LEGISLATIVE SERVICES AGENCY
OFFICE OF FISCAL AND MANAGEMENT ANALYSIS
200 W. Washington St., Suite 301
Indianapolis, IN 46204
(317) 233-0696
iga.in.gov
FISCAL IMPACT STATEMENT
LS 6552 NOTE PREPARED: Dec 20, 2021
BILL NUMBER: HB 1168 BILL AMENDED:
SUBJECT: Medical Marijuana.
FIRST AUTHOR: Rep. Lucas BILL STATUS: As Introduced
FIRST SPONSOR:
FUNDS AFFECTED:XGENERAL IMPACT: State & Local
XDEDICATED
FEDERAL
Summary of Legislation: Serious Medical Conditions: The bill permits the use of medical marijuana by
persons with serious medical conditions as determined by their physician.
Program: It establishes a Medical Marijuana Program (MMP) to permit the cultivation, processing, testing,
transportation, and dispensing of medical marijuana by holders of a valid permit. It requires the State
Department of Health (IDOH) to implement and enforce the MMP.
Permit Holders and Packaging: It requires that permit holders undertake steps to prevent diversion of
medical marijuana to unauthorized persons. It also requires that medical marijuana and medical marijuana
products be properly labeled, placed in child resistant packaging, and tested by an independent testing
laboratory before being made available for purchase. The bill prohibits packaging medical marijuana in a
manner that is appealing to children.
Research: The bill authorizes research on medical marijuana in accordance with rules set forth by the IDOH.
Discrimination: The bill prohibits discrimination against medical marijuana users. It prohibits harassment
of medical marijuana users by law enforcement officers, and prohibits cooperation with federal law
enforcement officials seeking to enforce federal laws that criminalize the use of marijuana authorized in
Indiana.
Oversight Board: It establishes the Medical Marijuana Oversight Board to review appeals and grievances
concerning the MMP.
HB 1168 1 Defenses: The bill provides a defense to prosecution for a person who operates a vehicle or motorboat with
marijuana or its metabolite in the person's blood under certain conditions that involve medical marijuana.
The bill makes conforming amendments.
Effective Date: July 1, 2022.
Explanation of State Expenditures: Summary - In the initial years, the bill is estimated to increase annual
state expenditures between $350,000 and $600,000 for the IDOH to establish and operate the MMP. After
an indeterminate implementation period, the MMP’s total costs will depend on the number of employees
needed to regulate medical marijuana. The costs may be at least partially offset with permit fees collected
by the IDOH.
Establishing two new Level 6 felonies concerning discrimination against an MMP participant should have
a minimal impact on the Department of Correction’s (DOC) offender population. Providing a defense to
operating a vehicle or motor boat while intoxicated and changing the blood level determinates for
intoxication could reduce certain law enforcement workload. [About 7% of all persons who have been
sentenced for a Level 6 felony are committed to DOC. Their average sentence is 1.4 years.]
Marijuana is federally classified as a Schedule I controlled drug with no medically indicated uses. Although
17 states have comprehensive medical marijuana programs and 19 states have combined adult and medical
use regulatory programs, future federal responses to state initiatives is unknown.
Additional Information - Program: The IDOH will establish a program that features individual identification
cards and business permits, which may be comparable to the regulatory functions of the Alcohol and Tobacco
Commission (ATC) or the Indiana Gaming Commission (IGC) The high estimate for agency costs is based
on the ATC, which has four commissioners, an executive secretary, and average annual expenditures for
administration and internal services of about $608,000 between FY 2015 and FY 2020. The low estimate
is based on the IGC, which has seven commissioners and an executive director, with average annual
administrative and operations expenses and internal services costs of about $356,000 between FY 2015 and
FY 2020. [Internal services include databases, software, human resources services, and telephone expenses.
Commissioner and executive personnel salaries are not included in these expenses.]
Total IGC and ATC expenses are determined by their overall enforcement activities, the number of regulated
entities, the complexity of items to be regulated, and the number of facilities to be inspected. Ultimately, the
number of regulated entities under this bill may increase over time leading to increased expenditures by the
IDOH in future years.
Oversight Board: The Medical Marijuana Oversight Board consists of seven members including four
legislators. The board meets at the call of the chair to adopt rules to implement and administer an appeals
process and resolve grievances. Members are to serve without compensation.
Defense to Prosecution: This defense should have no material effect on DOC’s inmate population. LSA
found that about 5% of persons who were convicted and sentenced for possession of marijuana as a Level
6 felony were committed to a DOC facility between 2013 and 2021. No persons were found to have been
committed to DOC for possession of marijuana in FY 2020 or FY 2021.
Explanation of State Revenues: Sales Tax: Sales Tax collections on sales of medical marijuana would
HB 1168 2 likely be significant once the program is fully implemented. The revenue increase could be approximately
$1.9 M to $6.6 M in the first year of sales. Revenue would likely increase to a greater extent in subsequent
years as the program matures. The bill is effective July 1, 2022, but the amount of time that will be required
to establish the program is not known. In some other states that have medical marijuana programs, the time
between the passage of legislation and the first month of revenue collections was between six months and
two years. Sales Tax revenue is deposited in the General Fund (99.838%), Commuter Rail Service Fund
(0.131%), and Industrial Rail Service Fund (0.031%).
Permit and Identification Fees: Permit fees will increase revenue to the General Fund by an indeterminate,
but potentially significant amount. Similar, but established agencies and programs, have fee and fine revenue
of between $3.4 M and $17.5 M. The IDOH may assess a penalty of up to $10,000 per violation and an
additional penalty of up to $1,000 for each day a violation continues. The IDOH may revoke an identification
card or permit.
Penalty Provisions: Combined, the bill’s penalty provisions will have an indeterminate impact on revenues
from fines and court fees, impacting the Common School Fund and the state General Fund.
The bill adds the following criminal penalties:
•Discrimination against a person authorized by the MMP, a Class C infraction or a Class B
infraction for a subsequent offense.
•Harassment of a medical marijuana user, a Class A misdemeanor or Level 6 felony for a
subsequent offense.
•Aiding federal law enforcement officer in enforcing a criminal law or authorizing a
forfeiture of an activity made legal by the bill, a Level 6 felony.
Also, the bill excludes patients, caregivers, medical marijuana organizations, testing laboratories, research
facilities, and transporters from the following offenses:
•Possession of paraphernalia, a Class C misdemeanor or Class A misdemeanor for a
subsequent offense.
•Dealing in paraphernalia, a Class A infraction or a Class A misdemeanor or Level 6 felony
in certain circumstances.
•Dealing in marijuana, hash oil, hashish, or salvia, a Class A misdemeanor or higher
depending on the substance weight.
•Possession of marijuana, hash oil, hashish, or salvia, a Class B misdemeanor or higher
depending on the substance weight.
The bill provides a defense to the crime of operating a motorboat under the influence as a Class C
misdemeanor.
Additional Information - Sales Tax: The estimated potential Sales Tax revenue from medical marijuana is
based on data from other states that have implemented similar programs, adjusted for tax rate and population.
Illinois collected $1.9 M from its 7% medical cannabis tax in FY 2017, the first full year of revenue
collections, and $23.9 M in FY 2021. Pennsylvania imposes a 5% medical marijuana gross receipts tax on
sales to dispensaries. Pennsylvania collected $3.5 M in FY 2019, $10.7 M in FY 2020, and $26.8 M in FY
2021. West Virginia collected $6.8 M in FY 2020 from its 10% retail tax on medical cannabis. Medical
marijuana sales in Ohio were approximately $56.0 M in CY 2019 and $221.2 M in CY 2020.
Revenue in these states was significantly higher in FY 2020 and FY 2021 than in previous years. The upper
HB 1168 3 limit estimate is based on the assumption that this increase in demand will continue, and the lower limit
estimate assumes that demand will return to pre-2020 levels.
Permit and Identification Fees: Once permits and identification cards are established, fee and fine revenue
may be similar to ATC or IGC. In FY 2021, the ATC had $17 M in alcoholic beverage and tobacco permit
fee revenue and $470,890 in fine revenue, while the IGC’s charity gaming program had revenue of $3.4 M
from license fees and $6,100 from fines. An identification card for a patient or caregiver is $50 for issuance
or renewal. Demonstrated financial hardship may reduce or waive the fee. The bill also requires the IDOH
to conduct a national criminal history background check of each applicant for a caregiver identification card.
The applicant is responsible for the $15 State Police Fee. Revenue from all fees established by the bill and
background check fees will be deposited in the General Fund. Medical marijuana organization permit fees
are listed in the following table.
Fee Type
Grower or
Processor
Dispensary
Testing
Laboratory
Application (nonrefundable) $10,000 $5,000 $2,000
Permit (refundable) $50,000 $20,000/location$10,000/location
Permit renewal (refundable) $10,000 $5,000/location$2,000/location
Permit amendment (nonrefundable) $250 $250 $250
Court Fees and Criminal Fines: If additional court cases occur and fines are collected, revenue to both the
Common School Fund and the state General Fund would increase. The maximum fine for any felony is
$10,000. Criminal fines are deposited in the Common School Fund. If the case is filed in a circuit or superior
court, 70% of the $120 criminal costs fee that is assessed and collected when a guilty verdict is entered
would be deposited in the state General Fund. In addition, some or all of the following revenue is deposited
into the state General Fund: automated record keeping fee ($20), judicial salaries fee ($20), public defense
administration fee ($5), court administration fee ($5), judicial insurance adjustment fee ($1), and the DNA
sample processing fee ($3).
Explanation of Local Expenditures: Penalty Provisions: The bill will not have a material impact on the
number of offenders incarcerated or detained in a county jail prior to trial. The average cost per day to
incarcerate a prisoner is approximately $54 based on the per diem payments reported by U.S. Marshals to
house federal prisoners in 16 county jails across Indiana during federal FY 2017.
Explanation of Local Revenues: Penalty Provisions: If additional court actions occur and guilty verdicts
are entered, local governments would receive more revenue from court fees. However, any change in revenue
would likely be small.
If additional court actions occur and a guilty verdict is entered, local governments would receive revenue
from the following sources. The county general fund would receive 27% of the $120 criminal costs fee that
is assessed in a court of record. Cities and towns maintaining a law enforcement agency that prosecutes at
least 50% of its ordinance violations in a court of record may receive 3% of the criminal costs fee. Persons
found guilty of a felony or misdemeanor are also required to pay the document storage fee ($5), which is
deposited into the clerk record perpetuation fund, and the jury fee ($2) and the law enforcement continuing
education fee ($4), which are both deposited in the county user fee fund.
HB 1168 4 State Agencies Affected: Indiana Department of Health; Department of Correction.
Local Agencies Affected: Trial courts, local law enforcement agencies.
Information Sources: State Budget Agency; Auditor's Data; State program websites and contacts available
from LSA upon request. NCSL, “State Medical Marijuana Laws,” Aug. 23, 2021,
https://www.ncsl.org/research/health/state-medical-marijuana-laws.aspx. Illinois Department of Revenue,
Monthly Collections Remitted to the State Comptroller. Ohio Department of Commerce, Medical Marijuana
Control Program Historical Sales Data. Pennsylvania Department of Revenue, Revenue and Receipts
Reports. West Virginia Joint Committee on Government and Finance, Digest of Revenue Sources. Indiana
Sheriffs’ Association, Department of Correction. Abstracts of Judgment, Indiana Supreme Court; Bureau of
Motor Vehicles; various state program websites and contacts available from LSA upon request.
Fiscal Analyst: Karen Rossen, 317-234-2106, Lauren Tanselle, 317-232-9586, Mark Goodpaster,
317-232-9852.
HB 1168 5