OFFICE OF FISCAL ANALYSIS
Legislative Office Building, Room 5200
Hartford, CT 06106 (860) 240-0200
http://www.cga.ct.gov/ofa
sHB-5150
AN ACT CONCERNING CANNABIS AND HEMP REGULATION.
Primary Analyst: ME 4/2/24
Contributing Analyst(s): LG, MM, JP, EW, RW
Reviewer: PR
OFA Fiscal Note
State Impact:
Agency Affected Fund-Effect FY 25 $ FY 26 $
Consumer Protection, Dept. GF - Potential
Cost
394,000 394,000
Attorney General GF - Potential
Cost
113,000 150,000
State Comptroller - Fringe
Benefits
1
GF - Potential
Cost
167,000 183,000
Department of Revenue Services Various -
Potential
Revenue Gain
Less than
100,000
Less than
100,000
Consumer Protection, Dept. Consumer
Protection
Enforcement
Account -
Revenue Gain
See Below See Below
Resources of the General Fund GF - Potential
Revenue Gain
See Below See Below
Consumer Protection, Dept. CSEIF - Potential
Revenue Gain
Potential None
Note: GF=General Fund; Various=Various
Municipal Impact:
Municipalities Effect FY 25 $ FY 26 $
Various Municipalities Potential
Revenue
Gain
See Below See Below
Various Municipalities 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 41.25% of payroll in FY 25. 2024HB-05150-R000199-FN.DOCX Page 2 of 5
Explanation
The bill makes various changes to the laws governing cannabis,
hemp, and medical marijuana resulting in the costs and revenue gains
described below.
Sections 5 – 8, 17, 21 and 24 result in a potential revenue gain to the
Cannabis Social Equity and Innovation Fund by:
(1) allowing certain social equity cultivator applicants partnering
with hemp producers to apply for either a cultivator or micro-
cultivator license that allows cultivation outside a
disproportionately impacted area. The bill requires a cultivator
application to pay a $3 million fee or the micro-cultivator to pay a
$500,000 fee unless the applicant received a provisional license.
Applicants may apply between July 1, 2024 and March 31, 2025,
which limits any revenue impact to FY 25.
(2) allowing social equity applicants for a cultivator license to apply
instead for a micro-cultivator license. The bill requires the
applicant to pay (i) a $500,000 application fee and (ii) a $500,000
conversion fee. Applicants may apply between July 1, 2024 and
December 31, 2024, which limits any revenue impact to FY 25.
(3) allowing certain hemp manufacturers to obtain a product
manufacturer license. The bill requires the applicant to pay a
$25,000 application fee. Applicants may apply between July 1,
2024 and December 31, 2024, which limits any revenue impact to
FY 25.
As these provisions generally provide expanded access for qualified
social equity applicants and hemp manufacturers to develop businesses,
it is anticipated that more businesses may apply and pay the fee for
licensure as permitted under the bill. The actual revenue gain will be
dependent upon the number of qualified applicants and the type of 2024HB-05150-R000199-FN.DOCX Page 3 of 5
licensure they are seeking.
Based on information from the Department of Consumer Protection
and Social Equity Council (SEC), there are currently 13 cultivator
licensees (1 active; 12 provisional) and 6 micro-cultivators (1 active; 5
provisional). Fourteen cultivator applicants approved by the SEC have
yet to pay the $3 million provisional license fee and therefore may
reapply for a micro-cultivator license under this bill. Additionally, there
are currently 49 hemp manufacturers who have been licensed prior to
January 1, 2022.
Sections 9-10 and 31 assess a fee of fifty cents on each infused
beverage container and require the fees to be deposited into the
Consumer Protection Enforcement Account
2
resulting in a revenue gain
to the account dependent on the number of infused beverages sold.
This section also expands CUTPA enforcement by the Office of the
Attorney General to include the unauthorized sale of (cannabis) infused
beverages. It is anticipated that the OAG could require at least one
Assistant Attorney General and one Investigator position as a result.
The total annualized cost of these positions in FY 25 would be less than
$212,000.
Sections 11 and 27 allow municipalities to (1) prohibit certain
businesses from operating, and (2) apply for a court order to remove
certain merchandise from stores that violate provisions related to the
delivery of cannabis, medical marijuana, or hemp. These sections also
permit (1) civil fines up to $30,000 for each violation committed, and (2)
civil fines up to $10,000 for anyone who knowingly makes commercial
areas available for use in these violations.
This results in a potential cost to municipalities beginning in FY 25
for legal costs. This potential cost may offset by a potential revenue gain
to municipalities for the collection of civil fines. The civil fines collected
2
Per section 21a-8a of the Connecticut General Statutes, this account funds positions
dedicated to the enhanced enforcement of DCP licensing laws and regulations. 2024HB-05150-R000199-FN.DOCX Page 4 of 5
are first paid to the municipality to reimburse for legal costs. Half of the
remainder is then paid to the municipality.
Section 11 also results in a potential revenue gain to the state to the
extent civil penalties are imposed.
3
Sections 13 and 22 allows a product packager to expand its
authorized activities to include a product manufacturer if certain
conditions are met and a $30,000 application fee is paid resulting in a
potential revenue gain to the state to the extent these applications are
received. There are currently seven provisional product manufacturer
licenses issued and seven provisional product packager licenses issued
in the state.
Sections 7, 17, 19, 24 allows the relocation of a dispensary or hybrid
retailer and the sale of seedlings by a micro-cultivator resulting in a
potential cost to the Department of Consumer Protection (DCP) and the
State Comptroller. To the extent numerous relocation requests are
submitted
4
and the sale of seedlings generates a significant number of
complaints which result in investigations
5
, DCP may have to hire up to
three additional positions
6
for a salary and other expenses cost of
$394,000 per year, along with associated fringe benefit costs of $121,000
per year.
These sections also result in a state and municipal tax revenue gain
by allowing the sale of cannabis seedlings. The bill limits sales to only
micro-cultivator establishments. The revenue gain is therefore
anticipated to be less than $100,000 annually for the state and less than
$50,000 annually for various municipalities in total from applicable state
3
Income from civil penalties must first be paid to the municipality to reimburse it for
the costs of instituting the action. If there is a remainder, half is paid to the
municipality and half is paid to the state treasurer to deposit into the General Fund.
4
There are currently 33 licensed hybrid and medical dispensaries in the state, but the
number is likely to increase. Relocation requests are labor intensive for DCP, and any
rejection will likely result in appeals, requiring legal intervention.
5
Currently, no live cannabis or hemp plants are permitted for retail sale in the state
which results in additional oversight for DCP. Violations will require swift inspections
to ensure product safety.
6
The positions include a drug control agent, program manager, and staff attorney. 2024HB-05150-R000199-FN.DOCX Page 5 of 5
and local taxes.
The Out Years
The annualized ongoing fiscal impact identified above would
continue into the future subject to the number of violations, inflation,
applications, and employee wage increases. The impact to the Cannabis
Social Equity and Innovation Fund noted above is limited to FY 25 only.