OFFICE OF FISCAL ANALYSIS
Legislative Office Building, Room 5200
Hartford, CT 06106 (860) 240-0200
http://www.cga.ct.gov/ofa
sHB-6377
AN ACT CONCERNING LABOR PEACE AGREEMENTS AND A
MODERN AND EQUITABLE CANNABIS WORKFORCE.
Primary Analyst: CW 4/14/21
Contributing Analyst(s): SB, DC, RDP, DD, ME, PM, MM, AN, MP,
CP, MR, PR, JS, EW
OFA Fiscal Note
State Impact:
Agency Affected Fund-Effect FY 22 $ FY 23 $
Department of Revenue Services Cannabis Control
Commission
Operational Trust
Fund - Revenue
Gain
See Below 19.6 million
Department of Economic &
Community Development
GF -
Appropriation
5 million 5 million
Department of Emergency
Services and Public Protection;
Criminal Justice, Div.; Judicial
Dept.
GF - Cost Up to
866,655
Up to
892,655
Department of Revenue Services GF - Cost 636,189 490,547
State Comptroller - Fringe
Benefits
1
GF - Cost Up to
455,475
Up to
571,262
Department of Motor Vehicles TF - Cost 625,639 529,446
State Comptroller - Fringe
Benefits
GF&TF - Cost 210,563 218,661
Attorney General GF - Potential
Cost
82,670 85,150
State Comptroller - Fringe
Benefits
GF - Potential
Cost
33,316 35,167
UConn Other - Potential
Revenue Gain
At least
150,000
See Below
Education, Dept. GF - Cost Up to 10,000 None
Department of Emergency
Services and Public Protection;
Legislative Mgmt.; Department of
Various -
Potential Cost
See Below See Below
1
The fringe benefit costs for most state employees are budgeted centrally in accounts
administered by the Comptroller. The estimated active employee fringe benefit cost
associated with most personnel changes is 41.3% of payroll in FY 22 and FY 23. 2021HB-06377-R000462-FN.DOCX Page 2 of 8
Energy and Environmental
Protection; Higher Education
Constituent Units; Department of
Transportation
Cannabis Control Commission Cannabis Control
Commission
Operational Trust
Fund - See Below
See Below See Below
Judicial Dept. (Probation);
Correction, Dept.
GF - See Below See Below See Below
Resources of the General Fund GF - See Below See Below See Below
Resources of the Special
Transportation Fund
TF - See Below See Below See Below
Note: GF=General Fund; Various=Various; TF=Transportation Fund; GF&TF=General Fund &
Transportation Fund
Municipal Impact:
Municipalities Effect FY 22 $ FY 23 $
Various Municipalities Potential
Revenue
Gain
See Below See Below
Various Municipalities STATE
MANDATE
2
- Potential
Cost
See Below See Below
Explanation
The bill, which makes numerous changes to employment, licensing,
consumer, economic development, tax, criminal justice, and traffic
enforcement laws to establish a legal recreational cannabis consumer
and business sector, results in the following fiscal impacts:
Section 2 appropriates $5 million from the General Fund to the
Department of Economic and Community Development for each fiscal
year from FY 22 through FY 26 for workforce training, small business
support, and facilities rehabilitation grants in 12 specific towns. This
results in a potential revenue gain to municipalities to the extent that
they are recipients of the grant. From FY 22 to FY 26, any revenue gain
2
State mandate is defined in Sec. 2-32b(2) of the Connecticut General Statutes, "state
mandate" means any state initiated constitutional, statutory or executive action that
requires a local government to establish, expand or modify its activities in such a
way as to necessitate additional expenditures from local revenues. 2021HB-06377-R000462-FN.DOCX Page 3 of 8
as a result of this section is limited to the cities of Hartford, New
Haven, Bridgeport, Waterbury, New London, Windham, New Britain,
Bloomfield, Norwalk, Torrington, Ansonia, and Derby.
Section 3 establishes certain employment protections and allows
aggrieved parties to bring an action before Superior Court over alleged
violations, which does not result in any fiscal impact to the Judicial
Department. The court system disposes of over 400,000 cases annually
and the number of cases is not anticipated to be great enough to
require additional resources.
Section 7 establishes a seven-member cannabis equity task force to
make recommendations that are relevant to the establishment and
regulation of cannabis cultivation, manufacture, and sale in the state.
The bill allocates the cannabis equity task force $500,000 from the
resources of the General Fund. The task force must contract with
researchers and research organizations and may hire staff in order to
carry out its duties. Any moneys remaining after the completion of
duties shall be retained in trust and remitted to the Cannabis Control
Commission to support the commission's first year of operations.
Sections 8, 9, and 12 creates a Cannabis Control Commission as an
independent regulatory agency, composed of five commissioners.
Two commissioners shall be appointed by the Black and Puerto Rican
Caucus. The remaining members are the commissioners of labor,
consumer protection, and economic and community development.
Each commissioner appointed by the Black and Puerto Rican Caucus
shall receive a base salary of not less than $100,000 annually.
Sections 18 and 19 require the Cannabis Control Commission to
establish an Office of Justice Reinvestment (OJF). The commission can
hire staff and authorize the OJR to hire staff to support their regulatory
operations. The bill establishes a Cannabis Control Commission
Operational Trust Fund (CCCOTF) containing all licensing and other
regulatory fees and all cannabis sales tax surcharges as established
under the bill. This fund shall pay for all the expenses of the
commission and the OJR. 2021HB-06377-R000462-FN.DOCX Page 4 of 8
Sections 14, 28, 39-45, 48, and 50 make various traffic stop and law
enforcement procedures and policies related to the detection and
enforcement of cannabis by law enforcement personnel, resulting in no
fiscal impact to the state or municipalities.
Section 21 establishes a 10% sales tax surcharge, in addition to the
general sales tax, on all cannabis and cannabis product sales. This
results in an estimated revenue gain of $32.1 million in FY 23 and $61.2
million in FY 24; the annual revenue gain is expected to grow to $99.4
million by FY 27.
3
The bill specifies that all cannabis sales tax surcharges be deposited
in the CCCOTF established under the bill, resulting in a revenue gain
of $19.6 million in FY 23 and $37.4 million in FY 24 to that fund. The
remaining $12.5 million in FY 23 and $23.8 million would be deposited
in the General and Special Transportation funds.
4
Section 21 also establishes an additional restorative justice tax on
cannabis businesses equal to (1) 2% on their annual gross revenue
between $1 million and $10 million and (2) 10% on their annual gross
revenue over $10 million. This results in a General Fund revenue gain
of less than $19.6 million in FY 23 and less than $37.4 million in FY 24;
the annual revenue is expected to grow to less than $60.8 million by FY
27.
5
Additionally, section 21 results in administrative costs to the
Department of Revenue Services estimated at $733,735 in FY 22 and
$693,143 in FY 23. This includes salary and fringe benefit costs for two
Revenue Agents and five Revenue Examiners, as well as a one-time
3
All revenue estimates assume that the first year of cannabis sales occur in FY 23; to
the extent that sales occur earlier there is a potential revenue gain as early as FY 22.
4
Under current law, a portion of the 6.35% sales tax rate is transferred to the Special
Transportation Fund (STF). Any measure increasing overall collections of the 6.35%
sales tax will positively impact the STF in addition to the General Fund.
5
These estimates assume an effective tax rate of 10% on all cannabis business gross
revenues; the actual revenue gain is dependent on the number of cannabis businesses
established and how cannabis gross revenues break down on an individual taxpayer
basis between the marginal tax thresholds established under the bill. 2021HB-06377-R000462-FN.DOCX Page 5 of 8
set-up and information technology programming cost estimated at
$400,000 in FY 22 only.
Finally, section 21 also allows municipalities to implement a five
percent tax on the sale of cannabis and cannabis products. Any
revenue gain to a municipality would depend on the volume of sales
in such a municipality.
Section 22 specifies that municipalities may not unconditionally
prohibit a cannabis business from operating in town. This has no fiscal
impact.
Section 24 prohibits certain municipal officials and members of
municipal police departments from having any managerial or financial
interest in a cannabis business. This has no fiscal impact.
Section 25 prohibits municipalities from conditioning any official
action or accepting any donation from a cannabis establishment that
seeks a license to operate in such a municipality. This has no fiscal
impact.
Section 26 conditions a municipality's eligibility for receiving
cannabis workforce and development grants or loans on such
municipality's adoption of the findings of fact made by the cannabis
equity task force established under the bill. This has no fiscal impact.
Section 27, regarding a research partnership, results in a potential
cost to the Cannabis Control Commission of approximately $150,000 in
FY 22 and an equivalent potential revenue gain to the University of
Connecticut, with the potential for this fiscal impact to grow in FY 22
and continue into FY 23. The bill requires the commission to consult
with the University of Connecticut regarding entering into a research
partnership in support of equity in the cannabis business sector. The
commission is further directed to attempt to partner with UConn for
up to six months and as needed thereafter. If the commission executes
an agreement with UConn that extends beyond six months, the fiscal
impact may increase in FY 22 and extend into FY 23. The estimated 2021HB-06377-R000462-FN.DOCX Page 6 of 8
partnership cost to the commission and revenue to UConn is based on
a six-month partnership involving data analysis, consultation with
national experts, and training.
Section 29 results in a one-time cost of up to $10,000 in FY 22 to the
State Department of Education to amend state data collection and
reporting systems to add and process separate cannabis-related
substance types.
Sections 30 and 31 are not anticipated to result in a fiscal impact to
the Department of Housing (DOH) as the provisions of section 31 (and
not section 30) are understood to apply to the federally assisted
housing programs the DOH administers.
Section 31 requires the Office of the Attorney General (OAG) to
conduct periodic racial impact reviews of denials and evictions for
cannabis-related reasons once every two years. The bill stipulates that
if the OAG identifies discrimination patterns in federally assisted
housing based on lawful cannabis activity, the Attorney General
would take remedial and corrective measures including injunctive
relief and imposing civil penalties not to exceed $100,000 for each
instance of a policy that creates a disparate racial impact in the housing
matters.
This requirement may result in costs of $82,670 in FY 22 and $85,150
in FY 23 to hire an additional Assistant Attorney General to conduct
the mandatory reviews and bring the cases, if necessary, under the
new program. The requirement for additional racial impact reviews
could also result in a cost of $33,316 in FY 22 and $35,167 in FY 23 for
fringe benefits associated with the new position to the extent the
number of racial impact reviews is significant.
Section 31 is also expected to result in a revenue gain to the General
Fund associated with the civil penalty provision related to racial
impact discrimination in housing, the extent to which depends on the
number of violations that occur. 2021HB-06377-R000462-FN.DOCX Page 7 of 8
Sections 33 and 34 require the erasure of certain police and court
records resulting in a cost to the state of up to $1.2 million in FY 22 and
$1.3 million in FY 23 (includes salary and fringe benefits). To meet the
requirements of the bill the Department of Emergency Services and
Public Protection, Division of Criminal Justice, and the Judicial
Department will have to hire up to 5 durational administrative
assistants each. The final cost will be dependent on how many
administrative assistants each agency hires and how long they are
needed to erase the records specified under the bill.
These sections also result in a potential cost to municipalities to the
extent additional staff are hired, or overtime is incurred, due to the
requirement that certain electronic records be deleted. It is anticipated
potential costs will be isolated to municipalities with greater volumes
of criminal records.
Sections 35, 51-53, and 56 make various conforming changes to
consumer protection statutes, resulting in no fiscal impact.
Section 36, 37, 49, 55, 57, 58, and 59 create new violations for
cannabis and results in a marginal cost for violations and revenue from
fines. On average, the marginal cost to the state for incarcerating an
offender for the year is $2,200
6
while the average marginal cost for
supervision in the community is less than $700
7
each year.
Section 38 requires the Police Officer Standards and Training
Council (POST) to determine how many drug recognition experts
(DRE) are needed for each law enforcement unit resulting in a
potential cost to various agencies
8
and municipalities. If agencies with
6
Inmate marginal cost is based on increased consumables (e.g. food, clothing, water,
sewage, living supplies, etc.). This does not include a change in staffing costs or
utility expenses because these would only be realized if a unit or facility opened.
7
Probation marginal cost is based on services provided by private providers and
only includes costs that increase with each additional participant. This does not
include a cost for additional supervision by a probation officer unless a new offense
is anticipated to result in enough additional offenders to require additional probation
officers.
8
Agencies with law enforcement personnel include Department Emergency Services
and Public Protection, Office of Legislative Management, Department of Energy and 2021HB-06377-R000462-FN.DOCX Page 8 of 8
law enforcement units and municipalities do not meet the minimum
standard developed by POST they will need to train additional DREs
resulting in a potential cost.
Section 38 also requires each police officer who has not been
recertified for the first time after the initial certification to be trained in
advanced roadside impaired driving enforcement (ARIDE) resulting in
a cost to various agencies and municipalities for the training. For
example, the cost for the Department of Transportation to hold
additional classes is estimated at approximately $50,000 annually.
Section 40 expands the administrative license suspension process to
drug-impaired drivers and results in a cost to the Department of Motor
Vehicles of approximately $720,400 in FY 22 and $748,107 in FY 23 for
salary and fringe benefit costs for seven new positions, and a one-time
cost in FY 22 of $115,802 for information technology and ancillary
costs.
Sections 46 and 47 modify allowable possession of cannabis and
results in a marginal savings due to decreased violations and revenue
loss from less fines collected.
The Out Years
The annualized ongoing fiscal impact identified above would
continue into the future subject to: 1) inflation, 2) the length of time
required to erase records, and 3) the number of racial impact reviews
performed by the OAG and the number of violations that occur.
Environmental Protections, the Department of Transportation and the Higher
Education Constituent Units.