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 7117 NOTE PREPARED: Jan 2, 2022
BILL NUMBER: SB 231 BILL AMENDED:
SUBJECT: Medical Marijuana.
FIRST AUTHOR: Sen. Taylor G BILL STATUS: As Introduced
FIRST SPONSOR:
FUNDS AFFECTED:XGENERAL IMPACT: State & Local
XDEDICATED
FEDERAL
Summary of Legislation: Medical Marijuana Program: The bill establishes a Medical Marijuana Program
and permits caregivers and patients who have received a physician recommendation to possess a certain
quantity of marijuana for treatment of certain medical conditions.
Regulatory Agency: It establishes a regulatory agency to oversee the program and creates the Regulatory
Agency Advisory Committee to review the effectiveness of the program and to consider recommendations
from the regulatory agency.
Research: It also authorizes the regulatory agency to grant research licenses to research facilities with a
physical presence in Indiana.
Repeals: The bill repeals the Controlled Substance Excise Tax and the Marijuana Eradication Program.
It makes conforming amendments.
Effective Date: July 1, 2022.
Explanation of State Expenditures: Summary - The bill establishes a new department of state government
with four commissioners and an executive director. Other state commissions with regulatory responsibilities
have average annual administrative expenses of between $350,000 and $600,000. Costs are expected to be
similar in the initial years to establish the regulatory agency. However, costs will ultimately depend on the
hiring decisions and the level of enforcement undertaken by the commission.
SB 231 1 The bill also establishes an advisory committee. The cost will depend on the budget established by the
Legislative Council. Recently, budgets for committees of similar size have been $13,500 per interim.
Certain criminal penalties to which a defense is added under the bill may be increased to a Level 5 or Level
6 felony based on the prior convictions of the individual and the amount of the drug involved. A decrease
in the number of incarcerations based on the exemptions in the bill is indeterminate, but expected to be
minimal.
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 are unknown.
Additional Information -
Regulatory Agency: The regulatory agency is comprised of four commissioners appointed by the Governor.
Each commissioner is entitled to salary per diem and reimbursement of traveling and other expenses. The
commissioners must execute surety bonds of $10,000 and an oath of office. The regulatory agency will
appoint an executive director and may employ all necessary employees, determine their duties, and fix their
salaries with the approval of the State Budget Agency. The regulatory agency will issue medical marijuana
cards, advise the General Assembly, and permit and encourage research concerning medical marijuana.
The high estimate for agency costs is based on the Alcohol and Tobacco Commission (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 Indiana Gaming
Commission (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 ATC and IGC 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
agency in future years.
Advisory Committee: This bill establishes an Advisory Committee with nine members–four legislative
members and five nonvoting members. Members of the committee are to receive the same salary per diem,
travel, and other expense reimbursement paid to legislative or lay members of interim study committees. The
committee is to review rules and legislative proposals of the regulatory agency and evaluate the marijuana
research and development program and the operation of the medical marijuana program.
Explanation of State Revenues: Medical Marijuana Card and Research License: The fee revenue from
issuance of medical marijuana cards and research licenses will depend on the fees set by the regulatory
agency. In other states, the revenue from medical marijuana registration fees and other licenses pay for
program expenditures.
The regulatory agency is to issue a medical marijuana card to a patient or caregiver who completes an
application and provides a physician recommendation. The regulatory agency may set other requirements
in rules and charge up to $100 for issuance of a medical marijuana card, which will be valid for two years.
SB 231 2 The fee would be deposited in the General Fund. In most other states, license or registration fees have been
set at less than $100, and reduced fees are charged to patients based on need.
The regulatory agency may also issue a research license to an institution or business and charge a reasonable
fee for the license.
Sales Tax: Sales Tax revenue could increase by an indeterminable, but likely minimal amount. States that
have implemented medical marijuana programs have collected significant amounts of sales and excise taxes.
However, these programs allow for sales of medical marijuana through dispensaries. Since this bill does not
allow for a point of sale, Sales Tax revenue is not likely to increase by a significant amount. Potential Sales
Tax revenue from seed sales would be based on the number of people who qualify for a medical marijuana
card and whether they purchase or cultivate their own medical marijuana. Sales Tax revenue is deposited in
the General Fund (99.838%), Commuter Rail Service Fund (0.131%), and Industrial Rail Service Fund
(0.031%).
Controlled Substance Excise Tax Repeal: Repeal of the Controlled Substance Excise Tax will have minimal
fiscal impact on state revenue. The tax is collected on the delivery, possession, or manufacture of controlled
substances in violation of state or federal law. Collections were $370 in FY 2019, $3,241 in FY 2020, and
$7,623 in FY 2021. Revenue is deposited in the Controlled Substance Tax Fund.
Penalty Provisions: The bill establishes two Class B misdemeanors, one concerning the release of
confidential information and the other for fraudulent application for a medical marijuana card. If additional
court cases occur and fines are collected, revenue to both the Common School Fund (from fines) and the state
General Fund (from court fees) would increase.
The bill provides a defense to an action or prosecution for the following crimes if the person is a qualified
patient, caregiver, or listed on a research license. The crimes include possession of paraphernalia, a Class
C or Class A misdemeanor; dealing in marijuana, hash oil, hashish, or salvia, a Class A misdemeanor or
Level 5 or Level 6 felony; and possession of marijuana, hash oil, hashish, or salvia, a Class B or Class A
misdemeanor or Level 6 felony. If fewer individuals are convicted of these crimes, revenue from the
Common School Fund (from fines) and the General Fund (from court fees) would decrease.
If there are fewer actions due to the immunity protections in the bill, funds deposited in the state General
Fund from civil penalties and actions would be reduced.
Explanation of Local Expenditures: Marijuana Eradication Program: The bill eliminates the Marijuana
Eradication Program, which is operated by county weed control boards to eliminate and destroy wild
marijuana plants. Of the six counties with a marijuana eradication fund, only Decatur and Franklin Counties
reported expenditures between FY 2017 and FY 2020.
Penalty Provisions: A Class A misdemeanor is punishable by up to one year in jail, a Class B misdemeanor
is punishable by up to 180 days in jail, and a Class C misdemeanor is punishable by up to 60 days in jail.
Explanation of Local Revenues: Marijuana Eradication Local User Fees: The bill eliminates the
Marijuana Eradication Program. An optional fee that may be imposed by the court is the Marijuana
Eradication Fee. The fee is deposited in the county court user fee fund and transferred by the county fiscal
body to the Marijuana Eradication Fund. Six counties have funds with an average annual fund balance of
$10,254 between FY 2017 and FY 2020. The annual revenue from the Marijuana Eradication Fees are in the
SB 231 3 following table.
Year
Number of
Units
Reporting
Revenue from
Marijuana
Eradication
Program
2017 6 $12,439
2018 6 4,803
2019 7 20,700
2020 5 6,708
Penalty Provisions: If fewer court actions occur and fewer guilty verdicts are entered, local governments
would receive less revenue from court fees. However, any change in revenue would likely be small.
State Agencies Affected: Governor’s Office; General Assembly; Department of State Revenue; State
Department of Agriculture; State Department of Health.
Local Agencies Affected: Trial courts, local law enforcement agencies, county weed control boards.
Information Sources: State Budget Agency; Auditor's Data; 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.
SB 231 4