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.
As Amended by House "A" (LCO 4912)
House Calendar No.: 152
Primary Analyst: ME 5/1/24
Contributing Analyst(s):
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
Resources of the General Fund,
Consumer Protection
Enforcement Account, Cannabis
Social Equity and Innovation
Fund
Various -
Potential
Revenue Gain
See Below See Below
Attorney General; Consumer
Protection Enforcement Account
Various -
Transfer
See Below See Below
Note: Various=Various; GF=General Fund
Municipal Impact:
Municipalities Effect FY 25 $ FY 26 $
Various Municipalities Potential
Cost
See Below See Below
Various Municipalities Potential
Revenue
Gain
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-R01-FN.DOCX Page 2 of 5
OFA Fiscal Note
The bill makes various changes to the laws governing cannabis,
hemp, and medical marijuana resulting in the costs and revenue gains
described below.
Section 5 results in a potential revenue gain to various funds and
accounts by:
(1) allowing social equity applicants for a cultivator license to apply
instead for a provisional micro-cultivator license. The bill requires
the applicant to pay a $500,000 application fee that shall be
deposited into the consumer protection enforcement account.
2
(2) requiring a renewal fee for the final micro-cultivator license to be
$1,000 and to be deposited into the General Fund (this is the same
as existing law for this fee).
(3) requiring social equity applicants seeking to operate an equity
joint venture to (1) obtain a micro-cultivator license, (2) commence
cultivation activities under such micro-cultivator license and (3)
pay both the application fee noted above and a conversion fee of
$500,000 which is to be deposited into the Cannabis Social Equity
and Innovation Fund.
As this provision generally provides expanded access for qualified
social equity applicants to develop businesses, it is anticipated that more
businesses may apply and pay the fees for licensure as permitted under
the bill. The actual revenue gain will be dependent upon the number of
qualified applicants and the type of licensure they are seeking.
Based on information from the Department of Consumer Protection
and Social Equity Council (SEC), as of March 2024 there are currently 13
cultivator licensees (1 active; 12 provisional) and 6 micro-cultivators (1
2
Per section 21a-8a of the Connecticut General Statutes, the consumer protection
enforcement account is a non-lapsing account to be used by the Department of
Consumer Protection to fund positions and other related expenses for the enforcement
of licensing and registration laws. 2024HB-05150-R01-FN.DOCX Page 3 of 5
active; 5 provisional).
Sections 6, 14, 27, and 28 allow the sale of infused beverages and of
seedlings
3
by a micro-cultivator resulting in a potential cost to the
Department of Consumer Protection (DCP) and the State Comptroller.
To the extent the sale of infused beverages and seedlings generates a
significant number of complaints which result in investigations, DCP
may have to hire up to three additional positions
4
for a salary and other
expenses cost of $394,000 per year, along with associated fringe benefit
costs of $121,000 per year.
Sections 6 and 35 create a fee of one dollar for each infused beverage
container or legacy infused beverage container sold for wholesaler
permits, dispensary facilities, hybrid retailers, or retailers resulting in a
revenue gain to the consumer protection enforcement account
dependent on how many infused beverages are sold.
Section 27 creates an infused beverage manufacturer license for an
initial and annual renewal fee of $5,000 resulting in a potential revenue
gain to the consumer protection enforcement account to the extent
applications and renewals are received. This section also allows DCP to
administer a $5,000 civil penalty for any violations resulting in a
potential revenue gain to the consumer protection enforcement account
to the extent violations occur.
These sections also expand CUTPA enforcement by the Office of the
Attorney General (OAG) 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.
These sections also result in a potential state and municipal tax
3
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.
4
The positions include a drug control agent, program manager, and staff attorney 2024HB-05150-R01-FN.DOCX Page 4 of 5
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 and local taxes.
Section 8 allows 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 be offset by a
potential revenue gain to municipalities for the collection of civil fines.
The civil fines collected are first paid to the municipality to reimburse
for legal costs. Half of the remainder is then paid to the municipality.
Section 8 also results in a potential revenue gain to the state to the
extent civil penalties are imposed.
5
Sections 10 and 18 allow 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.
Section 24 increases fines regarding manufacturer licenses resulting
in a potential revenue gain to the state to the extent violations occur and
fines are assessed.
Section 29 requires certain businesses to pay a one-dollar fee for each
infused beverage or legacy infused beverage in their possession by June
5
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. 2024HB-05150-R01-FN.DOCX Page 5 of 5
15, 2024, resulting in a potential revenue gain to the consumer protection
enforcement account.
Sections 31-32 create a certificate of registration for a moderate-THC
hemp product vendor that has a $2,000 application and annual renewal
fee resulting in a potential revenue gain to the consumer protection
enforcement account. These sections also allow DCP to impose a civil
penalty of up to $5,000 for violations resulting in a potential revenue
gain to the consumer protection enforcement account to the extent
violations occur.
Section 33 creates an infused beverage endorsement for package
store permittees for an annual fee of $500 resulting in a potential
revenue gain to the consumer protection enforcement account to the
extent the endorsement is applied for. In FY 23 there were 1,352 package
store permits in the state.
Section 36 allows the consumer protection enforcement account to
reimburse the OAG for certain enforcement expenses resulting in a cost
to the account and a savings to the OAG.
This bill also makes various minor and technical cannabis related
changes resulting in no fiscal impact to the state or municipalities.
House "A" strikes the underlying bill and its associated fiscal impact
resulting in the impact described above.
The Out Years
The annualized ongoing fiscal impact identified above would
continue into the future subject to employee wage increases, number of
registrations, licenses, endorsements applied for, the number of
violations, and the number of infused beverages sold.