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May 4, 2023 HB 23-1020
Legislative Council Staff
Nonpartisan Services for Colorado’s Legislature
Revised Fiscal Note
(replaces fiscal note dated April 10, 2023)
Drafting Number:
Prime Sponsors:
LLS 23-0029
Rep. Ricks; English
Sen. Fields
Date:
Bill Status:
Fiscal Analyst:
May 4, 2023
Senate Finance
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 and local workload on
an ongoing basis.
Appropriation
Summary:
For FY 2023-24, the bill includes an appropriation of $330,625 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 revised fiscal note reflects the reengrossed bill.
Table 1
State Fiscal Impacts Under HB 23-1020
Budget Year
FY 2023-24
Out Year
FY 2024-25
Revenue - -
Expenditures1 General Fund $175,725 $139,521
Centrally Appropriated $21,690 $23,566
Total Expenditures $197,415 $163,087
Total FTE 1.6 FTE 1.5 FTE
Transfers - -
Other Budget Impacts - -
1
The fiscal note assumes that the program can be funded from the Marijuana Cash Fund; however, the current
appropriation provides funding from the General Fund, reappropriated to the Marijuana Cash Fund.
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May 4, 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 regular marijuana license. The bill makes the following changes to the social equity
marijuana program:
creates an independent delivery license for social equity licensees that allows for purchase of
marijuana and marijuana products for sale and delivery to consumers, beginning March 1, 2024;
adds transporter, hospitality business, and independent delivery licenses as accelerator marijuana
licenses for which social equity licensees may apply;
allows social equity licensees with a retail marijuana transporter license and a delivery permit to
convert their license to an independent delivery license prior to February 29,2024;
expands eligibility criteria for social equity licensees beginning March 1, 2024;
specifies that social equity licensees and accelerator-endorsed licensees may be eligible for
incentives, which are determined by the Department of Revenue (DOR) through rule and may
include a reduction or waiver of application and license fees;
requires the DOR to report annually to the legislature on the social equity program starting
January 2025, including recommendations for social equity funding sources or license types that
were developed by either a new or existing working group;
requires the DOR to promulgate rules implementing new license types; and
prohibits the DOR from issuing new social equity licenses from the effective date of the bill until
March 1, 2024.
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.
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May 4, 2023 HB 23-1020
Assumptions
The bill prohibits the DOR from issuing new social equity licenses from the effective date of the bill
until March 1, 2024; however, the DOR would still be required to accept applications in this time
frame. Without authority to issue new licenses, the fiscal note assumes that DOR would be required
to deny applications, which may result in additional legal services costs. This fiscal note assumes that
DOR is permitted to stop accepting applications through March 1, 2024, and thus, no additional
appropriations are required for this purpose.
State Revenue
The bill impacts revenue to the Marijuana Cash Fund in the DOR starting in FY 2023-24. The precise
revenue impact has not been estimated, primarily because the amount of social equity incentives are
unknown.
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. The bill will increase fees paid
by social equity applicants utilizing expanded licensing options. In addition, the bill may:
increase marijuana fees and revenue to cover expenditures required to implement the bill (see
Departmental Difference); and
potentially decrease fees as incentives for social equity licensees.
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. The fiscal note assumes that new social equity
applications will occur after March 1, 2024.
State Expenditures
The bill increases state expenditures by $197,415 in FY 2023-24 and $163,087 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.
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May 4, 2023 HB 23-1020
Table 2
Expenditures Under HB 23-1020
FY 2023-24 FY 2024-25
Department of Revenue
Personal Services $82,250 $98,700
Operating Expenses $1,485 $1,755
Capital Outlay Costs $6,670 -
Legal Services $76,133 $38,066
Mapping Fees $1,000 $1,000
Centrally Appropriated Costs
1
$19,821 $23,566
FTE – Personal Services 1.1 FTE 1.3 FTE
FTE – Legal Services 0.4 FTE 0.2 FTE
DOR Subtotal $187,359 $163,087
Office of Economic Development & International Trade
Personal Services $8,187 -
Centrally Appropriated Costs
1
$1,869 -
FTE – Personal Services 0.1 FTE -
OEDIT Subtotal $10,056 -
Total $197,415 $163,087
Total FTE 1.6 FTE 1.5 FTE
1
Centrally appropriated costs are not included in the bill's appropriation.
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 0.8 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 and implement the new license. The analyst
will collect data related to eligibility requirements and reports on social equity program activity.
Costs include standard operating and capital outlay expenses and are prorated for a September 1
start date in the first year.
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.
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May 4, 2023 HB 23-1020
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.
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.
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 90 days following adjournment of the General Assembly sine die, assuming no
referendum petition is filed.
State Appropriations
For FY 2023-24, the bill includes an appropriation of $330,625 from the General Fund to the Marijuana
Cash Fund, and in the same amount from the Marijuana Cash Fund to the DOR, and 1.1 FTE. Of this
amount, $114,199 is further reappropriated to the Department of Law, with 0.4 FTE. All funding not
expended prior to July 1, 2024, is further appropriated to the departments in FY 2024-25 for the same
purpose.
No appropriation is required for OEDIT. The Marijuana Entrepreneur Fund is continuously
appropriated to OEDIT.
Departmental Difference
Marijuana Cash Fund. The Marijuana Cash Fund is currently in a cash fund deficit of approximately
$4 million. While the DOR has the ability to adjust fees or make other programmatic adjustments, it
has concerns about doing so given the current economic conditions in the marijuana industry, and
requests a General Fund appropriation for this bill. This fiscal note assumes that a regulatory program
must operate using a cash fund, and does not include funding from the General Fund.
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May 4, 2023 HB 23-1020
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.