoke Free Illinois

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Act, within its jurisdiction in a manner consistent with
this Act. A dispensing organization or retail tobacco
store authorized or permitted by a unit of local
government to allow on-site consumption shall not be
deemed a public place within the meaning of the Smoke Free
Illinois Act.
(5) A unit of local government, including a home rule
unit, or any non-home rule county within the
unincorporated territory of the county may issue licenses
to regulate hemp food establishments in a manner
consistent with this Act.
(6) A unit of local government, including a home rule
unit or any non-home rule county within the unincorporated
territory of the county, may not regulate the activities
described in paragraph (1), (2), or (3) in a manner more
restrictive than the regulation of those activities by the
State under this Act. This Section is a limitation under
Section 6 of Article VII of the Illinois Constitution.
(vii) A unit of local government, including a home
rule unit or any non-home rule county within the
unincorporated territory of the county, may not enact
ordinances to prohibit or significantly limit a hemp
business establishment's location.
(b) Except as otherwise provided in this Act, the
regulation and permitting of the activities described in this
Act are exclusive powers and functions of the State. Except as

HB5306 - 217 - LRB103 37926 CES 68058 b
otherwise provided in this Act, a unit of local government,
including a home rule unit, may not regulate or license the
activities described in this Act. This Section is a denial and
limitation of home rule powers and functions under Section 6
of Article VII of the Illinois Constitution.
(c) A unit of local government, including a home rule unit
or any non-home rule county within the unincorporated
territory of the county, may not require the issuance of a
tobacco license as a condition of authorizing a hemp business
establishment.
HB5306 - 218 - LRB103 37926 CES 68058 b
INDEX
Statutes amended in order of appearance
35 ILCS 5/203
235 ILCS 5/6-29.2 new
505 ILCS 89/3 new
505 ILCS 89/5
505 ILCS 89/7 new
505 ILCS 89/8 new
505 ILCS 89/8-5 new
505 ILCS 89/10
505 ILCS 89/11 new
505 ILCS 89/15
505 ILCS 89/16 new
505 ILCS 89/17
505 ILCS 89/18
505 ILCS 89/18.5 new
505 ILCS 89/18.10 new
505 ILCS 89/19
505 ILCS 89/20
505 ILCS 89/21 new
505 ILCS 89/22 new
505 ILCS 89/22.5 new
505 ILCS 89/22.10 new
505 ILCS 89/22.15 new
505 ILCS 89/23 new
HB5306 - 219 - LRB103 37926 CES 68058 b