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May 7, 2024 SB 24-076
Legislative Council Staff
Nonpartisan Services for Colorado’s Legislature
Revised Fiscal Note
(replaces fiscal note dated April 30, 2024)
Drafting Number:
Prime Sponsors:
LLS 24-0669
Sen. Van Winkle; Gonzales
Rep. Lindstedt
Date:
Bill Status:
Fiscal Analyst:
May 7, 2024
House Third Reading
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
shifts state and local revenue collections and increases state and local expenditures
beginning in FY 2024-25.
Appropriation
Summary:
For FY 2024-25, the bill requires an appropriation of $91,311 to the Department of
Revenue.
Fiscal Note
Status:
The revised fiscal note reflects the revised bill.
Table 1
State Fiscal Impacts Under SB 24-076
Budget Year
FY 2024-25
Out Year
FY 2025-26
Out Year
FY 2026-27
Out Year
FY 2027-28
Revenue Cash Funds - $127,221 $127,221 $76,333
Total - $127,221 $127,221 $76,333
Expenditures General Fund $91,311 - - -
Cash Funds $105,802 $105,802 $63,481
Central Approps. $17,136 $21,419 $21,419 $12,852
Total
Expenditures
$108,447 $127,221 $127,221 $76,333
Total FTE 0.8 FTE 1.0 FTE 1.0 FTE 0.6 FTE
Transfers - - - - -
Other Budget
Impacts
GF Reserve $13,697 - - -
TABOR Refund - $127,221 not estimated not estimated
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May 7, 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 allows marijuana business licensees to retest
products which, upon initial testing, indicated the presence of substances that are injurious to
health. If a licensees is able to remediate the product, and it passes retesting, licensees are not
required to indicate on the label that the product failed a test before it was remediated.
Transfer of marijuana products. The bill requires the Marijuana Enforcement Division (MED) in
the Department of Revenue (DOR) to promulgate rules by January 1, 2027, that do not require
radio frequency identification technology in seed-to-sale tracking.
Public health disclosures. The bill requires certain warnings about the impact of marijuana on
pregnancy to be posted at every point of sale. It also requires that an existing educational
resource about marijuana concentrate be physically attached to the product.
Report on streamlining regulation. For three years from 2026 to 2028, the bill requires the
MED to issue a legislative report each January that identifies:
rule changes that will reduce redundant or unnecessary testing of retail and medical
marijuana;
rule changes that reduce marijuana waste or reduce costs of compliance;
rule changes that bring retail and medical marijuana testing in line with the testing of
intoxicating hemp products; and
legislative changes needed to make suggested rule changes.
Licensing periods. The bill extends the license renewal period from one year for marijuana
businesses, controlling beneficial owners, and marijuana delivery permits to two years. Local
licensing authorities may determine if their licenses are valid for one or two years. After
January 1, 2026, the MED must promulgate rules authorizing multiple marijuana business
licensees with identical controlling beneficial owners to submit a single initial or renewal
application.
Retail marijuana stores. The bill permits retail marijuana stores to sell food, including food that
is not infused with marijuana or hemp products or extracts, so long as food sales are not in
excess of 20 percent of a store’s annual gross revenue.
Cultivation facilities. The bill updates the retail and medical marijuana cultivation facility
statues to allow for the sale, transfer, or shipment of genetic material to other licensed
cultivators, testing facilities, or other licensees approved by rule. Cultivation facilities must
confirm that the recipient is at least 21 years old, and may not transfer genetic material directly
to a consumer on the premises.
Fees. The bill puts a cap on initial application fees for retail marijuana businesses and allows the
MED to annually adjust for inflation or deflation. Page 3
May 7, 2024 SB 24-076
Marijuana excise tax. The bill clarifies that the transfer of unprocessed retail marijuana
exclusively for microbial control is deemed to not be the first transfer for the purposes of excise
taxation.
State Revenue
From FY 2025-26 through FY 2027-28, the bill is anticipated to increase fee revenue to the MED
by about $130,000, with a half-year impact in the final year. This amount is not shown in Table 2.
Additionally, the bill 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, modification of the premises
applications, and marijuana delivery permits. 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.
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
Marijuana Delivery License 37 $2,650 $5,300
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
From FY 2024-25 through FY 2027-28, the bill increases state expenditures in the Department of
Revenue, paid from the General Fund in FY 2024-25 due to a shortfall in the Marijuana Cash
Fund. In the remaining years, expenditures are paid from the Marijuana Cash Fund. Costs are
detailed in Table 3 and explained below.
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May 7, 2024 SB 24-076
Table 3
Expenditures Under SB 24-076
FY 2024-25 FY 2025-26 FY 2026-27 FY 2027-28
Department of Revenue
Personal Services $83,617 $104,522 $104,522 $62,713
Operating Expenses $1,024 $1,280 $1,280 $768
Capital Outlay Costs $6,670 - - -
Centrally Appropriated Costs
1
$17,136 $21,419 $21,419 $12,852
Total $108,447 $127,221 $127,221 $76,333
Total FTE 0.8 FTE 1.0 FTE 1.0 FTE 0.6 FTE
1
Centrally appropriated costs are not included in the bill's appropriation.
Assumptions. Intoxicating hemp products are not currently tested by the MED. The fiscal note
assumes that the MED requires staff to compare the testing protocols and toxicity levels
between marijuana products and intoxicating hemp products for the report on streamlining
regulation through FY 2027-28.
Department of Revenue. The DOR requires 1.0 FTE from FY 2024-25 through FY 2027-28 to
conduct the necessary research to write the report on rule changes to bring testing in line with
testing of intoxicating hemp products and recommend changes. This position will conduct a
literature review of testing of intoxicating hemp products and compare these procedures to
testing requirements of medical and retail marijuana before drafting rule changes and
coordinating with other stakeholders to make recommendations and write the report. Costs are
prorated to assume a September 2024 start date in FY 2024-25 and a January 2028 end date.
Standard operating expenses and capital outlay are included.
Additionally, the DOR will have increased workload to adopt new rules to comply with the bill,
including extending the license renewal period from one to two years. Rulemaking,
communication with stakeholders and updating forms and procedures will begin in FY 2024-25
and is assumed to be accomplished within existing appropriations.
Other Budget Impacts
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.
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May 7, 2024 SB 24-076
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 2024 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 reduce the amount of General Fund available to spend or save.
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, and applies to acts committed on or after this date.
State Appropriations
For FY 2024-25, the bill requires a General Fund appropriation of $91,311 to the Department of
Revenue and 0.8 FTE.
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.