LEGISLATIVE SERVICES AGENCY
OFFICE OF FISCAL AND MANAGEMENT ANALYSIS
FISCAL IMPACT STATEMENT
LS 6068 NOTE PREPARED: Apr 14, 2025
BILL NUMBER: SB 478 BILL AMENDED: Apr 14, 2025
SUBJECT: Craft Hemp Flower and THC Products.
FIRST AUTHOR: Sen. Holdman BILL STATUS: 2
nd
Reading - 2
nd
House
FIRST SPONSOR: Rep. Teshka
FUNDS AFFECTED:XGENERAL IMPACT: State & Local
XDEDICATED
FEDERAL
Summary of Legislation: (Amended) This bill establishes certain regulatory testing and packaging
requirements for the distribution and sale of craft hemp flower products. It creates and modifies certain
crimes concerning craft hemp, craft hemp flower products, and THC.
The bill provides that a food is not considered adulterated for containing low THC hemp extract or craft
hemp flower. The bill provides that craft hemp flower product is not included in the definition of "controlled
substance analog", "hashish", "low THC hemp extract", or "marijuana".
The bill prohibits the sale of specified products to a person less than 21 years of age.
The bill establishes a regulatory framework for craft hemp, including the regulation of advertising. It caps
the number of craft hemp retail permits at 20,000. It also provides that certain retailers may not sell craft
hemp flower products if the retailer is located near a school.
The bill changes certain references of delta 9-THC to THC.
The bill modifies the definition of "e-liquid."
The bill expands certain alcoholic beverage laws to include craft hemp products.
The bill provides that a person who is a retail craft hemp permit holder and a retail alcoholic beverage permit
holder may serve craft hemp beverages in the original container for consumption on the permitted premises.
It also provides that onsite consumption restrictions do not apply to holders of certain alcoholic beverage
retailer permits.
The bill adds certain retail establishments that sell craft hemp products to the list of retail establishments that
must prohibit minors from entering.
The bill provides that if the Alcohol and Tobacco Commission does not approve craft hemp packaging within
SB 478 1 30 days, the packaging is deemed approved and eligible for sale.
The bill provides that work in progress hemp extract may be sold to a craft hemp manufacturer permit holder.
The bill changes references of "administrative law judge" to "hearing judge".
The bill prohibits a craft hemp permit holder from giving free samples of craft hemp at a farmers' market.
The bill also defines terms, makes conforming changes, and makes technical corrections.
Effective Date: (Amended) July 1, 2020 (retroactive); July 1, 2025.
Explanation of State Expenditures: Alcohol and Tobacco Commission (ATC): The bill would establish a
new regulatory framework for craft hemp under the ATC. It would significantly increase the workload and
expenditures to create a new permits for craft hemp retailers, distributors, and manufacturers and enforce the
new regulatory framework. An additional employee may be needed for the processing of additional permits.
The cost would be an estimated $61,000 to $78,000 in FY 2026 and $64,000 to $81,000 in FY 2027 for
salary and benefits for the additional employee. Additional excise officers in each of the six districts will
need to be hired to investigate complaints associated with the new regulatory framework. Additional excise
officers start at a $70,000 salary and follow the same pay matrix as State Police. To handle the additional
workload, each district may need an additional three excise officers for a total of 18 new officers for a salary
total of $1.26 M in FY 2026. However, there are currently seven vacancies for excise officers and one for
an excise corporal as of February 2025, with a minimum salary total of $566,000. The increase in
expenditures would be offset through the permit fees and fines collected and deposited into the Enforcement
and Administration Fund under the new regulatory framework for craft hemp. [The ATC reported that it
would need seven new excise officers, one for each district and Marion County.]
Office of State Chemist and Seed Commissioner (OISC): The workload of the OISC could increase if
allowing the sale of craft hemp flower products directly to the public (to people age 21 and over, after testing
and packaging requirements are met) increases the number of hemp license applications to be processed. The
OISC is integrated in the Purdue University budget, including regulatory costs of the state hemp program.
[Total hemp program expenses were $202,989 in FY 2024.]
Office of the Attorney General: The administrative expenditures and workload of the Office of the Attorney
General could potentially increase to enforce the bill’s requirements for packaging and distribution of craft
hemp flower products under trade regulation laws. The bill’s requirements are within the agency’s routine
administrative functions and should be able to be implemented with no additional appropriations, assuming
near customary agency staffing and resource levels.
Penalty Provision: The penalty for selling craft hemp product or a product containing THC to a minor is
enhanced to a Level 6 felony if the person has prior convictions or a Level 5 felony if the minor’s use of the
product causes serious bodily injury or death.
A Level 6 felony is punishable by a prison term ranging from 6 to 30 months, with an advisory sentence of
1 year. A Level 5 felony is punishable by a prison term ranging from 1 to 6 years, with an advisory sentence
of 3 years. 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 $4,719 annually, or $12.93 daily, per prisoner. However, any additional expenditures are
SB 478 2 likely to be small.
Explanation of State Revenues: (Revised) Craft Hemp Permits: The bill is likely to significantly increase
revenue to the Enforcement and Administration Fund from new permit fees. For retail permits, there is a
maximum 20,000 allotted. If all the retail permits are filled, the fee could generate an estimated maximum
of $20 M in permit fee revenue for FY 2026 and thereafter. For distributor, out-of-state supplier, and
manufacturer craft hemp permits, the increase in revenue is indeterminable but likely to be small. The
increase in revenue would depend on the amount of craft hemp retailers, distributors, and manufacturers that
apply for a permit.
The bill creates a three tier permit regulatory system for craft hemp products. It creates a retail, distributor,
out-of-state supplier, and manufacturer permit of which the initial, renewal, and reinstatement fees are
deposited into the Enforcement and Administration Fund. For all the permits, the term lasts for two years.
A permit holder is not restricted from holding other craft hemp permits (e.g. a retail permittee may also hold
a distributor and manufacturer craft hemp permit). If a permit is revoked and subsequently reinstated, the
permittee would need to pay a fee to reinstate the permit. The table below shows fees for the different types
of permits.
Permit TypeInitial/Renewal FeeReinstatement Fee
Retail $1,000 $1,000
Distributor $5,000 $1,000
Manufacturer $5,000 $1,000
ATC Imposed Violations: The bill would increase penalty fine revenue from permit and criminal violations.
The ATC may impose a civil penalty up to $1,000 for a permit violation, which is deposited into the
Enforcement and Administration Fund. Increases in penalty revenue from permit and criminal violations
could potentially be significant. Penalties that may be assessed are listed in the table below.
SB 478 3 Violation Penalty Maximum Judgment/Fine
Failure to pay civil penalty issued
by the ATC
Class B infraction $1,000
Failure to show to hearing N/A $1,000
Knowingly selling/giving craft
hemp product to intoxicated person
Class B misdemeanor $1,000
Knowingly taking certain actions
involving craft hemp product
without a permit*
Class B misdemeanor $1,000
Acquiring craft hemp product from
person that does not hold an
appropriate permit*
Class B misdemeanor $1,000
Selling craft hemp product or
product containing THC to a minor;
failing to use an online age
verification system for online sales
Class A misdemeanor
Level 6 if prior unrelated
conviction
Level 5 if serious bodily injury
$1,000 (first offense)
$5,000 - $10,000 (repeat offenses)
Possession of craft hemp product or
product containing THC by a
minor*
Class B misdemeanor $1,000
Knowingly or intentionally selling
adulterated craft hemp flower
product
Class B misdemeanor $1,000
*Does not apply to permit holders.
Hemp Licensing Revenue: By allowing sales of craft hemp flower products directly to the public, revenue
to the OISC could increase from hemp grower and handler license applications and other hemp fees and
penalties. The bill would allow craft hemp flower products to be distributed to the public after the product
has passed independent laboratory testing; has been packaged in tamper evident packaging; and is in the form
of a gummy, an edible, a tincture, or an e-liquid. The amount of the revenue increase is indeterminate. Hemp
fee revenue is used for hemp administrative expenses, and hemp penalty revenue is transferred to the Indiana
State Department of Agriculture to be used for hemp marketing and research purposes. [In FY 2024, the
OISC issued 52 grower and handler licenses and collected $45,050 in revenue. No penalties were assessed.]
Craft Hemp Flower Product Violations: The bill includes craft hemp flower in the definition of smokable
hemp for purposes of the Class A misdemeanor penalties for possessing or dealing smokable hemp
(maximum judgment $5,000). It also allows for the possession and distribution of craft hemp flower products,
subject to packaging requirements, and creates penalties for violations related to craft hemp flower products
and counterfeit hemp substances, which are listed in the following table. Infraction judgments are deposited
in the General Fund, and fines for misdemeanors are deposited in the Common School Fund.
SB 478 4 Craft Hemp Flower Product
Violation
Penalty Maximum Judgment/Fine
Distribution and sale Class B misdemeanor
Class A misdemeanor (with prior)
$1,000
$5,000
Creates, delivers, or finances a
counterfeit hemp substance
Class A misdemeanor $5,000
Minors prohibited from entering
retail establishment that primarily
sells tobacco, electronic cigarettes,
e-liquids, and craft hemp product
Class C infraction
Class B infraction (with 6 prior
offenses)
$400*
$800-$2,000* (repeat offenses)
*Deposited in the Richard D. Doyle Youth Tobacco Education and Enforcement Fund
Low THC Hemp Extract Violations: The bill prohibits the sale of low THC hemp extract containing certain
ingredients to a person under 21 years of age. The bill sets the following maximum civil penalties for
violations:
(1) $1,000 for a first violation.
(2) $5,000 for a second violation that occurs within two years after a first violation, and suspension of the
retail dealer’s certificate for up to six months.
(3) $10,000 for each subsequent violation that occurs within two years of the preceding violation, and
revocation of the retail dealer’s certificate, with a one year waiting period for reapplication.
In addition, the bill makes changes to packaging requirements for low THC hemp products, the penalty for
a violation of which is a Class B infraction or a Class A infraction with prior violations. The maximum
judgment for a Class B infraction is $1,000, and the maximum judgment for a Class A infraction is $10,000,
which would be deposited in the state General Fund.
Court Fee Revenue: If additional court cases occur, revenue to the state General Fund (from court fees)
would increase. The total fee revenue per case would range between $113 and $135 for misdemeanors and
felonies and between $85.50 and $103 for infractions. 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: Criminal Violations: A Class A misdemeanor is punishable by up to
one year in jail and a Class B misdemeanor is punishable by up to 180 days in jail.
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: Court Fee Revenue: If additional court actions occur and a guilty verdict
or judgment 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 for misdemeanors and felonies or $33.90 for
infractions, and qualifying municipalities will receive a share of $3.60 for misdemeanors and felonies or
$2.10 for infractions. If the case is filed in a municipal court, the county receives $30 for misdemeanors and
felonies or $20 for infractions, and the municipality will receive $46 for misdemeanors and felonies or
SB 478 5 $33.50 for infractions. 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: Alcohol and Tobacco Commission; Office of the Attorney General; Office of the
Indiana State Chemist; Indiana State Department of Agriculture; Department of Correction.
Local Agencies Affected: Trial courts, local law enforcement agencies.
Information Sources: Office of Indiana State Chemist, Annual Hemp Regulatory and Research Reports,
https://oisc.purdue.edu/hemp/annual_reports.html. Blaine Brown, Office of Indiana State Chemist. Indiana
Supreme Court, Indiana Trial Court Fee Manual. SPD Staffing Data, February 2025. Trooper Matrix
effective January 7, 2023, https://www.in.gov/atc/isep/files/Excise-Police-Pay-Matrix_2023-07-01.pdf.
Fiscal Analyst: Nate Bodnar, 317-234-9476.
SB 478 6