LEGISLATIVE SERVICES AGENCY
OFFICE OF FISCAL AND MANAGEMENT ANALYSIS
FISCAL IMPACT STATEMENT
LS 7524 NOTE PREPARED: Jan 7, 2025
BILL NUMBER: HB 1630 BILL AMENDED:
SUBJECT: Cannabis Legalization.
FIRST AUTHOR: Rep. VanNatter BILL STATUS: As Introduced
FIRST SPONSOR:
FUNDS AFFECTED:XGENERAL IMPACT: State & Local
XDEDICATED
FEDERAL
Summary of Legislation: The bill establishes a procedure for the lawful production and sale of cannabis
in Indiana. It makes conforming amendments.
Effective Date: July 1, 2025.
Explanation of State Expenditures: Summary - The bill could increase state costs by between $1.1 M and
$1.7 M in FY 2026 and between $680,000 and $1.2 M in FY 2027 for the Cannabis Commission
(commission) and the Department of State Revenue (DOR).
The bill will have an indeterminate, but minimal, impact on the number of commitments to the Department
of Correction (DOC) for felony violations as it removes marijuana from the list of controlled substances
(eliminating offenses for possession and dealing), but also adds new felony offenses.
Additional Information - Marijuana is federally classified as a Schedule I controlled drug with no medically
indicated uses. Future federal responses to state initiatives is unknown although 14 states have
comprehensive medical marijuana programs and 24 states have combined adult and medical use regulatory
programs.
Cannabis Commission: In the initial years, the commission could incur annual state expenditures between
$580,200 and $1 M to establish and operate the commission. After an indeterminate implementation period,
the commissions’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 commission.
The cost range was estimated using relevant staff positions and administrative costs in other state regulatory
agencies and divisions of state agencies with regulatory functions. The higher estimate includes a
superintendent position (a position that is hired at the discretion of the commission). Total regulatory
expenses are determined by the 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
HB 1630 1 commission for future years.
Cannabis Excise Tax: The DOR would incur significant software-related costs and would need to hire
additional staff to implement the bill's provisions. The DOR's expenses for implementing the Cannabis
Excise Tax and Sales Tax on cannabis would include first-year costs between $540,000 and $675,000 and
ongoing annual costs between $100,000 and $200,000.
Penalty Provisions: The overall impact of the bill on the number of offenders committed to DOC facilities
is potentially minor. 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, the number of offenders committed to DOC
facilities for marijuana dealing and possession each year averaged only 27 individuals between FY 2020 and
FY 2024. The majority of cases where a marijuana charge is listed as the maximum convicted charge are
disposed as misdemeanors.
Explanation of State Revenues: Summary - Revenue to the state General Fund is estimated to increase
between $41.9 M and $82.1 M per year from Sales Taxes. Also, the bill establishes the nonreverting
Cannabis Regulation Fund which could receive between $60.4 M and $118.5 M per year from the Cannabis
Excise Tax and permit fee revenue.
The addition of new infractions, misdemeanors, and felonies, as well as the decriminalization of marijuana
(including hash oil and hashish), will have an indeterminate overall impact on the state General Fund (from
court fees and infraction judgements) and the Common School Fund (from criminal fines).
Additional Information -
Excise and Sales Taxes: Significant revenue from the Cannabis Excise Tax and Sales Tax could potentially
be collected beginning in FY 2026. However, the timing of revenue collections will depend on the length of
time necessary to implement the cannabis regulatory program. The following table summarizes the estimated
revenue that could be collected when the program is fully implemented.
Estimated Revenue Upon Full Implementation
(in millions)
Revenue SourceLow EstimateHigh Estimate
Sales Tax $41.9 $82.1
Excise Tax $59.9 $117.2
Permit Fees $0.5 $1.3
All revenue from the Cannabis Excise Tax will be deposited in the Cannabis Regulation Fund. 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%).
The bill establishes the Cannabis Excise Tax at a rate of 10% of the retail price of cannabis. The excise tax
revenue could potentially generate an estimated $59.9 M to $117.2 M in the first full year of regulated
cannabis sales. Before the cannabis program is fully implemented, a lesser but potentially significant amount
of revenue could be collected. The 7% state Sales Tax would also apply to sales of cannabis. The Sales Tax
HB 1630 2 revenue increase could be approximately $41.9 M to $82.1 M in the first full year of sales.
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. A
review of 21 states found that the average time to implement a medical marijuana program is 29 months. If
Indiana's implementation time is similar, revenue collection may begin in FY 2028, and the first full year of
collections may be FY 2029.
Permits, Fees, and Fines: Permit fees and civil penalties imposed by the commission will increase revenue
to the Cannabis Regulation Fund by a potentially significant amount. New programs such as those in
Michigan or Illinois received between $0.5 M and $1.3 M from active licenses. [The permit fee revenue will
increase as the program matures.] The application and license fees reviewed included growers, processors,
dispensaries, testing laboratories, transportation providers, as well as identification cards for patients and
caregivers. Permit fees are deposited in the Cannabis Regulation Fund, a new fund established in the bill,
that reverts to the state General Fund.
Cannabis grower permittees may have a license revoked (or not renewed) and a civil penalty imposed of up
to $2,500 for violation of a permit requirement, permit term or condition, or a rule related to the growing of
cannabis. Additionally, the commission may assess a civil penalty for violations of the law by any permittee
up to $50,000. A permit applicant must post a $15,000 surety bond payable to the state, and the commission
may recover between $250 and $500 for violations, or up to the full amount for failure to pay taxes or fees.
Permit Fees by Type
Permit Type
Application
(non-refundable)
New and
Renewed Permit
(refundable)
Annual
InvestigationPermit Limit
Integrated Permits $30,000, plus each
underlying permit fee
$15,000 $7,500 9
Grower (assessed by canopy
square footage)
$5,000 to $15,000 $2,500 to $7,500 $1,250 to
$3,750
4 to 22
Processor $5,000 $2,500 $1,250
Transport Carrier $5,000 $2,500 $1,250
Retailer $10,000 $5,000 $2,500 300
Penalty Provisions: The bill will have an indeterminate impact on revenue from court fees, infraction
judgments, and criminal fines due to the elimination and creation of offenses. The removal of marijuana
offenses for possession and dealing marijuana and for dealing in paraphernalia will lower the number of
these charges, but not necessarily the number of cases. The majority of cases listing a marijuana offense
include multiple other higher level charges. Therefore, many of these cases may still exist and be disposed
for other offenses.
Additionally, the bill adds several new offenses, including Level 6 felonies for dealing in mislabeled THC
hemp extract, growing or selling cannabis without a permit, and other cannabis permit violations. The bill
HB 1630 3 adds Class A and Class B misdemeanors regarding the transporting of cannabis, providing cannabis to a
person under 21 years old (with a Level 6 felony enhancement for serious bodily injury or death), and other
cannabis violations. The bill also adds Class C infractions and Class B misdemeanors for furnishing cannabis
to a person under 21 years old, for certain individuals allowing or taking a person under 18 years old to a
cannabis retailer or other location where cannabis is sold, the public use of cannabis, and county vendors
spending money to promote a public question.
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.
Explanation of Local Expenditures: Penalty Provisions: The bill will have an indeterminate impact on
counties for public defense expenses and the pre- and post-trial jail confinement due to the elimination of
marijuana offenses and the addition of other offenses, as prescribed in the bill. 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: The bill will have an indeterminate impact on the
number of court actions due to the elimination of marijuana offenses and the addition of other offenses. 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: Department of State Revenue; Department of Correction; Indiana Department of
Health.
Local Agencies Affected: Courts with criminal jurisdiction; prosecuting attorneys.
Information Sources: U.S. Substance Abuse and Mental Health Services Administration;
National Survey on Drug Use and Health, December 2020;
Budget data for Indiana Gaming Commission and Alcohol and Tobacco Commission;
U.S. Census Bureau, Annual Estimates of the Resident Population by Single Year of Age and Sex;
Indiana Office of Court Services 2022 Caseload Statistics and Revenue downloads;
Indiana Supreme Court Abstracts of Judgment;
State program websites and contacts available from LSA upon request.
Fiscal Analyst: Karen Rossen, 317-234-2106; Qian Li, 317-232-967; Heather Puletz, 317-234-9484.
HB 1630 4