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January 23, 2023 HB 23-1020
Legislative Council Staff
Nonpartisan Services for Colorado’s Legislature
Fiscal Note
Drafting Number:
Prime Sponsors:
LLS 23-0029
Rep. Ricks
Date:
Bill Status:
Fiscal Analyst:
January 23, 2023
House Business
Clayton Mayfield | 303-866-5851
clayton.mayfield@coleg.gov
Bill Topic: SOCIAL EQUITY LICENSES IN REGULATED MARIJUANA
Summary of
Fiscal Impact:
☒ State Revenue
☒ State Expenditure
☐ State Transfer
☒ TABOR Refund
☒ Local Government
☐ Statutory Public Entity
The bill expands eligibility criteria for social equity licensees, expands the categories
of marijuana accelerator licenses for which social equity licensees may apply, and
requires additional incentives for social equity licensees and accelerator-endorsed
licensees. The bill increases state revenue and expenditures on an ongoing basis.
Appropriation
Summary:
For FY 2023-24, the bill requires an appropriation of $160,764 to the Department of
Revenue. The Marijuana Entrepreneur Fund is continuously appropriated to the Office
of Economic Development. See State Appropriations section for detail.
Fiscal Note
Status:
The fiscal note reflects the introduced bill.
Table 1
State Fiscal Impacts Under HB 23-1020
Budget Year
FY 2023-24
Out Year
FY 2024-25
Revenue Cash Funds $178,862 $134,125
Total Revenue $178,862 $134,125
Expenditures Cash Funds $170,589 $116,027
Centrally Appropriated $20,120 $18,098
Total Expenditures $190,709 $134,125
Total FTE 1.5 FTE 1.2 FTE
Transfers - -
Other Budget Impacts TABOR Refunds $178,862 $134,125
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January 23, 2023 HB 23-1020
Summary of Legislation
Under current law, retail marijuana store, cultivation facility, and manufacturing accelerator licenses
are awarded to social equity applicants that meet certain criteria. Existing licensees can receive
accelerator endorsements to host social equity licensees in these categories. Social equity licensees may
also hold any standalone marijuana license. The bill makes the following changes to the social equity
marijuana program:
adds hospitality business, retail delivery, and transporter licenses as accelerator marijuana
licenses for which social equity licensees may apply;
requires the Department of Revenue (DOR) to report annually to the legislature on the social
equity program starting January 2025;
expands eligibility criteria for social equity licensees beginning January 2024;
allows social equity licensees with a retail marijuana transporter and retail delivery permit as of
January 1, 2024, to exercise the privileges of a retail marijuana store without needing to obtain a
marijuana store or accelerator store license; and
requires that the DOR create incentives for social equity licensees and accelerator-endorsed
licensees, including a reduction or waiver of application and license fees for both original and
renewal applications and licenses for applicable accelerator categories.
The bill also creates a program grant committee in the Office of Economic Development and
International Trade (OEDIT) to review applications, select recipients, and determine award amounts
for the existing Cannabis Business Grant program. OEDIT’s director must appoint 15 persons to serve
on the committee by September 1, 2023.
Background
Under current law, Colorado residents may apply as a social equity licensee if they meet the following
criteria:
resided for at least 15 years between 1980 and 2010 in an area designated as an opportunity zone,
or as a disproportionate impacted area as defined in rule by the Marijuana Enforcement Division;
the applicant or the applicant's immediate family was arrested for or convicted of a marijuana
offense or was subject to civil asset forfeiture related to a marijuana investigation; or
the applicant's household income in the previous year did not exceed an amount determined by
the Department of Revenue (DOR).
As of January 2023, there are 84 active social equity licensees and 119 pending social equity
applications. Fees for regulated marijuana licenses are set through DOR rule.
State Revenue
The bill will increase revenue to the Marijuana Cash Fund in the DOR by an estimated $190,709 in
FY 2023-24 and $134,125 in FY 2024-25 and ongoing.
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January 23, 2023 HB 23-1020
Fee impact on marijuana licenses. Colorado law requires legislative service agency review of
measures which create or increase any fee collected by a state agency. These fee amounts are estimates
only, actual fees will be set administratively by the DOR based on cash fund balance, program costs,
and the number of marijuana licenses subject to the fee. Table 2 below identifies the fee impact of this
bill based on:
increased expenditures to implement changes to the social equity program;
decreased revenue to cover incentives for social equity applicants; and
increased revenue from fees charged to non-social equity licensees to cover the revenue lost as a
result of the incentives and to maintain sufficient fund balance to cover department costs.
The estimated revenue impact from incentives is based on the current fee schedule, the three-year
average of the number of impacted licensees, and expected utilization of the expanded social equity
program.
Table 2
Fee Impact on Marijuana Licenses
Fiscal Year Type of Fee Total Fee Impact
FY 2023-24
Marijuana Fees (cover expenditures) $178,862
Marijuana Fee Incentives (incentives for social equity applicants) (up to $700,000)
Marijuana Fees (cover incentives) up to $700,000
FY 2023-24 Total $178,862
FY 2024-25
Marijuana Fees (cover expenditures) $134,125
Marijuana Fee Incentives (incentives for social equity applicants) (up to $700,000)
Marijuana Fees (cover incentives) up to $700,000
FY 2024-25 Total $134,125
State Expenditures
The bill increases state expenditures by $190,709 in FY 2023-24 and $134,125 in FY 2024-25. Costs are
in the DOR and OEDIT, and are paid from the Marijuana Cash Fund and Marijuana Entrepreneur
Fund, respectively. Expenditures are detailed below and shown in Table 2.
Department of Revenue. The bill increases workload for the DOR to implement changes to the social
equity licensing program and handle an increase in applications for social equity and
accelerator-endorsed licenses.
Staffing. The DOR requires 0.5 FTE Compliance Investigator II and 0.5 FTE Statistical Analyst II.
The investigator will conduct more complex licensing investigations based on new eligibility
criteria, as well as handle an increase in applications. The analyst will collect data related to
eligibility requirements and reports on social equity program activity. Costs include standard
operating and capital outlay expenses. Page 4
January 23, 2023 HB 23-1020
Legal services. The DOR will require 720 hours (0.4 FTE) of legal services in FY 2023-24 and
360 hours (0.2 FTE) in subsequent years to support the DOR with additional rulemaking for the
social equity program and an overall increase in administrative case work as a result of expanding
the social equity program. Legal services are provided by the Department of Law at a rate of
$105.74 per hour.
Mapping fees. The DOR uses maps created by the Department of Local Affairs (DOLA) to
determine if social equity applicants reside in criteria-matching locations. Based on the current
volume of social equity program activity, the DOR pays for each use of DOLA’s maps. The DOR
anticipates moving to a flat-fee model to accommodate the expanded eligibility criteria and
increase in social equity applications.
Office of Economic Development and International Trade. The bill increases workload for OEDIT
to staff a grant program application review committee. OEDIT requires 0.1 FTE Program
Management I in FY 2023-24 only to support the committee by recruiting members, managing
meetings, and assisting with application review and disposition.
Table 3
Expenditures Under HB 23-1020
FY 2023-24 FY 2024-25
Department of Revenue
Personal Services $75,611 $75,611
Operating Expenses $1,350 $1,350
Capital Outlay Costs $6,670 -
Legal Services $76,133 $38,066
Mapping Fees $1,000 $1,000
Centrally Appropriated Costs
1
$18,098 $18,098
FTE – Personal Services 1.0 FTE 1.0 FTE
FTE – Legal Services 0.4 FTE 0.2 FTE
DOR Subtotal $178,862 $134,125
Office of Economic Development & International Trade
Personal Services $9,825 -
Centrally Appropriated Costs
1
$2,022 -
FTE – Personal Services 0.1 FTE -
OEDIT Subtotal $11,847 -
Total $190,709 $134,125
Total FTE 1.5 FTE 1.2 FTE
1
Centrally appropriated costs are not included in the bill's appropriation.
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January 23, 2023 HB 23-1020
Centrally appropriated costs. Pursuant to a Joint Budget Committee policy, certain costs associated
with this bill are addressed through the annual budget process and centrally appropriated in the Long
Bill or supplemental appropriations bills, rather than in this bill. These costs, which include employee
insurance and supplemental employee retirement payments, are shown in Table 3.
Other Budget Impacts
TABOR refunds. The bill is expected to increase the amount of state revenue required to be refunded
to taxpayers by the amounts shown in the State Revenue section above. This estimate assumes the
December 2022 LCS revenue forecast. A forecast of state revenue subject to TABOR is not available
beyond FY 2024-25. Because TABOR refunds are paid from the General Fund, increased cash fund
revenue will decrease the amount of General Fund available to spend or save.
Local Government
The bill may minimally increase workload for local licensing authorities that offer marijuana licenses
to update local licensing regulations.
Effective Date
The bill takes effect upon signature of the Governor, or upon becoming law without his signature.
State Appropriations
For FY 2023-24, the bill requires an appropriation of $160,764 from the Marijuana Cash Fund to the
DOR, and 1.0 FTE. Of this amount, $76,133 is reappropriated to the Department of Law, with 0.4 FTE.
No appropriation is required for OEDIT. The Marijuana Entrepreneur Fund is continuously
appropriated to OEDIT.
State and Local Government Contacts
Counties Economic Development & International Trade Law
Municipalities Public Health & Environment Revenue
The revenue and expenditure impacts in this fiscal note represent changes from current law under the bill for each
fiscal year. For additional information about fiscal notes, please visit: leg.colorado.gov/fiscalnotes.