Page 1
February 22, 2024 SB 24-076
Legislative Council Staff
Nonpartisan Services for Colorado’s Legislature
Fiscal Note
Drafting Number:
Prime Sponsors:
LLS 24-0669
Sen. Van Winkle; Gonzales
Rep. Lindstedt
Date:
Bill Status:
Fiscal Analyst:
February 22, 2024
Senate Finance
John Armstrong | 303-866-6289
john.armstrong@coleg.gov
Bill Topic: STREAMLINE MARIJUANA REGULATION
Summary of
Fiscal Impact:
☒ State Revenue
☒ State Expenditure
☐ State Transfer
☒ TABOR Refund
☒ Local Government
☐ Statutory Public Entity
The bill makes various changes to the regulation of marijuana businesses. The bill
increases state revenue and expenditures and may impact local revenue and
expenditures beginning in FY 2024-25.
Appropriation
Summary:
For FY 2024-25, the bill requires an appropriation of $1,760,742 to multiple state
agencies.
Fiscal Note
Status:
The fiscal note reflects the introduced bill.
Table 1
State Fiscal Impacts Under SB 24-067
Budget Year
FY 2024-25
Out Year
FY 2025-26
Revenue
1
Cash Funds $1,657,811 $1,596,300
Total Revenue $1,657,811 $1,596,300
Expenditures General Fund $1,518,959 -
Cash Funds $241,782 $1,709,143
Centrally Appropriated $178,554 $222,337
Total Expenditures $1,939,295 $1,931,480
Total FTE 10.6 FTE 12.6 FTE
Transfers - -
Other Budget Impacts TABOR Impact $1,657,811 $1,596,300
General Fund Reserve $227,844 -
1
The revenue amount included in Table 1 reflects the fee increase required to cover the Department of Revenue’s costs
under the bill. The biennial renewal cycle is assumed to be revenue neutral. Page 2
February 22, 2024 SB 24-076
Summary of Legislation
The bill makes a series of changes to the regulation of marijuana businesses.
Regulation of marijuana contaminants. The bill changes the testing requirements for the
Marijuana Enforcement Division (MED) in the Department of Revenue (DOR) regarding
contaminants in marijuana products. Under current law, MED must test to ensure that products
do not contain any contaminants that are injurious to health. The bill requires MED to ensure
that products do not contain contaminants in an amount that is determined to be injurious.
Current law requires any business that is found to have a contaminant to document and destroy
the contaminated product. The bill allows the business to retest and remediate the product.
Frequency of testing. MED may not require that a product pass a test multiple times before it
is transferred to another business or sold to a consumer, with certain exceptions. MED must
adopt rules allowing a business to conduct less testing of its products if the business
consistently passes tests over a specific time period. Businesses that participate in a reduced
testing program may be a charged a fee, not exceed $4,000 per facility. Participating businesses
may have reduced testing for up to three years.
License renewal. The bill extends the license renewal period, currently annually, for marijuana
businesses to once every two years. Renewal applications do not need to repeat the required
fingerprint-based criminal history check for initial applications. If a business possesses multiple
types of marijuana licenses, MED must allow that business to submit a unified application
renewal and coordinate the performance review of the single business renewing multiple
licenses.
Identification cards. The bill removes the requirement that passive marijuana business owners
obtain an identification card from the MED. It also requires that conditional employee licenses
be issued after a review of the application, rather than an initial investigation.
Transfer of marijuana products. The bill specifies that RFID tags are not required to track
marijuana products, and makes the following changes to the transfer of marijuana products:
requires DOR to allow a marijuana business that transports products to use and electronic
manifest system;
allows medical and retail marijuana cultivation facilities to obtain or deliver genetic material
to other persons who are licensed to possess or cultivate marijuana plants, accept payments
online for these transfers, and are not required to use inventory for these transfers unless
they are between licensed marijuana businesses; and
specifies that a tax is not levied the first time unprocessed retail marijuana is transferred
exclusively for microbial control.
Violations. The bill requires DOR to classify each violation for a marijuana business as either a
safety violation or a technical violation. Technical violations are removed from a licensee’s record
either one year after the violation is reported or upon renewal of the license. Page 3
February 22, 2024 SB 24-076
Record keeping. Current law requires marijuana licensees to retain a record of all business
transactions for the past three years. The bill changes this requirement to the past two years.
Definitions. The bill changes the definition of “immature plant” by increasing the height from
eight to 15 inches and establishes a definition for “genetic material” related to marijuana.
Background
The MED is responsible for licensing and regulating medical and retail marijuana businesses,
their owners, and their employees. The MED operates testing facilities in conjunction with the
Colorado Department of Public Health and Environment (CDPHE) to determine safety standards
and requirements for marijuana products. The MED also employs criminal investigators to
enforce requirements to marijuana businesses.
Assumptions
There are currently no reference standards to determine an amount of a pesticide in marijuana
that can be determined to be injurious to public health. The fiscal note assumes that the DOR
and CDPHE will research and set rules based on currently available research. However, should
new research be required in order to implement the bill, these costs are estimated at
approximately $2,000,000 per pesticide based on EPA studies on non-marijuana pesticide
products, and would require a multi-year research project.
State Revenue
The bill is anticipated to increase fee revenue by about $1.6 million annually to the Marijuana
Cash Fund to cover the new expenditures in the Department of Revenue. The bill also changes
revenue collections to the Marijuana Cash Fund by creating a biennial licensing renewal period
in place of the current annual renewal, which this analysis assumes will have a neutral revenue
impact.
Fee impact on marijuana licensees. Colorado law requires legislative service agency review of
measures which create or increase any fee collected by a state agency. The bill is anticipated to
double all fees collected by MED to account for the change from annual to biennial renewal,
which will have a neutral impact over a two-year period. These fees are expected to apply to
marijuana business licenses, owner and owner entity licenses, and modification of the premises
applications. The bill will also increase fee revenue to cover the costs outlined in the State
Expenditures section. Finally, the bill may decrease testing fee revenue, which has not been
estimated. Actual fees will be set administratively by MED based on cash fund balance, program
costs, and the number of licenses subject to the fee. Table 2 below identifies the impact of the
biennial renewal fee.
Page 4
February 22, 2024 SB 24-076
Table 2
Fee Impact on Marijuana Licensees
License Type Licensees
Current
Annual Fee
SB 24-076
Biennial Fee
Regulated Marijuana Business 2,546 $2,300 $4,600
Owner License 1,649 $550 $1,100
Owner Entity License 268 $825 $1,650
Modifications of Premises 200 $150 $300
1
Table 2 shows how current fees will be modified to maintain consistent revenue on a biennial basis. It does not
include the revenue increases that will be required to cover the DOR expenditures in this bill.
State Expenditures
The bill increases state expenditures in the DOR and the CDPHE by about $1.9 million annually
beginning in FY 2024-25. DOR costs are paid from the General Fund in FY 2024-25 and
Marijuana Cash Fund in subsequent years. CDPHE costs are paid from the Marijuana Tax Cash
Fund. Expenditures are shown in Table 3 and explained below.
Table 3
Expenditures Under SB 24-067
FY 2024-25 FY 2025-26
Department of Revenue (DOR)
Personal Services $674,519 $837,132
Operating Expenses $8,320 $10,368
Capital Outlay Costs $60,030 -
Legal Services $576,090 $576,090
Information Technology Costs $200,000 -
Centrally Appropriated Costs
1
$138,852 $172,710
FTE – Personal Services 6.5 FTE 8.1 FTE
FTE – Legal Services 2.5 FTE 2.5 FTE
DOR Subtotal
2
$1,657,811 $1,596,300
Page 5
February 22, 2024 SB 24-076
Table 3 (Cont.)
Expenditures Under SB 24-067
FY 2024-25 FY 2025-26
Department of Public Health and Environment (CDHPE)
Personal Services $226,394 $282,993
Operating Expenses $2,048 $2,560
Capital Outlay Costs $13,340 -
Centrally Appropriated Costs
1
$39,701 $49,627
FTE – Personal Services 1.6 FTE 2.0 FTE
CDPHE Subtotal
3
$281,484 $335,180
Total $1,939,295 $1,931,480
Total FTE 10.6 FTE 12.6 FTE
1
Centrally appropriated costs are not included in the bill's appropriation.
2
DOR costs are paid from the General Fund in FY 2024-25 and Marijuana Cash Fund in subsequent years.
3
CDPHE costs are paid from the Marijuana Tax Cash Fund.
Department of Revenue. The DOR will have increased expenditures to determine amounts of
contaminants that are injurious to public health, conduct additional investigations resulting from
reduced testing, determine violations, expunge records, and update the information technology
system. All DOR costs come from the General Fund in the first year due to an insufficient
balance in the Marijuana Cash Fund. Once licensing fees are changed in out years, these FTE are
expected to be funded from the Marijuana Cash Fund.
Staffing. The DOR will require a total of 8.1 FTE to implement the various provisions of the
bill, including 1.0 FTE Research Scientist, to determine amounts of contaminants that are
injurious to public health; 1.0 FTE Research Scientist Supervisor, to oversee the
contamination testing process, adopt new rules, and coordinate investigations with local,
state, and federal agencies; 3.0 FTE Environmental Protection Specialist, to conduct an
estimated 125 additional investigations into Adverse Health Events resulting from the
reduced testing requirements in the bill; 1.0 FTE Environmental Protection Supervisor, to
adopt testing program rules, oversee investigations and coordinate with local, state and
federal agencies; and 2.1 FTE Legal Assistant, to support the additional number of
investigations, coordinate with the Attorney General’s Office, and expunge records. Costs
include standard operating and capital outlay costs and are prorated to assume a September
2024 start date in FY 2024-25.
Legal services. The DOR requires approximately 4,500 hours annually in legal services from
the Department of Law, which equates to 2.5 FTE. These additional hours are required to
handle additional violations as a result of the reduced testing requirements. The fiscal note Page 6
February 22, 2024 SB 24-076
assumes that the number of active administrative cases investigating businesses will roughly
double.
Information technology costs. The MYLO system and inventory tracking systems will
require approximately $200,000 in updates to allow for the additional electronic tracking
system, the biannual renewal requirement, the additional categories of technical vs. safety
violations, and tracking sales of genetic material from cultivations.
Department of Public Health and Environment. The CDPHE requires a Public Medical
Administrator and a Project Manager, totaling 2.0 FTE, to research development on the toxicity
levels of contaminants and determine amounts that are injurious to public health. Costs are paid
from the Marijuana Tax Cash Fund. Standard capital outlay and operating costs are included and
are prorated in FY 2024-25 to assume a September 2024 start date.
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 2023 LCS revenue forecast. A forecast of state revenue subject to TABOR
is not available beyond FY 2025-26. 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.
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.
Local Government
Local marijuana licensing authorities will have impacts similar to the state to implement a
biennial renewal cycle and consolidating licensing renewals.
Effective Date
The bill takes effect 90 days following adjournment of the General Assembly sine die, assuming
no referendum petition is filed.
Page 7
February 22, 2024 SB 24-076
State Appropriations
For FY 2024-25, the bill requires the following appropriations:
$1,518,959 to the Department of Revenue, and 6.5 FTE, paid from the General Fund; of this
amount, $576,090 and 2.5 FTE is reappropriated to the Department of Law; and
$241,782 to the Department of Public Health and Environment and 1.6 FTE, paid from the
Marijuana Tax Cash Fund
State and Local Government Contacts
Counties Municipalities
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 the General Assembly website.