Page 1
April 17, 2023 SB 23-271
Legislative Council Staff
Nonpartisan Services for Colorado’s Legislature
Fiscal Note
Drafting Number:
Prime Sponsors:
LLS 23-0932
Sen. Roberts; Van Winkle
Date:
Bill Status:
Fiscal Analyst:
April 17, 2023
Senate Finance
Clayton Mayfield | 303-866-5851
clayton.mayfield@coleg.gov
Bill Topic: INTOXICATING CANNABINOID HEMP & MARIJUANA
Summary of
Fiscal Impact:
☒ State Revenue
☒ State Expenditure
☐ State Transfer
☒ TABOR Refund
☐ Local Government
☐ Statutory Public Entity
The bill modifies the regulation of cannabinoids and compounds derived from hemp
and marijuana, and requires the Department of Revenue to conduct a feasibility study.
Starting in FY 2023-24, the bill increases state revenues and expenditures.
Appropriation
Summary:
For FY 2023-24, the bill requires appropriations totaling $1.4 million to multiple state
agencies. See State Appropriations section below.
Fiscal Note
Status:
The fiscal note reflects the introduced bill. Due to time constraints, this analysis is
preliminary and will be updated following further review and any additional information
received.
Table 1
State Fiscal Impacts Under SB 23-271
Budget Year
FY 2023-24
Out Year
FY 2024-25
Revenue Cash Funds $707,269 $596,021
Total Revenue $707,269 $596,021
Expenditures General Fund $575,289 $355,834
Cash Funds $841,074 $704,948
Centrally Appropriated $206,253 $196,564
Total Expenditures $1,622,616 $1,257,346
Total FTE 8.2 FTE 7.5 FTE
Transfers - -
Other Budget Impacts TABOR Impact
1
$480,000 $480,000
General Fund Reserve $86,293 $53,375
1
Revenue from marijuana business license fees is not subject to TABOR.
Page 2
April 17, 2023 SB 23-271
Summary of Legislation
The bill modifies the regulation of the manufacture, production, and distribution of cannabinoids and
compounds derived from hemp and marijuana, including synthetic cannabinoids. Cannabinoids and
compounds are divided into the following classifications for hemp and marijuana derived
cannabinoids:
intoxicating cannabinoids
nonintoxicating cannabinoids; and
potentially intoxicating compounds.
Under the bill, intoxicating cannabinoids and potentially intoxicating compounds may only be sold
within Colorado in accordance with the Marijuana Code, but can be manufactured or produced for
export. The Department of Revenue (DOR) is responsible for the regulation and enforcement of
marijuana-derived cannabinoids and compounds, and the Colorado Department of Public Health and
Environment (CDPHE) is responsible for the regulation and enforcement of hemp-derived
cannabinoids and compounds.
CDPHE regulation. Beginning July 1, 2023, owners of regulated hemp facilities must register
annually with the Colorado Department of Public Health and Environment (CDPHE) and pay an
application fee of $100 and a registration fee of $1,500. The bill specifies that it is unlawful for a person
to manufacture or sell hemp and cannabinoids without registering or complying with the bill’s
provisions, and specifies a civil penalty of up to $10,000 per day per violation for regulated hemp
facilities that do not comply with the provisions of the bill.
DOR regulation. The bill requires that manufacturers of intoxicating or potentially intoxicating
products derived from marijuana obtain a license under the Marijuana Code. By July 1, 2024, the DOR
must submit a report to the General Assembly analyzing the feasibility of establishing a standing
committee to evaluate cannabinoids and compounds for classification.
Rulemaking. The bill charges CDPHE and DOR with adopting rules related to labeling, regulation
of synthetic cannabinoids, sales limits, definitions or classification of intoxicating products, and other
regulation required.
Finally, the bill updates statutory provisions for certain crimes regarding synthetic cannabinoids,
updates statutory references regarding local government regulation of hemp businesses, and clarifies
the definition of retail marijuana in the tax statutes.
Background
Senate Bill 22-205 created a task force to study intoxicating hemp products and make legislative and
rule recommendations. The task force report can be found here.
Page 3
April 17, 2023 SB 23-271
Comparable Crime Analysis
Legislative Council Staff is required to include certain information in the fiscal note for any bill that
creates a new crime, changes the classification of an existing crime, or creates a new factual basis for
an existing crime. The following section outlines crimes that are comparable to the offense in this bill
and discusses assumptions on future rates of criminal convictions resulting from the bill.
Prior conviction data and assumptions. This bill creates a new factual basis for the existing offenses
of unlawful use or possession of any synthetic cannabinoids and unlawful distribution,
manufacturing, dispensing, sale, or cultivation of synthetic cannabinoids by allowing synthetic
cannabinoid production. From FY 2019-20 to FY 2021-22, 70 offenders have been sentenced and
convicted for these offenses; however, since it is unknown how many of these convictions resulted
from activity that would be lawful under the bill, the fiscal note assumes that there will be a minimal
impact to criminal case filings or convictions for these offenses under the bill. Because the bill is not
expected to have a tangible impact on criminal justice-related revenue or expenditures at the state or
local levels, these potential impacts are not discussed further in this fiscal note. Visit
leg.colorado.gov/fiscalnotes for more information about criminal justice costs in fiscal notes.
State Revenue
The bill increases state fee revenue to CDPHE, DOR, and potentially the Judicial Department
beginning in FY 2023-24, as described below. Colorado law requires legislative service agency review
of measures which create or increase any fee collected by a state agency; fee impact from the bill is
discussed below.
Fee impact on hemp businesses—CDPHE. The bill increases fee revenue to the Wholesale Food
Manufacturing and Storage Protection Cash Fund in the CDPHE by $480,000 beginning in FY 2023-24
as detailed in Table 2. Fees for hemp application and registration fees are established in the bill, and
the fiscal note assumes that 400 manufacturers will apply for a registration. Table 2 below identifies
the fee impact of this bill. This fee revenue is subject to TABOR.
Table 2
Fee Impact on Hemp Businesses
Fiscal Year
Type of
Fee
Current
Fee
Bill
Fee
Number
Affected
Total Fee
Impact
FY 2023-24 Hemp Application Fee $100 $100 400 -
Hemp Registration Fee $300 $1,500 400 $480,000
FY 2023-24 Total $480,000
FY 2024-25 Hemp Application Fee $100 $100 400 -
Hemp Registration Fee $300 $1,500 400 $480,000
FY 2024-25 Total $480,000
Revenue from the civil penalty provided for in the bill must also be deposited into this fund. It is
assumed that most businesses will take remedial action before a civil action is filed by the CDPHE
and, therefore, any penalty revenue is expected to be minimal. Page 4
April 17, 2023 SB 23-271
Fee impact on marijuana licenses—DOR. The bill increases state revenue to the Marijuana Cash
Fund in the DOR by $227,269 in FY 2023-24, and by $116,021 in FY 2024-25 as detailed in Table 3 below.
These fee amounts reflect the revenue required to cover the additional expenses that DOR will incur
to implement the bill. Actual fees will be set administratively by the DOR based on cash fund balance,
program costs, and the number of marijuana licensees subject to the fee. Marijuana fee revenue is not
subject to TABOR. See Technical Note.
Table 3
Fee Impact on Marijuana Licensees
Fiscal Year Marijuana Licensees Total Fee Impact
FY 2023-24 Fee increase to cover Marijuana Cash Fund expenditures $227,269
FY 2024-25 Fee increase to cover Marijuana Cash Fund expenditures $116,021
The bill may minimally increase the number of marijuana license applications from manufacturers of
intoxicating cannabinoid products. Any change in revenue from license fees is expected to be
minimal.
Judicial Department. The bill may increase state revenue from filing fees in the Judicial Department
due to potential civil actions filed by the CDPHE against noncompliant hemp businesses. This fee
revenue is subject to TABOR. This fiscal note assumes most businesses will follow the law, and any
revenue increase is expected to be minimal.
State Expenditures
The bill increases state expenditures in CDPHE and DOR by $1.6 million in FY 2023-24, and
$1.3 million in FY 2024-25, paid from the General Fund and cash funds. Expenditures are shown in
Table 4 and detailed below.
Table 4
Expenditures Under SB 23-271
FY 2023-24 FY 2024-25
Department of Public Health and Environment
Personal Services $496,195 $504,901
Operating Expenses $7,425 $7,425
Capital Outlay Costs $40,020 -
Legal Services $190,332 $190,332
Other Costs $483,491 $262,000
Centrally Appropriated Costs
1
$177,884 $176,667
FTE – Personal Services 5.4 FTE 5.5 FTE
FTE – Legal Services 1.0 FTE 1.0 FTE
CDPHE Subtotal $1,395,347 $1,141,325 Page 5
April 17, 2023 SB 23-271
Table 4
Expenditures Under SB 23-271 (Cont.)
Department of Revenue
Personal Services $126,435 $94,774
Operating Expenses $2,025 $1,350
Capital Outlay Costs $13,340 -
Legal Services $57,100 -
Centrally Appropriated Costs
1
$28,369 $19,897
FTE – Personal Services 1.5 FTE 1.0 FTE
FTE – Legal Services 0.3 FTE -
DOR Subtotal $227,269 $116,021
Total $1,622,616 $1,257,346
Total FTE 8.2 FTE 7.5 FTE
1
Centrally appropriated costs are not included in the bill's appropriation.
Department of Public Health and Environment
The bill increases expenditures in the CDPHE by $1.4 million in FY 2023-24, with $575,289 paid from
the General Fund, $345,576 from the Wholesale Food Manufacturing and Storage Protection Cash
Fund, and $296,598 paid from the Marijuana Tax Cash Fund.
Staffing. The CDPHE requires the following staff, and costs include standard operating and capital
outlay expenses:
1.0 FTE of Scientist IV to conduct required testing and research of hemp-derived product, research
safety standards, monitor product trends, and identify novel cannabinoids and compounds;
1.0 FTE of Project Manager II to track adverse public health impacts from cannabinoids and
compounds, review medical literature, review clinical evidence, and review epidemiological
research findings; and
3.5 FTE of Environmental Protection Specialists to develop and enforce safety regulations for
hemp businesses, as well as conduct site inspections for these businesses.
Legal services. The CDPHE requires 1,800 hours of legal services support, provided by the
Department of Law (DOL), to assist with initial rulemaking to implement the bill and ongoing
enforcement. This equates to 1.0 FTE in DOL.
Other costs. In addition, CDPHE requires the following lab and testing related costs:
$200,000 in one-time costs for specialized lab equipment and instrumentation used to analyze
synthetically derived cannabinoids;
$100,000 in ongoing costs for lab supplies, including necessary supplies and equipment service
costs; and
$171,491 in FY 2023-24, decreasing to $150,000 in future years, to certify third-party hemp testing
labs. Page 6
April 17, 2023 SB 23-271
Department of Revenue
The bill increases expenditures in the DOR by $227,269 in FY 2023-24, paid from the Marijuana Cash
Fund. See Departmental Difference for more information on the fund source.
Staffing. The DOR requires 1.0 FTE to assist with implementation regarding marijuana-derived
cannabinoids and compounds, rulemaking, product quality investigations, and the feasibility study.
Additionally, the DOR requires a term-limited 0.5 FTE to assist with coordinating and writing the
feasibility study report required by the bill.
Legal services. The DOR requires 540 hours, which equates to 0.3 FTE, of legal services support,
provided by the DOL, to assist with the feasibility study and rulemaking.
Judicial Department
The bill may increase workload in the trial courts due to the potential for civil actions filed by the
CDPHE against noncompliant hemp businesses. This fiscal note assumes most businesses will follow
the law and any workload increase is expected to be minimal.
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 2.
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
March 2023 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 reduce the amount of General Fund available to spend or save.
General Fund reserve. Under current law, an amount equal to 15 percent of General Fund
appropriations must be set aside in the General Fund statutory reserve. Based on this fiscal note, the
bill is expected to increase the amount of General Fund held in reserve by the amounts shown in
Table 1, decreasing the amount of General Fund available for other purposes.
Effective Date
The bill takes effect upon signature of the Governor, or upon becoming law without his signature, and
applies to offenses committed or conduct occurring on or after the effective date.
Page 7
April 17, 2023 SB 23-271
State Appropriations
For FY 2023-24, the bill requires the following appropriations to the Colorado Department of Public
Health and Environment:
$575,289 from the General Fund, and 1.0 FTE;
$345,576 from the Wholesale Food Manufacturing and Storage Protection Cash Fund, and 3.5 FTE;
$296,598 from the Marijuana Tax Cash Fund, and 1.0 FTE. Of this amount, $190,332 is
reappropriated to the Department of Law, and 1.0 FTE.
For FY 2023-24, the bill also requires an appropriation of $198,900 from the Marijuana Cash Fund to
the Department of Revenue, and 1.5 FTE. Of this amount, $57,100 is reappropriated to the Department
of Law, and 0.3 FTE.
Departmental Difference
Marijuana Cash Fund. The Marijuana Cash Fund is currently in a cash fund deficit of approximately
$4.0 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 for the DOR.
State and Local Government Contacts
Agriculture Judicial Law
Public Health and 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.