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 6236 NOTE PREPARED: Dec 12, 2023
BILL NUMBER: SB 99 BILL AMENDED:
SUBJECT: Cannabis Regulation.
FIRST AUTHOR: Sen. Pol BILL STATUS: As Introduced
FIRST SPONSOR:
FUNDS AFFECTED:XGENERAL IMPACT: State & Local
XDEDICATED
FEDERAL
Summary of Legislation: The bill permits the use of cannabis by: (1) a person at least 21 years of age; and
(2) a person with a serious medical condition as determined by the person's physician.
Adult Use Cannabis Excise Tax: The bill establishes the Adult Use Cannabis Excise Tax, and requires a
retailer to transfer the tax to the Department of State Revenue for deposit in the state General Fund. It
exempts veterans from payment of the sales tax on medical or adult use cannabis.
Program: The bill establishes a cannabis program (program) to permit the cultivation, processing, testing,
transportation, and sale of cannabis by holders of a valid permit.
Indiana Cannabis Commission (ICC) and ICC Advisory Committee: The bill establishes the Indiana
Cannabis Commission (ICC) as a state agency to oversee, implement, and enforce the program, and
establishes the ICC Advisory Committee to review the effectiveness of the program.
Distribution and Labeling: The bill requires that permit holders take steps to prevent diversion of cannabis
to unauthorized persons. It requires that cannabis and cannabis products be properly labeled, placed in child
resistant packaging, and tested by an independent testing laboratory before being made available for
purchase. It also prohibits packaging cannabis in a manner that is appealing to children.
Research: The bill authorizes research on cannabis in accordance with rules set forth by the ICC.
Expungement: It establishes a procedure for the expungement of a cannabis related conviction if the act
constituting the conviction becomes legal.
SB 99 1 The bill also makes conforming amendments.
Effective Date: July 1, 2024.
Explanation of State Expenditures: Summary - The bill could increase state costs by between $893,500
and $1.1 M in FY 2025 and between $493,500 and $663,500 in FY 2026 for the Indiana Cannabis
Commission (ICC), the ICC Advisory Committee (advisory committee), and the Department of State
Revenue (DOR).
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.
ICC and Advisory Committee: In the initial years, the ICC could incur annual state expenditures between
$480,000 and $650,000 to establish and operate the ICC. After an indeterminate implementation period, the
ICC’s total costs will depend on the number of employees needed to regulate cannabis as prescribed in the
bill. The costs may be at least partially offset with fees established by the ICC. The cost of the advisory
committee will depend on the budget established by the Legislative Council. Recently, budgets for
committees of similar size are estimated at $13,500 per interim.
The cost range was estimated using relevant staff positions in 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 ICC in future years.
Adult Use Cannabis Excise Tax: Implementing the Adult Use Cannabis Excise Tax would require additional
workload and expenditures for the DOR outside of the agency’s routine administrative functions. The DOR’s
workload and expenses would also increase to administer the Sales Tax exemption for cannabis purchased
by veterans. The DOR would need to update computer software and create forms, guidance, and processes
to implement the bill’s tax provisions. [The DOR reports that the software-related costs to implement the
Electronic Cigarette Tax and Closed System Cartridge Tax were approximately $400,000.]
The Department of State Revenue (DOR) will experience additional costs and workload to implement the
provisions outlined in the bill. The additional funds and resources required could be supplied through
existing staff and resources currently being used in another program or with new appropriations. Ultimately,
the source of funds and resources required to satisfy the requirements of this bill will depend on legislative
and administrative actions.
Penalty Provisions: The bill exempts an adult cannabis user, patient, caregiver, cannabis organization,
research facility, or transporter substantially in compliance with the requirements of this comprehensive
program from criminal penalties concerning dealing, use, possession, or transportation of marijuana or
related paraphernalia. This would have little or no effect on the future offender population of the Department
of Correction (DOC) since there were a total of nine individuals committed to DOC facilities for possession
of marijuana as a Level 6 felony between FY 2019 and 2023.
Impaired operation of a motor vehicle, motorboat, or any other device or equipment while under the influence
SB 99 2 of cannabis is a Class C misdemeanor, but may be charged as a Level 4, Level 5, or Level 6 felony 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.
Advisory Committee: This bill establishes the 12 member advisory committee comprised of four legislative
members and eight nonvoting members. Members of the advisory committee are to receive the same salary
per diem and traveling 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 ICC, evaluate the cannabis
research and development program, and evaluate operation of the cannabis program as well as matters with
bearing on the operation of the program. Prior to marijuana being removed as a Schedule I controlled
substance, the committee will meet to adopt rules, take testimony, and make recommendations.
Explanation of State Revenues: Revenue to the state General Fund could increase between $41.8 M and
$90.4 M in FY 2025 and $45.2 M and $96.5 M in FY 2026 from Adult Use Excise Tax, Sales Tax, and
permits, fees, and fines.
An estimated total between $55,000 and $109,000 from state Sales Tax revenue would be distributed to the
Commuter Rail Service Fund and the Industrial Rail Service Fund per fiscal year. Also, the Controlled
Substance Tax Fund and Common School Fund could decrease.
Additional Information -
Adult Use Cannabis Excise Tax: The bill establishes the Adult Use Cannabis Excise Tax, effective July 1,
2024. In FY 2025, the tax rate would be 1% of the retail price of cannabis (excluding medical cannabis). The
rate would increase to 2% in FY 2026 and 3% beginning in FY 2027. Revenue would be deposited in the
state General Fund. The following table shows the estimated potential excise tax revenue.
Estimated Potential Excise Tax Revenue from Adult-use
Cannabis (in Millions)
FY Low Estimate High Estimate
FY 2025 (1%) $3.4 $6.2
FY 2026 (2%) $6.8 $12.3
FY 2027 (3%) $10.2 $18.5
The estimated potential excise revenue is based on retail sales of cannabis and revenue collections in states
that have implemented programs permitting and taxing both medical cannabis and adult-use cannabis,
adjusted for marijuana use percentage and population in each state and estimated cross-border sales.
Sales Tax: The 7% state Sales Tax would also apply to sales of adult use and medical cannabis beginning
in FY 2025. The revenue increase could be approximately $34.5 M to $67.3 M in the first full year of sales.
However, actual revenue would be lower to the extent veterans purchase cannabis exempt from tax. The
estimated potential sales revenue is based on retail sales of cannabis and revenue collections in states that
have implemented programs permitting and taxing both medical cannabis and adult-use cannabis, adjusted
for marijuana use percentage and population in each state and estimated cross-border 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%).
SB 99 3 Permits, Fees, and Fines: 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. The ICC will assess a penalty of up to $20,000 per violation and an additional penalty of
up to $2,500 for each day a violation continues. The Indiana Alcohol and Tobacco Commission, a mature
program, received an average $15.8 M from alcohol beverage permits between FY 2018 and FY 2022.
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 ICC to conduct a national criminal history
background check of each applicant for a caregiver identification card and requires the applicant to pay for
the associated $15 State Police fee.
Cannabis organization permit fees are listed in the following table.
Fee Type Grower Processor
Qualified
Retailer
Testing
Laboratory
Application (nonrefundable) $500 $2,500 $200 $1,000
Permit (refundable) $2,500 $10,000 $1,000/location$2,500/location
Permit renewal (refundable) $1,000 $5,000 $750/location $2,000/location
Permit amendment (nonrefundable) $250 $250 $250 $250
Controlled Substance Excise Tax Repeal: Repeal of the Controlled Substance Excise Tax (CSET) will have
minimal impact on state revenue. The tax is collected on the delivery, possession, or manufacture of
controlled substances in violation of state or federal law. CSET collections are $3,555 per year on average
between FY 2019 and FY 2023. Revenue is deposited in the Controlled Substance Tax Fund.
Penalty Provisions: Limiting certain use, possession, and dealing of marijuana and paraphernalia to
individuals noncompliant with this program could reduce revenue from court fees and criminal fines.
Similarly, the changes to the definition of impairment for operating while intoxicated and operating a
motorboat intoxicated will potentially reduce the revenue from court fees and criminal fines. Criminal fines
are deposited in the Common School 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: Expungement: More petitions for expungement would increase the
workload of local courts. Persons who have been convicted of marijuana offenses in different counties would
need to file petitions in each county with the circuit or superior court in that county for an expungement.
Whether the added workload can be accommodated with a court’s existing resources will depend on the
number of possible cases filed, how quickly they could be processed, and each court’s capacity. While the
volume of new cases is uncertain, most of these cases will be for Class A or B misdemeanors and not Level
6 felonies. Since more than 80% of cases that are expunged are disposed with a bench disposition, the court
proceedings should be briefer because they historically have not required introducing witnesses or evidence.
Effect on County Jails, Probation Departments, and Community Corrections Agencies: The bill would
reduce the costs to counties for public defense expenses and the pre- and post-trial jail confinement for
SB 99 4 persons who are charged with possession of marijuana as either a misdemeanor or felony. The bill would also
reduce the supervisory burden on community corrections agencies and probation departments.
Criminal Penalties: The changes in criminal penalties are likely to have a minor change in county jail
populations. If fewer convictions occur due to the defense protections in the bill, local jail populations may
be reduced. The new misdemeanors may increase the county jail populations.
Additional Information – Of the 891 persons who were sentenced for marijuana possession as a Class B
misdemeanor, 29% were appointed a public defender.
A Class A misdemeanor is punishable by a maximum one year term in a county jail, and the maximum term
for a Class B misdemeanor is punishable by up to 180 days in jail. [The average cost per day is
approximately $64.53 based on the per diem payments reported by U.S. Marshals to house federal prisoners
in 11 county jails across Indiana during CY 2021.]
Explanation of Local Revenues: Penalty Provisions: Local governments would receive less revenue from
court fees if there are fewer criminal prosecutions. However, any reduction in revenue would likely be minor.
When cases are filed in a court of record, the county general fund receives $47.40 and qualifying
municipalities will receive a share of $3.60. When cases are 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: Governor’s Office; General Assembly; Department of State Revenue; State
Department of Agriculture; State Department of Health.
Local Agencies Affected: Prosecuting attorneys; law enforcement agencies; courts with certain criminal
jurisdiction; community corrections agencies.
Information Sources: State Budget Agency; Auditor's Data; State program websites and contacts available
from LSA upon request; U.S. Census Bureau, Annual Estimates of the Resident Population by Single Year
of Age and Sex; U.S. Department of Health and Human Services, National Survey on Drug Use and Health,
December 2021; Abstracts of Judgment, Indiana Supreme Court.
Fiscal Analyst: Qian Li, 317-232-9671; Karen Rossen, 317-234-2106; Mark Goodpaster, 317-232-9852.
SB 99 5