LEGISLATIVE SERVICES AGENCY
OFFICE OF FISCAL AND MANAGEMENT ANALYSIS
FISCAL IMPACT STATEMENT
LS 6395 NOTE PREPARED: Dec 12, 2024
BILL NUMBER: HB 1178 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: The bill establishes a medical marijuana program 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 medical marijuana program.
Permit Holders and Packaging: The bill requires that permit holders undertake steps to prevent diversion
of medical marijuana to unauthorized persons. It 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: It authorizes research on medical marijuana in accordance with rules set forth by the state
department. Prohibits discrimination against medical marijuana users.
Discrimination: 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.
Medical Marijuana Oversight Committee: The bill establishes the Medical Marijuana Oversight Committee
to review appeals and grievances concerning the medical marijuana program.
Defense: The bill establishes 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, 2025.
HB 1178 1 Explanation of State Expenditures: The bill could increase state costs between $692,000 and $1.5 M in
FY 2026 and between $422,000 and $796,000 in FY 2027 for the Indiana Department of Health (IDOH) to
implement the Medical Marijuana Program and for the advisory committee.
The bill will have an indeterminate, but minimal, impact on the number of commitments to the Department
of Correction (DOC) for felony violations.
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): IDOH has on average between three and four division director
positions per division. The average administrative and utility cost per IDOH employee was used to estimate
overhead costs. The first year estimated includes $300,000 to $750,000 for database design and
implementation, and between $30,000 and $75,000 in ongoing costs. 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.
Advisory Council: 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 overall impact of the bill on the number of offenders committed to DOC facilities
is potentially minor. It provides that current marijuana offenses do not apply to individuals and organizations
in substantial compliance with the medical marijuana program established by the bill, but it also adds new
felony offenses concerning law enforcement.
While the number of offenders who may be committed to a DOC facility (as a result of the new felony
offenses established in the bill) is indeterminate, there were a total of only fifteen individuals committed to
DOC facilities for possession of marijuana as a Level 6 felony (listed as the maximum convicted charge)
between FY 2020 and 2024. The majority of cases where a marijuana charge is listed as the maximum
convicted charge are disposed as misdemeanors.
Individuals committed to the DOC for dealing marijuana as felony convictions were not included since
felony enhancements only apply if the person has a prior conviction or has at least 30 grams, and the bill
limits an adult cannabis user from possessing more than one ounce (about 28.3 grams) in a 30-day period,
so these charges could still be filed.
Explanation of State Revenues: Summary - Revenue to the state General Fund could increase between
$13.1 M and $19.1 M in the initial year from Sales Tax and permit and identification fees.
The bill will have an indeterminate overall impact on the state General Fund (from court fees and infraction
judgments) and the Common School Fund (from criminal fines) due the bill’s exemption for medical
marijuana offenses for individuals and organizations in substantial compliance with the medical marijuana
program and the addition of new infractions, misdemeanors, and felonies.
Additional Information -
HB 1178 2 Estimated Revenue Upon Full Implementation
(in millions)
Revenue SourceLow EstimateHigh Estimate
Sales Tax $12.6 $17.8
Permit Fees $0.5 $1.3
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 $12.6 M to $17.8 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 between $0.5 M
to $1.3 M in the early years, based on similar permit and fine revenue in state agencies and other states’ new
medical marijuana programs. 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 specified in the 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
Penalty Provisions: The bill exempts a person in substantial compliance with the medical marijuana program
from criminal penalties concerning marijuana. The majority of cases where a marijuana charge is listed as
the maximum convicted charge are disposed as misdemeanors.
Additionally, the bill also establishes infractions, misdemeanors, and Level 6 felonies concerning law
enforcement, for discriminating against a participant in the medical marijuana program and for assisting a
federal law enforcement in enforcing activities made legal by the bill.
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
HB 1178 3 document describes the fees and distribution of the revenue: Court fees imposed in criminal, juvenile, and
civil violation cases.
The medical marijuana program specifies that a person may not operate a motor vehicle, including a
motorboat, while under the influence of medical marijuana; therefore, the defenses provided by the bill,
regarding operating a vehicle while intoxicated convictions for a person in substantial compliance with the
program may not apply.
Explanation of Local Expenditures: Penalty Provision: The bill will have will have an indeterminate
overall impact on the number of defendants detained in county jails prior to their court hearings due to the
bill’s exemption for medical marijuana offenses for individuals and organizations in substantial compliance
with the medical marijuana program and the addition of new misdemeanors and felonies.
Explanation of Local Revenues: Penalty Provisions: The bill will have an indeterminate impact on the
number of court actions due to the elimination of marijuana offenses and the addition of new infractions,
misdemeanors, and felonies. If fewer or additional court actions occur and guilty verdicts are entered,
revenue to certain local units may be impacted. The amount of court fees deposited varies 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.
State Agencies Affected: Indiana Department of Health; Department of Correction, Indiana State Police,
Legislative Council, Legislative Services Agency.
Local Agencies Affected: Trial courts; local law enforcement agencies.
Information Sources: Indiana Supreme Court, Indiana Trial Court Fee Manual; Department of Correction.
Fiscal Analyst: Karen Rossen, 317-234-2106; Qian Li, 317-232-967; Heather Puletz, 317-234-9484.
HB 1178 4