SB3377 104TH GENERAL ASSEMBLY

LRB104 17196 BDA 30615 b

104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026
SB3377

Introduced 2/4/2026, by Sen. Emil Jones, III

SYNOPSIS AS INTRODUCED:

See Index

Amends the Illinois Income Tax Act. Creates a corporate income tax deduction for hemp business establishments in an amount equal to 50% of the income generated by the sale of products made by businesses owned by minority and other specific priority-population-owned businesses. Amends the Tobacco Products Tax Act of 1995 to exclude hemp-cannabinoid products subject to tax under the Industrial Hemp Act from the definition of tobacco products. Amends the Liquor Control Act of 1934 to provide that hemp extract and hemp-cannabinoid products made in compliance with State law are considered fit for human consumption. Authorizes liquor license holders to manufacture, distribute, and sell such products. Amends the Industrial Hemp Act to establish a comprehensive regulatory framework for hemp and hemp-derived cannabinoid products, including licensing, registration, packaging and labeling standards, age verification, laboratory testing, recordkeeping, enforcement, and penalties. Creates the Hemp Social Equity Fund to support loans, grants, and technical assistance for social equity applicants. Makes conforming changes to the State Finance Act. Effective January 1, 2027.

A BILL FOR

AN ACT concerning agriculture.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The State Finance Act is amended by adding Section 5.1038 as follows:

(30 ILCS 105/5.1038 new)

Sec. 5.1038. The Hemp Social Equity Fund.

Section 10. The Illinois Income Tax Act is amended by changing Section 203 as follows:

(35 ILCS 5/203) (from Ch. 120, par. 2-203)

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 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 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 through 2025, 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; for taxable years 2026 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) or (n) 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.

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 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. For taxable years ending on and after December 31, 2025, for purposes of applying this paragraph in the case of a taxpayer to which Section 163(j) of the Internal Revenue Code applies for the taxable year, the reduction in the amount of interest for which a deduction is allowed by reason of Section 163(j) shall be treated as allocable first to persons who are not foreign persons referred to in this paragraph and then to such foreign persons.

For taxable years ending before December 31, 2025, 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 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).

For taxable years ending on or after December 31, 2025, this paragraph shall not apply to the following:

(i) 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

(ii) 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 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 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.

For taxable years ending before December 31, 2025, 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:

(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);

For taxable years ending on or after December 31, 2025, this paragraph shall not apply to the following:

(i) 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

(ii) 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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) or (n) 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) or (n) 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 election under Section 168(k)(7) or Section 168(n)(6) 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) or (n) 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, 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 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 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 (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;

(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) 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, 2026, if the taxpayer is a qualified worker, as defined in the Workforce Development through Charitable Loan Repayment Act, an amount equal to the amount included in the taxpayer's federal adjusted gross income that is attributable to student loan repayment assistance received by the taxpayer during the taxable year from a qualified community foundation under the provisions of the Workforce Development through Charitable Loan Repayment Act.

This subparagraph (LL) is exempt from the provisions of Section 250; and

(MM) For taxable years beginning on or after January 1, 2025, if the taxpayer is an eligible resident as defined in the Medical Debt Relief Act, an amount equal to the amount included in the taxpayer's federal adjusted gross income that is attributable to medical debt relief received by the taxpayer during the taxable year from a nonprofit medical debt relief coordinator under the provisions of the Medical Debt Relief Act. This subparagraph (MM) is exempt from the provisions of Section 250.

(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 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 (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, 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 through 2025, 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; for taxable years 2026 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) or (n) 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;

(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, accrued, or incurred. For taxable years ending on and after December 31, 2025, for purposes of applying this paragraph in the case of a taxpayer to which Section 163(j) of the Internal Revenue Code applies for the taxable year, the reduction in the amount of interest for which a deduction is allowed by reason of Section 163(j) shall be treated as allocable first to persons who are not foreign persons referred to in this paragraph and then to such foreign persons.

For taxable years ending before December 31, 2025, 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 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).

For taxable years ending on or after December 31, 2025, this paragraph shall not apply to the following:

(i) 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

(ii) 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 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 "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.

For taxable years ending before December 31, 2025, 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:

(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);

For taxable years ending on or after December 31, 2025, this paragraph shall not apply to the following:

(i) 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

(ii) 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 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 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;

(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;

(E-21) the amount that is claimed as a federal deduction when computing the taxpayer's federal taxable income for the taxable year and that is attributable to an endowment gift for which the taxpayer receives a credit under the Illinois Gives Tax Credit Act;

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 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 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 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 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 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 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. For taxable years ending on or after December 31, 2025, 50% of the amount of global intangible low-taxed income or net controlled foreign corporation (CFC) tested income received or deemed received or paid or deemed paid under Sections 951 through 965 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. 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) or (n) 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) or (n) 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 election under Section 168(k)(7) or Section 168(n)(6) 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) or (n) 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 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 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 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 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

(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, 2026, 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 of 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 subparagraph, "minority and other specific priority-population-owned businesses" includes businesses 51% or more owned by women, parents, African Americans, Puerto Ricans, Hispanics, Asian Americans, veterans, persons 65 years of age or older, 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 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 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 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 through 2025, 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; for taxable years 2026 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) or (n) 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 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 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. For taxable years ending on and after December 31, 2025, for purposes of applying this paragraph in the case of a taxpayer to which Section 163(j) of the Internal Revenue Code applies for the taxable year, the reduction in the amount of interest for which a deduction is allowed by reason of Section 163(j) shall be treated as allocable first to persons who are not foreign persons referred to in this paragraph and then to such foreign persons.

For taxable years ending before December 31, 2025, 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 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).

For taxable years ending on or after December 31, 2025, this paragraph shall not apply to the following:

(i) 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

(ii) 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;

(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) 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.

For taxable years ending before December 31, 2025, 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:

(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);

For taxable years ending on or after December 31, 2025, this paragraph shall not apply to the following:

(i) 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

(ii) 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 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 (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;

(G-17) the amount that is claimed as a federal deduction when computing the taxpayer's federal taxable income for the taxable year and that is attributable to an endowment gift for which the taxpayer receives a credit under the Illinois Gives Tax Credit Act;

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 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 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 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 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) or (n) 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) or (n) 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 election under Section 168(k)(7) or Section 168(n)(6) 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) or (n) 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.

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 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 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 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, 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 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, 2026, 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 of 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 subparagraph, "minority and other specific priority-population-owned businesses" includes businesses 51% or more owned by women, parents, African Americans, Puerto Ricans, Hispanics, Asian Americans, veterans, persons 65 years of age or older, 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) 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;

(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 through 2025, 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; for taxable years 2026 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) or (n) 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 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 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. For taxable years ending on and after December 31, 2025, for purposes of applying this paragraph in the case of a taxpayer to which Section 163(j) of the Internal Revenue Code applies for the taxable year, the reduction in the amount of interest for which a deduction is allowed by reason of Section 163(j) shall be treated as allocable first to persons who are not foreign persons referred to in this paragraph and then to such foreign persons.

For taxable years ending before December 31, 2025, 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 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).

For taxable years ending on or after December 31, 2025, this paragraph shall not apply to the following:

(i) 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

(ii) 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; 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) 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;

For taxable years ending on or after December 31, 2025, 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:

(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);

For taxable years ending on or after December 31, 2025, this paragraph shall not apply to the following:

(i) 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

(ii) 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 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 (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;

(D-12) the amount that is claimed as a federal deduction when computing the taxpayer's federal taxable income for the taxable year and that is attributable to an endowment gift for which the taxpayer receives a credit under the Illinois Gives Tax Credit Act;

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), (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 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;

(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) or (n) 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) or (n) 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 election under Section 168(k)(7) or Section 168(n)(6) 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) or (n) 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 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 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 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 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, 2026, 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 of 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 subparagraph, "minority and other specific priority-population-owned businesses" includes businesses 51% or more owned by women, parents, African Americans, Puerto Ricans, Hispanics, Asian Americans, veterans, persons 65 years of age or older, 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 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 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 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 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, 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 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 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 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. 103-8, eff. 6-7-23; 103-478, eff. 1-1-24; 103-592, Article 10, Section 10-900, eff. 6-7-24; 103-592, Article 170, Section 170-90, eff. 6-7-24; 103-605, eff. 7-1-24; 103-647, eff. 7-1-24; 104-6, eff. 6-16-25; 104-417, eff. 8-15-25; 104-453, eff. 12-12-25.)

Section 15. The Tobacco Products Tax Act of 1995 is amended by changing Section 10-5 as follows:

(35 ILCS 143/10-5)

Sec. 10-5. Definitions. For purposes of this Act:

"Business" means any trade, occupation, activity, or enterprise engaged in, at any location whatsoever, for the purpose of selling tobacco products.

"Cigarette" has the meaning ascribed to the term in Section 1 of the Cigarette Tax Act.

"Contraband little cigar" means:

(1) packages of little cigars containing 20 or 25 little cigars that do not bear a required tax stamp under this Act;

(2) packages of little cigars containing 20 or 25 little cigars that bear a fraudulent, imitation, or counterfeit tax stamp;

(3) packages of little cigars containing 20 or 25 little cigars that are improperly tax stamped, including packages of little cigars that bear only a tax stamp of another state or taxing jurisdiction; or

(4) packages of little cigars containing other than 20 or 25 little cigars in the possession of a distributor, retailer or wholesaler, unless the distributor, retailer, or wholesaler possesses, or produces within the time frame provided in Section 10-27 or 10-28 of this Act, an invoice from a stamping distributor, distributor, or wholesaler showing that the tax on the packages has been or will be paid.

"Correctional Industries program" means a program run by a State penal institution in which residents of the penal institution produce tobacco products for sale to persons incarcerated in penal institutions or resident patients of a State operated mental health facility.

"Department" means the Illinois Department of Revenue.

"Distributor" means any of the following:

(1) Any manufacturer or wholesaler in this State engaged in the business of selling tobacco products who sells, exchanges, or distributes tobacco products to retailers or consumers in this State.

(2) Any manufacturer or wholesaler engaged in the business of selling tobacco products from without this State who sells, exchanges, distributes, ships, or transports tobacco products to retailers or consumers located in this State, so long as that manufacturer or wholesaler has or maintains within this State, directly or by subsidiary, an office, sales house, or other place of business, or any agent or other representative operating within this State under the authority of the person or subsidiary, irrespective of whether the place of business or agent or other representative is located here permanently or temporarily.

(3) Any retailer who receives tobacco products on which the tax has not been or will not be paid by another distributor.

"Distributor" does not include any person, wherever resident or located, who makes, manufactures, or fabricates tobacco products as part of a Correctional Industries program for sale to residents incarcerated in penal institutions or resident patients of a State operated mental health facility.

"Electronic cigarette" means:

(1) any device that employs a battery or other mechanism to heat a solution or substance to produce a vapor or aerosol intended for inhalation, except for (A) any device designed solely for use with cannabis that contains a statement on the retail packaging that the device is designed solely for use with cannabis and not for use with tobacco or (B) any device that contains a solution or substance that contains cannabis subject to tax under the Compassionate Use of Medical Cannabis Program Act or the Cannabis Regulation and Tax Act;

(2) any cartridge or container of a solution or substance intended to be used with or in the device or to refill the device, except for any cartridge or container of a solution or substance that contains cannabis subject to tax under the Compassionate Use of Medical Cannabis Program Act or the Cannabis Regulation and Tax Act; or

(3) any solution or substance, whether or not it contains nicotine, intended for use in the device, except for any solution or substance that contains cannabis subject to tax under the Compassionate Use of Medical Cannabis Program Act or the Cannabis Regulation and Tax Act.

The changes made to the definition of "electronic cigarette" by this amendatory Act of the 102nd General Assembly apply on and after June 28, 2019, but no claim for credit or refund is allowed on or after the effective date of this amendatory Act of the 102nd General Assembly for such taxes paid during the period beginning June 28, 2019 and the effective date of this amendatory Act of the 102nd General Assembly.

"Electronic cigarette" includes, but is not limited to, any electronic nicotine delivery system, electronic cigar, electronic cigarillo, electronic pipe, electronic hookah, vape pen, or similar product or device, and any component or part that can be used to build the product or device. "Electronic cigarette" does not include: cigarettes, as defined in Section 1 of the Cigarette Tax Act; any product approved by the United States Food and Drug Administration for sale as a tobacco cessation product, a tobacco dependence product, or for other medical purposes that is marketed and sold solely for that approved purpose; any asthma inhaler prescribed by a physician for that condition that is marketed and sold solely for that approved purpose; or any therapeutic product approved for use under the Compassionate Use of Medical Cannabis Program Act.

"Little cigar" means and includes any roll, made wholly or in part of tobacco, where such roll has an integrated cellulose acetate filter and weighs less than 4 pounds per thousand and the wrapper or cover of which is made in whole or in part of tobacco.

"Manufacturer" means any person, wherever resident or located, who manufactures and sells tobacco products, except a person who makes, manufactures, or fabricates tobacco products as a part of a Correctional Industries program for sale to persons incarcerated in penal institutions or resident patients of a State operated mental health facility.

Beginning on January 1, 2013, "moist snuff" means any finely cut, ground, or powdered tobacco that is not intended to be smoked, but shall not include any finely cut, ground, or powdered tobacco that is intended to be placed in the nasal cavity.

"Nicotine" means any form of the chemical nicotine, including any salt or complex, regardless of whether the chemical is naturally or synthetically derived, and includes nicotinic alkaloids and nicotine analogs.

"Person" means any natural individual, firm, partnership, association, joint stock company, joint venture, limited liability company, or public or private corporation, however formed, or a receiver, executor, administrator, trustee, conservator, or other representative appointed by order of any court.

"Place of business" means and includes any place where tobacco products are sold or where tobacco products are manufactured, stored, or kept for the purpose of sale or consumption, including any vessel, vehicle, airplane, train, or vending machine.

"Prior continuous compliance taxpayer" means any person who is licensed under this Act and who, having been a licensee for a continuous period of 2 years, is determined by the Department not to have been either delinquent or deficient in the payment of tax liability during that period or otherwise in violation of this Act. "Prior continuous compliance taxpayer" also means any taxpayer who has, as verified by the Department, continuously complied with the condition of his bond or other security under provisions of this Act for a period of 2 consecutive years. In calculating the consecutive period of time described in this definition for qualification as a prior continuous compliance taxpayer, a consecutive period of time of qualifying compliance immediately prior to the effective date of this amendatory Act of the 103rd General Assembly shall be credited to any licensee who became licensed on or before the effective date of this amendatory Act of the 103rd General Assembly. A distributor that is a prior continuous compliance taxpayer and becomes a successor to a distributor as the result of an acquisition, merger, or consolidation of that distributor shall be deemed to be a prior continuous compliance taxpayer with respect to the acquired, merged, or consolidated entity.

"Retailer" means any person in this State engaged in the business of selling tobacco products to consumers in this State, regardless of quantity or number of sales.

"Sale" means any transfer, exchange, or barter in any manner or by any means whatsoever for a consideration and includes all sales made by persons.

"Stamp" or "stamps" mean the indicia required to be affixed on a package of little cigars that evidence payment of the tax on packages of little cigars containing 20 or 25 little cigars under Section 10-10 of this Act. These stamps shall be the same stamps used for cigarettes under the Cigarette Tax Act.

"Stamping distributor" means a distributor licensed under this Act and also licensed as a distributor under the Cigarette Tax Act or Cigarette Use Tax Act.

"Tobacco products" means any product that is made from or derived from tobacco that is intended for human consumption or is likely to be consumed, including but not limited to cigars, including little cigars; cheroots; stogies; periques; granulated, plug cut, crimp cut, ready rubbed, and other smoking tobacco; snuff (including moist snuff) and snuff flour; cavendish; plug and twist tobacco; fine-cut and other chewing tobaccos; shorts; refuse scraps, clippings, cuttings, and sweeping of tobacco; snus; shisha and tobacco for use in waterpipes; and other kinds and forms of tobacco, prepared in such manner as to be suitable for chewing or smoking in a pipe or otherwise, or both for chewing and smoking or for inhalation, absorption, or ingesting by any other means; but does not include cigarettes as defined in Section 1 of the Cigarette Tax Act or tobacco purchased for the manufacture of cigarettes by cigarette distributors and manufacturers defined in the Cigarette Tax Act and persons who make, manufacture, or fabricate cigarettes as a part of a Correctional Industries program for sale to residents incarcerated in penal institutions or resident patients of a State operated mental health facility.

Beginning on July 1, 2019, "tobacco products" also includes electronic cigarettes.

Beginning July 1, 2025, "tobacco products" also includes any product that is made from or derived from tobacco, or that contains nicotine whether natural or synthetic, that is intended for human consumption or is likely to be consumed, including but not limited to nicotine pouches, lozenges, and gum; and other kinds and forms of nicotine prepared in such manner as to be suitable for chewing or smoking in a pipe or otherwise, or both for chewing and smoking or for inhalation, absorption, or ingesting by any other means.

"Tobacco products" does not include any product that has been approved by the United States Food and Drug Administration for sale as a tobacco or smoking cessation product, a nicotine replacement therapy product, or for other medical purposes where that product is marketed and sold solely for such approved use, including but not limited to spray or inhaler prescribed by a physician, chewing gum, skin patches, or lozenges. "Tobacco products" also does not include any hemp-cannabinoid product subject to the tax under Section 80 of the Industrial Hemp Act.

"Wholesale price" means the established list price for which a manufacturer sells tobacco products to a distributor, before the allowance of any discount, trade allowance, rebate, or other reduction. In the absence of such an established list price, the manufacturer's invoice price at which the manufacturer sells the tobacco product to unaffiliated distributors, before any discounts, trade allowances, rebates, or other reductions, shall be presumed to be the wholesale price.

"Wholesaler" means any person, wherever resident or located, engaged in the business of selling tobacco products to others for the purpose of resale. "Wholesaler", when used in this Act, does not include a person licensed as a distributor under Section 10-20 of this Act unless expressly stated in this Act.

(Source: P.A. 103-1001, eff. 8-9-24; 104-6, eff. 7-1-25.)

Section 20. 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) As used in 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.

"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 that meets the packaging, labeling, and testing requirements of the Industrial Hemp Act.

"Hemp extract" means a substance or compound intended for ingestion or inhalation that is derived from or contains hemp and that does not contain other controlled substances.

(b) 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.

(c) License holders under this Act may buy, import, manufacture, produce, possess, hold, distribute, transport, transfer, sell, serve, sample, dispense, deliver, market, and advertise hemp-cannabinoid products and any other act in compliance with this Section.

(d) Nothing in this Act:

(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 hemp-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.

Section 25. The Industrial Hemp Act is amended by changing Sections 5, 10, 15, 17, 18, 19, 20, and 25 and by adding Sections 3, 5.1, 5.2, 5.3, 5.4, 5.5, 5.6, 5.7, 5.8, 5.9, 5.10, 5.11, 5.12, 5.13, 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. The General Assembly finds that:

(1) 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.

(2) 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:

(A) Persons will have to show proof of age before purchasing hemp-derived cannabinoids.

(B) 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.

(C) 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.

(D) Legitimate, taxpaying businesspeople, and not criminal actors, will conduct the sales of hemp-derived cannabinoids.

(E) Hemp-derived cannabinoids sold in the State will be tested, labeled, and subject to additional regulation to ensure that purchasers are informed and protected.

(F) Purchasers will be informed of known health risks associated with the use of hemp-derived cannabinoids, as concluded by evidence-based, peer reviewed research.

(3) 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.

(4) This Act shall not diminish the State's duties and commitment to purchasers and businesses that operate under the Cannabis Regulation and Tax Act, nor alter the protections granted to them.

(5) 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.

(6) 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, and labeled according to a batch cycle production record executed and documented during the same cycle of manufacture.

"Bona fide labor organization" means a labor organization recognized under the federal Labor Relations Act.

"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. "Cottage hemp-cannabinoid products" includes 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 are produced by a cottage hemp food operator.

"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 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 an employee.

"Department" means the Department of Agriculture, the Department of Public Health, or the Department of Financial and Professional Regulation 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 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 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 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 an Illinois farm or facility operated by an organization or business that is licensed by the Department of Agriculture to grow industrial hemp.

"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 ingestion or inhalation 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 that incorporates intermediate hemp products in the manufacturing, processing, or preparation of prepackaged or ready-to-eat hemp-cannabinoid products intended for human ingestion and which meets the requirements of this Act.

"Hemp justice participant" means an individual who is an Illinois resident, who 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 effective date of this amendatory Act of the 104th General Assembly, and who is prohibited either by 7 U.S.C. 1639q from participating in an industrial hemp program or by 7 U.S.C. 1639r from producing 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 before flowering, that are not more than 14 days after germination, and that are no more than 5 inches in height.

"Hemp processor" means a facility operated by an organization or business that is licensed by the Department of Agriculture to convert raw industrial hemp material into processed hemp products or intermediate hemp products through processes, such as 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 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 of 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; or

(2) an applicant with at least 51% ownership and control by one or more individuals who: (i) have been arrested for, convicted 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.

"Illinois hemp" means industrial hemp grown, processed or produced by hemp business establishments licensed and located within the State under this Act.

"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, either by ingestion or inhalation.

"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 a bona fide labor organization that prohibits labor organizations and members from engaging in picketing, work stoppages, boycotts, and any other economic interference with the hemp business establishment and that prohibits the hemp business establishment from disrupting efforts by the bona fide labor organization to communicate with, and attempt to organize and represent, the hemp business establishment's employees.

"IDOA" means the 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.

"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 and that is allowed to purchase live hemp products and to grow at their residence under the Cannabis Regulation and Tax Act.

"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 purpose 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, 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. "Processed hemp products" includes 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 products" includes hulled hemp seed, hemp seed protein powder, hemp seed oil, hemp stalks, hemp leaves, and artwork incorporating hemp by-products.

"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 uses intermediate hemp products as an input and that is produced as a single serving in a retail food establishment.

"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.

"THC" means delta-9 tetrahydrocannabinol. "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 89/5.1 new)

Sec. 5.1. Cottage hemp-cannabinoid product requirements. Cottage hemp-cannabinoid products may 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.

(505 ILCS 89/5.2 new)

Sec. 5.2. Cottage hemp food operator requirements. Cottage hemp food operators must disclose that prepared ready-to-eat hemp-cannabinoid products are Cottage hemp-cannabinoid products and adhere to the labeling and disclosure requirements in the Act. Cottage hemp food operators may not use more than the equivalent of 1,000 grams 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.

(505 ILCS 89/5.3 new)

Sec. 5.3. Hemp cultivator requirements. Hemp cultivator facilities may be located outdoors, in greenhouses, or indoors and may be located on residentially zoned properties in accordance with permitted agricultural use guidelines from local zoning ordinances, except as provided under Section 10.

(505 ILCS 89/5.4 new)

Sec. 5.4. Hemp food establishment requirements. 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 may sell ready-to-eat hemp-cannabinoid products to hemp-cannabinoid users or medical patients.

(505 ILCS 89/5.5 new)

Sec. 5.5. Hemp retailer requirements. Hemp retailers are responsible for collecting and remitting hemp-cannabinoid taxes under this Act.

(505 ILCS 89/5.6 new)

Sec. 5.6. Illinois hemp requirements. 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. For Illinois hemp business establishments with certain programs, such as with respect to hemp program justice participants, individuals with non-violent State or federal controlled substance felony convictions within the last 10 years, or other programs that may touch on federal prohibitions founded on the interstate commerce clause of the United States Constitution, these Illinois hemp business establishments may only legally produce, process, and distribute Illinois hemp within the State and they may not export Illinois hemp.

(505 ILCS 89/5.7 new)

Sec. 5.7. Intermediate hemp product requirements. The 0.3% delta-9 THC limit does not apply for intermediate hemp products.

(505 ILCS 89/5.8 new)

Sec. 5.8. Labor peace agreement requirements. A labor peace agreement shall provide a bona fide labor organization access at reasonable times to areas where 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. A labor peace agreement shall not mandate a particular method of election or certification of the bona fide labor organization.

(505 ILCS 89/5.9 new)

Sec. 5.9. Live hemp product requirements. For a live hemp product, a representative sample of the live hemp material must test under 0.3% delta-9 THC by weight using high performance liquid chromatography or comparable technologies capable of identifying delta-9 THC separately from other cannabinoids. Live hemp material can only be sold or transferred to other hemp cultivators or medical patients.

(505 ILCS 89/5.10 new)

Sec. 5.10. Medical patient requirements. Medical patients under the age of 21 are authorized to purchase hemp-cannabinoid products.

(505 ILCS 89/5.11 new)

Sec. 5.11. Raw hemp product requirements. Raw hemp products may 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.

(505 ILCS 89/5.12 new)

Sec. 5.12. Ready-to-eat hemp product requirements. Ready-to-eat hemp products must be registered under this Act and may only be sold directly to hemp-cannabinoid users or medical patients within the State.

(505 ILCS 89/5.13 new)

Sec. 5.13. Serving or serving size requirements. A serving size may be indicated by marking or scoring on packaging or labeling.

(505 ILCS 89/7 new)

Sec. 7. Lawful user and lawful product.

(a) 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.

(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 marketable hemp products, including, but not limited to, stripped stalks, fiber, dried roots, nonviable seeds, seed oils, floral material, and plant extracts, to members of the general public, both within and outside the State, in compliance with this Act.

(d) Lawful products under this Act may be transported by consumers and may not constitute probable cause for a traffic stop or vehicle inspection.

(e) Persons may legally possess, cultivate, transport, distribute, process, sell, and buy food products, including beverages, that contain a delta-9 THC concentration of not more than 0.3% by weight.

(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 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 under the Compassionate Use of Medical Cannabis Program Act;

(2) 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) Except as provided under subsection (a), nothing in this Act authorizes a person who is under 21 years of age to possess hemp-cannabinoid products. Except as provided under subsection (a), a person under 21 years of age with hemp-cannabinoid products in his or her possession is guilty of a civil law violation as described in Section 4 of the Cannabis Control Act.

(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)

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 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) 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. Furthermore, 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 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 federal law, including institutions that must abide by the Drug-Free Schools and Communities Act Amendments of 1989.

(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.

(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 Department of Agriculture shall regulate hemp cultivation and hemp processing licenses. The Department of Financial and Professional Regulation shall regulate hemp distributors and hemp retailers. The Department of Public Health shall regulate hemp food establishments. The applicant shall provide 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.

(8) for hemp cultivator applicants, an acknowledgment and consent to the Department collecting, maintaining, and providing to the U.S. Department of Agriculture directly and through the online platform of the U.S. Department of Agriculture, any required data, including but not limited to; status, contact, disposal reporting, background checks if required by the U.S. Department of Agriculture, 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.

The Department of Agriculture may encourage hemp business establishment applicants under this Section 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 or new applications.

(f) License or registration shall be good for a maximum of one 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 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 Department 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 its license.

A hemp business establishment that wishes to change locations must submit a new application for the new location.

(q) As a condition of its license, hemp business 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 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 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 shall provide the information in this Section to the U.S. Department of Agriculture within 30 calendar days of its receipt.

(f) Cultivator licensees shall report hemp planting acreage to the Farm Service Agency of the U.S. Department of Agriculture. This report shall be submitted to the Farm Service Agency 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.

(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, 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 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 under Section 10 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 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 the maximum amount under subsection (g) of Section 10 of this Act.

(g) The Department shall adopt rules concerning the review of standard operating procedures 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)

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 Class A misdemeanor and may be required to pay 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

(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 Class A misdemeanor:

(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) 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 paragraph 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 Section 21.

(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 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 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 or a penalty of $2,500 for a second violation under other circumstances; and

(3) a penalty of $10,000 for a third or subsequent violation at the same location within 2 years of the second violation or a penalty of $2,500 for a third or subsequent violation under other circumstances.

(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.

(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 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) The amount of 15% of all monies in the Industrial Hemp Regulatory Fund shall be used by the Department of Agriculture for the purposes of implementation, administration, and enforcement of this Act. The amount of 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. The amount of 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. The amount of 55% of all monies deposited into the Fund shall be immediately deposited into the Hemp Social Equity Fund and be used by the Department of Agriculture 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 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; and

(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 in communities who have been most impacted by the war on drugs; and

(4) evaluate whether there exists discrimination in the State's hemp industry, and, if so, evaluate 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 into the hemp market.

The 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 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 Director 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 the findings and 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.

(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 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 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, 2026 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; and

(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.

(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 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 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)

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.

(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 paragraphs (5) through (7) of this subsection 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 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 years of age or over.

(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, 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 hemp-cannabinoid product packaging and labeling.

(a) Hemp food establishments must ensure that the total milligram content of each type of hemp-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:

(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 standard operating procedures; 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 hemp-cannabinoid products.

(a) The following types of hemp-cannabinoid products are exempted from the requirements of Section 22:

(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 0.5mg 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 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.

(6) 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.

(7) 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.

(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.

(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 consumption 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 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 Drug Enforcement Administration 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.

(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, consisting of full buds (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 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;

(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 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.

(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.

(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.

(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.

(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.

(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.

(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.

(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 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 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 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 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 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.

(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 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) If 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 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) If 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:

(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) If 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 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 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:

(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 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 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 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 products test under 0.3% 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% 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 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 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, 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 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.

(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, 2026, 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. 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 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 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.

(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

(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 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 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 5 to 8 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.

(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 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. hemp-cannabinoid tax.

(a) A tax is imposed upon the privilege of engaging or continuing within this State in the business of the retail sale of hemp-cannabinoid products, including hemp-cannabinoid products for inhalation, help-cannabinoid products for ingestion, and ready-to-eat hemp-cannabinoid products. The applicable tax rate is equal to 5% of the retail sales price of the hemp-cannabinoid products sold during the reporting period. Such tax is imposed in addition to all other applicable taxes.

(b) On or before the 20th day of the first month following the end of the calendar quarter, a person in the business of the retail sale of hemp-cannabinoid products shall file with the Department of Revenue a return on a form prescribed by the Department of Revenue. Each person in the business of the retail sale of hemp-cannabinoid products in this State shall pay to the Department of Revenue the amount of the tax at the time when the person is required to file the person's return for the period during which the tax was collected.

(c) Revenue from the tax shall be deposited in the Industrial Hemp Fund.

(d) 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 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.

(e) 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.

(f) 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.

(g) 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 of Revenue 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.

(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.

(h) 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.

(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 of Revenue within one month after discontinuing the business.

(j) A person required to file a return under this Section who knowingly files a false or incomplete return is guilty of a Class A misdemeanor.

(k) The Department of Revenue has full power to: (i) administer and enforce this Law; (ii) collect all taxes, penalties, and interest due under this Section; (iii) dispose of taxes, penalties, and interest so collected; and (iv) determine all rights to credit memoranda or refunds arising on account of the erroneous payment of tax, penalty, or interest under this Law.

(l) All of the provisions of Sections 5a, 5b, 5c, 5d, 5e, 5f, 5g, 5i, and 5j of the Retailers' Occupation Tax Act, which are not inconsistent with this Act, and Section 3-7 of the Uniform Penalty and Interest Act shall apply, as far as practicable, to the subject matter of this Act to the same extent as if such provisions were included herein.

(m) The tax imposed in this Section shall be administered by the Department of Revenue under rules adopted by the Department of Revenue. The Department of Revenue shall adopt rules as necessary to implement this Section.

(505 ILCS 89/100 new)

Sec. 100. Local ordinances; home rule.

(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 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 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 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 Act is a denial and limitation of home rule powers and functions under subsection (g) of 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.

Section 99. Effective date. This Act takes effect on January 1, 2027.