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 6294 NOTE PREPARED: Dec 14, 2023
BILL NUMBER: SB 126 BILL AMENDED:
SUBJECT: Medical Cannabis.
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 (MMP): The bill establishes an MMP, 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 and Regulatory Agency Advisory Committee: The bill 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: The bill 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, 2024.
Explanation of State Expenditures: Summary - The bill could increase state costs between $493,500 and
$663,500 in the initial years for the regulatory agency 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
SB 126 1 combined adult and medical use regulatory programs, future federal responses to state initiatives is unknown
Regulatory Agency: The regulatory agency is comprised of four commissioners appointed by the Governor
and an executive director. 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 may employ all necessary employees, determine their duties, and fix their salaries (with
the approval of the Budget Agency). The regulatory agency will issue medical marijuana cards, advise the
General Assembly, and permit and encourage research concerning medical marijuana. After an indeterminate
implementation period, the regulatory agency’s total costs will depend on the number of employees needed
to regulate medical marijuana. The costs may be at least partially offset with fees established by the program.
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. Ultimately, the number of regulated
entities under this bill may increase over time leading to increased expenditures by the regulatory agency in
future years.
Regulatory Agency 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, evaluate
the marijuana research and development program, and evaluate the operation of the medical marijuana
program. 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.
Penalty Provisions: The bill provides a defense for qualified patients, caregivers, and researchers from
criminal penalties concerning dealing, use, possession, or transportation of marijuana or related paraphernalia
that may be felony offenses based on the circumstance of the offense. The prosecuting attorney would have
to prove that the accused person was not a qualified caregiver or did not have a valid marijuana research
license. Any reduction in the number of new commitments based on the defenses in the bill is expected to
be minor.
Explanation of State Revenues: Summary - 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. Repeal of the
Controlled Substance Excise Tax (CSET) will have very minimal fiscal impact on state revenue.
Medical Marijuana Program (MMP): 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. The fee would be deposited in the state 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
SB 126 2 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 state General Fund (99.838%), Commuter Rail Service Fund (0.131%), and Industrial Rail Service Fund
(0.031%).
Controlled Substance Excise Tax Repeal: The tax is collected on the delivery, possession, or manufacture
of controlled substances in violation of state or federal law. CSET collections were $3,555 per year on
average between FY 2019 and FY 2023. Revenue is deposited in the Controlled Substance Tax Fund.
Criminal Penalties: Two new Class B misdemeanors are created: 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 and the state General Fund would
increase. The maximum fine for a Class B misdemeanor is $1,000. 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: 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. In FY 2022, Decatur, Fountain, Jasper, Newton, and Pike counties reported marijuana
eradication funds, with only Decatur County reporting expenditures of $3,684.
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. However, the two new Class B misdemeanors created by the bill may increase the county jail
populations. A Class B misdemeanor is punishable by up to 180 days in jail.
The average cost per day was approximately $64.53 to house federal prisoners in 11 county jails across
Indiana during CY 2021, based on the per diem payments reported by U.S. Marshals.
Explanation of Local Revenues: Marijuana Eradication Local User Fees: The bill eliminates the Marijuana
Eradication fee, an optional fee that may be imposed by the court. The fee is deposited in the County Court
User Fee Fund and transferred by the county fiscal body to the Marijuana Eradication Fund. Five counties
reported balanced with their Marijuana Eradication Fund in FY 2022, with revenues to the funds ranging
from $0 to $26,808.
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.
SB 126 3 State Agencies Affected: Governor’s Office; General Assembly; Department of State Revenue; State
Department of Agriculture; Indiana Department of Health.
Local Agencies Affected: Trial courts; local law enforcement agencies; county weed control boards.
Information Sources: State Budget Agency; Comptroller’s Data; State program websites and contacts
available from LSA upon request; Department of Correction; U.S. Department of Justice Marshals Service;
Indiana Supreme Court, Indiana Trial Court Fee Manual.
Fiscal Analyst: Karen Rossen, 317-234-2106; Qian Li, 317-232-9671; Mark Goodpaster, 317-232-9852.
SB 126 4