Division of the Budget
Landon State Office Building Phone: (785) 296-2436
900 SW Jackson Street, Room 504 adam.c.proffitt@ks.gov
Topeka, KS 66612 http://budget.kansas.gov
Adam Proffitt, Director Laura Kelly, Governor
Division of the Budget
May 8, 2023
The Honorable Daniel Hawkins, Chairperson
House Committee on Interstate Cooperation
300 SW 10th Avenue, Room 368-W
Topeka, Kansas 66612
Dear Representative Hawkins:
SUBJECT: Fiscal Note for HB 2367 by Representative S. Miller
In accordance with KSA 75-3715a, the following fiscal note concerning HB 2367 is
respectfully submitted to your committee.
HB 2367 would establish the Adult Use Cannabis Regulation Act. The bill would permit
the cultivation, manufacturing, transportation, possession, sale, and use of cannabis. The Division
of Alcoholic Beverage Control in the Department of Revenue would be responsible for
implementing, regulating, and enforcing the Act. The bill lists the powers, duties, and functions
of the Division, including receiving applications for and issuing, suspending, and revoking licenses
and coordinating with other state and local governmental entities. The Division would be required
to create a database to monitor cannabis through the entire supply chain and each distribution
channel. The Division would be required to establish a cannabis and cannabis products testing
and certification program. The Division would be required to establish rules and regulations
related to the Act on and before July 1, 2024. Most of the provisions of the Act would expire on
July 1, 2028.
Cultivators, manufacturers, transporters, cannabis or hospitality businesses, retailers or
individuals wishing to establish testing facilities would be required to apply to the Division of
Alcoholic Beverage Control for a license. The Division could also issue an occupational license
for any individual who is an owner, manager, operator, employee, contractor, or other individual
performing work on behalf of a cannabis business licensee or having unescorted access to any
restricted area of the licensed premises of a cannabis business licensee. Any person intending to
become a controlling beneficial owner of any cannabis business would be required to first submit
a request to the Division for a determination of suitability. The bill would include the requirements
for licensure, which would include criminal history checks. A cannabis business license would be The Honorable Daniel Hawkins, Chairperson
Page 2—HB 2367
valid for one year. An occupational license would be valid for two years. The bill would establish
the following fees:
Application Fees
Maximum Fee
Cannabis Retailer License Application Fee $5,000
Cannabis Products Manufacturer License Application Fee $5,000
Cannabis Cultivation Facility License Application Fee $5,000
Cannabis Testing Facility License Application Fee $1,000
Cannabis Transporter License Application Fee $1,000
Cannabis Business Operator License Application Fee $1,000
Hospitality Business License Application Fee $1,000
Hospitality and Sales Business License Application Fee $1,000
License Fees
Maximum Fee
Cannabis Retailer License Fee $2,000
Cannabis Products Manufacturer License Fee $1,500
Cannabis Cultivation Facility License Fee:
1 to 1,800 plants $1,500
1,801 to 3,600 plants $2,300
3,601 to 6,000 plants $3,000
6,001 to 10,200 plants $4,500
10,201 to 13,800 plants $6,500
More than 13,800 plants $6,500 plus $800 for
each additional 3,600
plants over 13,800
Cannabis Testing Facility License Fee $1,500
Cannabis Transporter License Fee $4,400
Cannabis Business Operator License Fee $2,200
Hospitality Business License Fee $1,000
Hospitality and Sales Business License Fee $2,000
License Renewal Fee $300
Suitability Fees
Maximum Fee
Individual $800
Non-Publicly Traded Corporation $800 plus $800 for each
additional individual or entity
associated with applicant
Publicly Traded Corporation $6,000 plus $800 for each
additional individual or entity
associated with applicant The Honorable Daniel Hawkins, Chairperson
Page 3—HB 2367
Permit Fees
Maximum Fee
Centralized Distribution Permit $20
Cannabis Delivery Permit $2,000
Change of Permanent Location $500
Transfer of Ownership $1,600
All fees and fines collected under the Act would be remitted to the Cannabis Business
Regulation Fund, which would be a new fund created by the bill. Monies in the fund would be
used for Division of Alcoholic Beverage Control costs related to regulation and enforcement of
the Act. The bill would also establish a privilege tax on licensed cannabis cultivation facilities.
The tax would be equal to 15.0 percent of the average market rate for cannabis produced by a
cannabis cultivation facility on the gross receipts from the sale of cannabis. The bill would also
establish a 15.0 percent sales tax rate on cannabis sold by licensed cannabis retailer or licensed
hospitality and sales business.
The bill would establish the Cannabis Advisory Committee within the Department of
Revenue. The Committee would include 13 members appointed by the Governor and Legislature.
The Committee would consist of members who represent employers, employees, law enforcement,
agriculture, persons involved alcohol and drug addiction treatment and academic research. The
Committee would also include the Secretary of Revenue or the Secretary’s designee. The initial
appointments to the Committee would be made on or before July 31, 2021. The Committee could
develop and submit recommendations to the Department of Revenue related to implementation
and enforcement of the Act.
Financial institutions that provide services to any licensed cannabis business would be
exempt from any criminal law of the state. Entities or individuals covered under the Act would
not be subject to criminal prosecution.
The Department of Revenue estimates that the sales of cannabis would increase tax
revenues to the State General Fund by $18.1 million in FY 2025, $27.2 million in FY 2026, and
$36.3 million in FY 2027. The Department indicates that there would also be an amount of
additional sales tax that would have a fiscal effect on the State General Fund and State Highway
Fund from the sale of industry-related products that do not contain cannabis such as merchandise.
However, the amount of the additional sales tax is undetermined.
The bill establishes the Cannabis Business Regulation Fund and creates a revenue stream
to fund Department of Revenue activities of the Kansas Cannabis Legalization Act. The
Department estimates it would receive Cannabis Business Regulation Fund revenues totaling $2.7
million in FY 2025, $3.1 million in FY 2026, and $3.4 million in FY 2027.
The Department of Revenue estimates the bill would require additional expenditures of
$10.2 million from the State General Fund and 62.00 FTE positions in FY 2024. The table below
lists the expenditures and positions. The Honorable Daniel Hawkins, Chairperson
Page 4—HB 2367
FY 2024
Expenditures FTE Positions
Division of Alcoholic Beverage Control $9,311,435 57.00
Information Technology 396,000 --
Tax Operations 382,567 5.00
Quality Assurance 89,420 --
Total Expenditures & Positions $10,179,422 62.00
The Kansas Sentencing Commission indicates that enactment of HB 2367 would reduce
prison admissions, but the total impact could not be determined. The Office of Judicial
Administration indicates the bill could affect the number of cases that are filed in courts, but the
Office is unable to estimate what the effect would be. The bill could decrease the number of cases
filed in court because it decriminalizes actions that could be charged as crimes under current law.
However, the Office indicates it is possible that crimes that are charged under existing law would
still be charged and the provisions of the bill would be used as a defense. Any change to the
number of cases that are filed would affect Judiciary expenditures and revenues. However, the
fiscal effect is unknown. The Office of the Attorney General indicates that the bill could increase
the number of consumer complaints regarding violations of the Act. The Kansas Bureau of
Investigation indicates that any additional revenue received from the state and national criminal
history record check requests would be offset by expenditures related to staffing and maintenance
of the required information technology systems and repositories necessary for the maintenance
and dissemination of criminal history information.
The State Treasurer and the Office of the State Banking Commissioner indicate the bill
would not have a fiscal effect on agency operations. Any fiscal effect associated with HB 2367 is
not reflected in The FY 2024 Governor’s Budget Report.
Sincerely,
Adam Proffitt
Director of the Budget
cc: Randy Bowman, Department of Corrections
Lynn Robinson, Department of Revenue
Vicki Jacobsen, Judiciary
John Milburn, Office of the Attorney General
John Hedges, Office of the State Treasurer
Brock Roehler, Office of the State Bank Commissioner
Scott Schultz, Sentencing Commission