OFFICE OF FISCAL ANALYSIS
Legislative Office Building, Room 5200
Hartford, CT 06106 (860) 240-0200
http://www.cga.ct.gov/ofa
sHB-6700
AN ACT CONCERNING HEMP LICENSEES AND THE ADULT-USE
CANNABIS MARKET.
Primary Analyst: ME 3/22/23
Contributing Analyst(s): MR, EW
Reviewer: RP
OFA Fiscal Note
State Impact:
Agency Affected Fund-Effect FY 24 $ FY 25 $
Consumer Protection, Dept. GF - Cost 107,259 107,715
State Comptroller - Fringe
Benefits
1
GF - Cost 42,075 43,126
Department of Revenue Services Various -
Revenue Gain
Potential Potential
Significant
Department of Revenue Services Social Equity and
Innovation Fund
- Potential
Revenue Gain
See Below See Below
Resources of the General Fund GF - Potential
Revenue Gain
See Below See Below
Note: GF=General Fund; Various=Various
Municipal Impact:
Municipalities Effect FY 24 $ FY 25 $
Various Municipalities Potential
Revenue
Gain
None See Below
Explanation
The bill allows hemp producers to convert their license to a cultivator
or micro-cultivator cannabis license resulting in the various costs and
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 42.82% of payroll in FY 24. 2023HB-06700-R000202-FN.DOCX Page 2 of 3
revenue gains described below.
Cost:
To meet the requirements of the bill DCP will have to hire one drug
control agent for a salary and other expenses cost of $107,259 in FY 24
and $107,715 in FY 25, along with corresponding fringe benefits costs of
$42,075 in FY 24 and $43,126 in FY 25. The additional employee is
needed to regulate this new market through inspections, monitoring
compliance and security, employee licensing, and investigating
complaints.
Revenue Impact:
State and Municipal Tax Impact. The bill results in a potential
significant revenue gain to the state anticipated to begin in FY 25 by
allowing hemp producers to apply for licensure to cultivate cannabis.
The actual revenue gain to the state would depend upon the number
of hemp cultivator licenses approved and the total volume of product
that is produced and sold per year. The state’s sales tax and cannabis
excise tax would apply to the cannabis sold.
The bill also results in a potential revenue gain to municipalities in
which the retailer selling the cannabis permitted under this bill is
located. Under current law, there is a 3% municipal sales tax imposed
on the retail sale of cannabis.
The bill also results in a potential revenue gain in sales tax to the state
by allowing the sale of manufactured hemp products in licensed
dispensary facilities and cannabis retailers. Any tax revenue impact
would be only to the extent that there is an increase in hemp products
sales rather than a shift from currently allowed transactions for hemp
products.
Currently there are 78 hemp producers licensed in the state.
Licensing fees. The bill results in a potential revenue gain of up to $3 2023HB-06700-R000202-FN.DOCX Page 3 of 3
million by charging a fee of $12 per square foot of growing space to
hemp producers converting to cultivators or micro-cultivators. The total
aggregate allowable grow space for hemp producers under the bill is
250,000 square feet.
Under the bill, the conversion fee revenue generated is to be
deposited into the Social Equity and Innovation Fund.
The bill also results in a potential revenue gain to the General Fund
to the extent additional cultivator and micro-cultivator licenses are
applied for. The annual renewal fee for a cultivator license is $75,000
and the annual renewal fee for a micro-cultivator license is $1,000.
The Out Years
The annualized ongoing fiscal impact identified above would
continue into the future subject to the number of permits applied for and
inflation.