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 6265 NOTE PREPARED: Dec 14, 2023
BILL NUMBER: HB 1146 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.
Medical Marijuana Program (MMP): The bill 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 Indiana Department of Health (IDOH) to implement and enforce the MMP.
Permit Holders and Packaging: The bill 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. It 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. The bill also 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.
Medical Marijuana Oversight Board (Board): The bill establishes the Medical Marijuana Oversight
Committee to review appeals and grievances concerning the MMP.
Defenses: It provides a defense to prosecution for a person who operates a vehicle or motorboat with
HB 1146 1 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, 2024.
Explanation of State Expenditures: Summary - The bill could increase state costs between $493,500 and
$663,500 in the initial years for the Indiana Department of Health (IDOH) to implement the MMP and for
the advisory committee.
Additional Information - Marijuana is federally classified as a Schedule I controlled drug with no medically
indicated uses. Although 14 states have comprehensive medical marijuana programs and 24 states have
combined adult and medical use regulatory programs, future federal responses to state initiatives is unknown.
Medical Marijuana Program (MMP): In the initial years, the bill is estimated to increase annual state
expenditures for the IDOH between $480,000 and $650,000 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 that are deposited
in the state General Fund.
The cost of the advisory committee will depend on the budget established by the Legislative Council.
Recently, budgets for committees of similar size have been $13,500 per interim.
The IDOH will establish a program that features individual identification cards and business permits. The
IDOH is made up of established divisions operating federal, state, and combination programs. On average,
the divisions have 7.3 executive or managerial staff with average annual salary and benefits of about
$696,100 per division. This is similar to the average cost of other state regulatory agencies and divisions of
state agencies with regulatory functions. The administrative costs are based on the Indiana Gaming
Commission’s overhead costs and estimated costs for new equipment. Total regulatory expenses are
determined by overall enforcement activities of the agency, 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.
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. As well, impaired operation of a
motor vehicle, motorboat, or any other device or equipment while under the influence of cannabis are Class
C misdemeanors, but may be charged as Level 4, Level 5, or Level 6 felonies depending upon the
circumstance. The bill adds a defense to these offenses that will have an indeterminate impact on the number
of people committed to a DOC facility. Between FY 2019 and FY 2023, a total of 17 individuals were
committed to a DOC facility for felony impaired operation of a vehicle while under the influence of cannabis.
A Level 6 felony is punishable by a prison term ranging from 6 to 30 months, with an advisory sentence of
1 year. The sentence depends on mitigating and aggravating circumstances. Assuming offenders can be
housed in existing facilities with no additional staff, the marginal cost for medical care, food, and clothing
is approximately $4,456 annually, or $12.21 daily, per prisoner. However, any additional expenditures are
likely to be small.
Explanation of State Revenues: Revenue to the state General Fund could increase between $11.1 M and
HB 1146 2 $25.5 M in the initial year from Sales Tax and permit and identification fees.
An estimated total between $17,172 and $39,200 from state Sales Tax revenue would be distributed to the
Commuter Rail Service Fund and the Industrial Rail Service Fund per fiscal year.
Additional Information -
Sales Tax: Sales of medical cannabis would be subject to Sales Tax after marijuana is removed as a federal
Schedule I controlled substance and after state permits for the sale of cannabis have been issued. Sales Tax
revenue could increase by an estimated $10.6 M to $24.2 M in the first full year of sales. This estimate is
based on data from other states that have implemented similar programs, adjusted for population and
prevalence of marijuana use, as well as potential out-of-state sales. Sales Tax revenue is deposited in the state
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 state General Fund by an
indeterminate, but potentially significant amount. Comparable agencies and programs have fee and fine
revenue of between $4 M and $17 M, while similar new programs in other states received $0.5 M and $1.3
M in the early years. The Indiana Alcohol and Tobacco Commission, a mature program, received an average
of $15.8 M from alcohol beverage permits between FY 2018 and FY 2022. 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.
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. Medical marijuana organization permit fees are listed in the following table.
Fee Type Grower Processor Dispensory
Testing
Laboratory
Application (nonrefundable) $10,000 $10,000 $5,000 $2,000
Permit (refundable) $50,000 $50,000 $20,000/location$10,000/location
Permit renewal (refundable) $10,000 $10,000 $5,000/location$2,000/location
Permit amendment (nonrefundable) $250 $250 $250 $250
Penalty Provision: 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; and
•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.
HB 1146 3 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; and
•Possession of marijuana, hash oil, hashish, or salvia, a Class B misdemeanor or higher depending
on the substance weight.
If additional court cases occur and fines are collected, revenue to both the Common School Fund (from
criminal fines) and the state General Fund (from court fees) would increase.
The maximum fine for felonies and misdemeanors in this bill are shown below:
Penalty
Maximum
Fine/Judgement Deposited in
Any felony $10,000 Common School Fund
Class A misdemeanor $5,000 Common School Fund
Class B misdemeanor $1,000 Common School Fund
Class C misdemeanor $500 Common School Fund
Class B infraction $1,000 State General Fund
Class C infraction $500 State General Fund
The total fee revenue per case would range between $113 and $135. The amount of court fees deposited will
vary depending on whether the case is filed in a court of record or a municipal court. The following linked
document describes the fees and distribution of the revenue: Court fees imposed in criminal, juvenile, and
civil violation cases.
Explanation of Local Expenditures: Penalty Provision: If more defendants are detained in county jails
prior to their court hearings, local expenditures for jail operations may increase. However, any additional
expenditures would likely be small.
Explanation of Local Revenues: Penalty Provision: If additional court actions occur and a guilty verdict
is entered, more revenue will be collected by certain local units. If the case is filed in a court of record, the
county general fund will receive $47.40 and qualifying municipalities will receive a share of $3.60. If the
case is filed in a municipal court, the county receives $30, and the municipality will receive $46. The
following linked document describes the fees and distribution of the revenue: Court fees imposed in criminal,
juvenile, and civil violation cases.
State Agencies Affected: Indiana Department of Health; Department of Correction.
Local Agencies Affected: Trial courts; local law enforcement agencies.
HB 1146 4 Information Sources: Indiana Supreme Court, Indiana Trial Court Fee Manual; Department of Correction.
Fiscal Analyst: Karen Rossen, 317-234-2106.
HB 1146 5