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 Mike Thompson, Chairperson
Senate Committee on Federal and State Affairs
300 SW 10th Avenue, Room 144-S
Topeka, Kansas 66612
Dear Senator Thompson:
SUBJECT: Fiscal Note for SB 171 by Senator Holland, et al.
In accordance with KSA 75-3715a, the following fiscal note concerning SB 171 is
respectfully submitted to your committee.
SB 171 would create the Veterans First Medical Cannabis Act and would provide for the
regulation of the cultivation, distribution, sale, and use of medical cannabis. The bill would make
related definitions and would include a list of qualifying medical conditions allowing the patient
to use medical cannabis if certified by their healthcare provider and would also include
requirements for certification. The bill would allow an individual to apply to the Kansas
Department of Health and Environment for an initial or renewed patient identification card, which
the bill would outline the process and requirements for obtaining. The fee would not exceed $50
and if the applicant were a Medicaid beneficiary, the fee would be $10. For the first 60 days after
the Act becomes effective, patient identification cards would only be issued for individuals
currently serving in the military, those separated by honorable discharge, or those generally
discharged under honorable conditions.
The bill would create the Cannabis Regulatory Commission within the Kansas Department
of Revenue, which would be responsible for all powers, duties, and functions assigned to the
Department under the Act. The Commission would be required to adopt rules and regulations as
necessary to implement and administer the provisions of the Act and would also be required to
establish an electronic database to store information as required by the bill. The Commission
would be administered under a director appointed by the Secretary of Revenue. Individuals could
apply to the Commission for initial or renewal licensure as a medical cannabis grower-distributor.
The bill would provide for the requirements and process for obtaining such licensure, as well as
the requirements and conditions for holding the licensure, including an application or renewal fee
of up to $15,000 and a fee of up to $90,000 plus a surety bond upon a license being granted. Half
of the application fee would be refundable if the license was not granted. Employees and agents The Honorable Mike Thompson, Chairperson
Page 2—SB 171
of grower-distributors would require a permit, with a fee not to exceed $100. The bill would create
the Medical Cannabis Harvest Fund for collection of these fees with expenditures dedicated to
costs related to medical cannabis regulation, taxation, and enforcement by the Kansas Department
of Revenue.
SB 171 would allow individuals to apply to the State Board of Pharmacy for an initial or
renewed licensure as a medical cannabis dispensary. The requirements for the application and
licensure would be outlined in the bill, with an application fee of up to $5,000 and a fee upon
licensure of up to $30,000. Half of the application fee would be refundable if the license was not
granted. Employees and agents of dispensaries would also require a permit, with a fee up to $100.
The Board would be required to adopt rules and regulations to implement provisions of the bill
and the Medical Cannabis Dispensary Fund would be created for collection of the fees paid to the
Board and expenditures would be dedicated to costs related to medical cannabis regulation and
enforcement activities of the Board.
A tax of $115 per pound would be required as detailed in the bill for growing and harvesting
medical cannabis. The Secretary of Agriculture would be required to adopt rules and regulations
to uniformly and efficiently administer the weighing of harvested cannabis for taxing purposes.
The taxes collected would be credited to the Medical Cannabis Harvest Fund. There would also
be a tax of $3.00 per ounce required as detailed in the bill for selling or dispensing medical
cannabis. The taxes collected would be credited to the Medical Cannabis Dispensary Fund. The
Secretary of Revenue would adopt rules and regulations for implementation of both taxes and the
Director of Taxation would have the authority to require additional information as necessary to
compute the taxes due, including the power to issue subpoenas and examine witnesses under oath.
SB 171 would also establish the Medical Cannabis Implementation Task Force, which
would have nine members appointed by various Legislative leadership and state agencies. The
Task Force would submit a report to the Governor and Legislature each year, including information
about the implementation of the Act and related recommendations. The bill would outline all
requirements and duties for licensees, agencies, and professions as related to the regulation of
medical cannabis under the Act and would update current statutes to be consist with the Act.
According to the Kansas Board of Pharmacy, passage of the bill would require 6.00
additional FTE positions and would increase fee fund expenditures by at least $557,680 in FY
2024. The agency states that the bill vests the Board with the authority to register and regulate
medical cannabis dispensaries and the personnel working in such dispensaries. While there are
requirements for routine reporting to the Board, there is no reference to reporting to K-TRACS.
While the bill authorizes the Board to charge application and registration fees to applicants and
registrants, it also requires the Board refund half of any application fee to any applicant denied
registration. Currently, all Board application fees are non-refundable so this would require setting
up a new process. It is anticipated that these refunds would require significant setup and work by
current staff, which would likely require assistance from licensing division staff of an additional
0.50 FTE. The agency is unable to estimate the number of dispensary and personnel applications
or registrations but also anticipates needing an additional 2.50 FTE for administrative staff. Costs
for the 3.00 FTE positions are estimated at $254,000 per year, which include salaries and wages
as well as administrative overhead for office space rent, supplies, computer and accessories, phone, The Honorable Mike Thompson, Chairperson
Page 3—SB 171
and software. Additional costs to the Board would be in the form of staff time and resources for
monitoring and regulating dispensaries, although the agency was unable to estimate a total cost for
these requirements. If treated similarly to Kansas pharmacies, the Board would anticipate
conducting routine audits and inspections of dispensaries and personnel. The number of
dispensaries is unknown at this time, but the Board anticipates needing an additional 2.00 FTE
compliance staff at a total cost of $300,480 per year. This would include salaries and wages, and
administrative overhead including vehicle and maintenance, supplies, computer and accessories,
phone, and software. The Board anticipates the need for up to 1.00 additional FTE or other
supplemental resources as there are so many unknowns related to implementation of the bill. In
addition, the Board would incur costs associated with publication of regulations, notices of
hearing, and adoption in the Kansas Register, published by the Kansas Secretary of State, which
range from $2,000 to $3,000 per publication depending on the length of the regulation(s).
The Kansas Department of Revenue estimates passage of the bill would require additional
expenditures of $3.9 million in FY 2024, including up to 11.00 new FTE positions. This includes
$2.0 million for the initial cost for the licensing, enforcement, and legal system needed to meet the
requirements of the bill. The agency estimates $1.0 million for total costs for staffing and other
expenses associated with establishing a new work unit to license growers, distributors, and their
employees. The agency notes new positions would be phased in as the program is set up and starts
running. In addition, the agency estimates costs of $300,566 for administrative costs including
4.00 FTE positions; $89,420 for quality assurance; $250,000 for IT tax applications; $84,000 for
project management (1.00 FTE); and $86,000 for other IT and website related costs. Most of these
costs would be ongoing. While the bill would eventually generate enough revenue to cover costs,
the revenue would not be enough to cover costs the first year and it is likely that a State General
Fund appropriation would be required for implementation. Assuming the maximum fees allowed,
the agency estimates revenue from application and licensure fees to be $2.1 million in FY 2024
and FY 2025, $4.3 million in FY 2026, $3.2 million in FY 2027, and $4.3 million in FY 2028.
The excise tax revenue is estimated to be $1.3 million in FY 2024, $2.6 million in FY 2025, $5.2
million in FY 2026, and $7.8 million in FY 2027.
The Kansas Department of Health and Environment estimates that SB 171 would require
$4.8 million, all from the State General Fund, and 23.00 additional FTE positions in FY 2024. The
agency assumes the need for a web-based, information system with cloud storage that would
electronically establish patient identification cards, including access to the patient system by
dispensaries and law enforcement. The total estimate includes the creation of a new program, new
information system, incorporating security and confidentiality requirements, capacity to address
access needs by law enforcement, program evaluation, and rules and regulations support. The
agency estimates $3.5 million for their share of a cloud-based system that would interface with all
other agencies necessary to implement provisions of the bill; $467,026 for administrative costs
and general overhead related to the new program; and $819,917 for salaries and wages for an
additional 23.00 FTE positions to fully staff the program as required by the bill. The agency
estimates the need for staff would slightly increase as the program continues, with a total of 29.00
FTE positions in FY 2025 and 33.50 FTE positions beginning in FY 2026 and beyond. The cost
for the computer system would continue but would decrease after start-up. The agency projected
revenue based on patient participation rates from other states and is projected to be approximately
$732,619 in FY 2025 and $740,971 in FY 2026. The revenue projections are for patient and The Honorable Mike Thompson, Chairperson
Page 4—SB 171
caregiver registration fees only and does not include projections for revenue collected under the
bill that is assessed or collected by other agencies.
The Kansas Highway Patrol estimates the passage of SB 171 would require additional fee
fund expenditures of $875,100 beginning in FY 2024. The agency estimates $120,000 for Troop
S, Special Response Team to retrain eight canines but notes there is a high probability the canines
would need to be replaced as retraining has not been successful in other states. The agency believes
the need for Drug Recognition Experts would be doubled to 180 in the Breath Alcohol Unit if the
bill were passed. The cost for certification of the additional experts is estimated at $600,000 and
the agency notes the process would take approximately two years. The bill would also require
additional training in the Breath Alcohol Unit in Advanced Roadside Impaired Driving
Enforcement. While some officers have obtained this training, the agency estimates 3,000 of the
approximately 6,900 sworn law enforcement officers in Kansas would need the training. The
estimated cost for the training would be $155,100, and does not include costs for any salaries,
overtime accrued, time to prepare materials for the classes, or additional instructors due to the class
volume. The agency notes several items within General Operations and Field Troops, as well as
Troops N and I where a fiscal effect could not be estimated, including the potential loss of federal
funding due to non-compliance with rules and regulations, delayed or loss of resources, additional
specialized training, extended investigations and additional functions, IT supported tracking
systems, impact on personnel if they were prescribed medical cannabis, and the potential for an
increase in calls for service and collisions.
The Kansas Commission on Peace Officer Standards and Training estimates that enactment
of the bill would require $65,000, all from fee funds, in FY 2024 and future years, for 1.00 new
FTE for the new tracking and training qualifications for law enforcement officers. The position
would also provide investigative assistance to ensure licensed peace officers are not in violation
of statute and administrative regulations prohibiting the conduct described in the bill.
The Kansas Sentencing Commission reports that enactment of the bill could decrease
prison admissions and prison beds, as well as decrease the workload of the agency, but a total
fiscal effect could not be estimated. The Kansas Board of Healing Arts states that the bill could
lead to additional complaints and investigations, but a total fiscal effect could not be estimated.
The agency anticipates handling any additional workload within existing resources. The Kansas
State Board of Nursing anticipates that communication and education costs associated with the bill
would require additional fee fund expenditures totaling under $1,000.
The Kansas Bureau of Investigation states that the bill would require an integration to the
Kansas Criminal Justice Information System for validation of identification cards. There would
also be an impact to laboratory operations. Additional revenue received from record check
requests would be offset for expenditures related to staffing and maintenance of the related
systems. An exact fiscal effect could not be estimated by the agency. The Office of Judicial
Administration states enactment of SB 171 could decrease the number of criminal cases filed
because it decriminalizes actions that could be charged as crimes under current law. Provisions of
SB 171 could also be asserted as a defense when crimes were charged. The bill could also have a
fiscal effect on revenues to the Judicial Branch and the State General Fund. According to the
Office, a fiscal effect cannot be estimated. The Honorable Mike Thompson, Chairperson
Page 5—SB 171
The State Treasurer’s Office states the agency would account for receipts and
disbursements in connection with this bill using existing systems and procedures, with minor
modifications. Any additional workload would be minimal and could be accommodated within
existing resources. The Office of the Attorney General, the Kansas Department of Corrections,
and the Kansas Department of Agriculture state that enactment of SB 171 would not result in any
fiscal effect on agency operations. Any fiscal effect associated with SB 171 is not reflected in The
FY 2024 Governor’s Budget Report.
According to the League of Kansas Municipalities and the Kansas Association of Counties,
enactment of SB 171 could increase costs for local governments but some of the costs could be
offset by potential revenue. A total fiscal effect could not be estimated for either entity.
Sincerely,
Adam Proffitt
Director of the Budget
cc: Lynn Robinson, Department of Revenue
Amy Penrod, Department of Health & Environment
Jill Simons, Board of Nursing
Alexandra Blasi, Board of Pharmacy
Susan Gile, Board of Healing Arts
Scott Schultz, Sentencing Commission
Randy Bowman, Department of Corrections
Vicki Jacobsen, Judiciary
Paul Weisgerber, Kansas Bureau of Investigation
Sherry Macke, Highway Patrol
Kellen Liebsch, Department of Agriculture
John Milburn, Office of the Attorney General
Jay Hall, Kansas Association of Counties
Wendi Stark, League of Kansas Municipalities
Doug Schroeder, Peace Officers Standards & Training
John Hedges, Office of the State Treasurer