COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. No.:1695H.03C Bill No.:HCS for HB 593 Subject:Drugs and Controlled Substances; Department of Health and Senior Services;
Licenses - Miscellaneous; Business and Commerce
Type:Original Date:February 13, 2025Bill Summary:This proposal creates provisions relating to cannabinoids.
FISCAL SUMMARY
ESTIMATED NET EFFECT ON GENERAL REVENUE FUNDFUND AFFECTEDFY 2026FY 2027FY 2028General*$852,493$1,136,657$1,136,657Total Estimated Net
Effect on General
Revenue$852,493$1,136,657$1,136,657
*Oversight notes funds from the 2% Tax levy shall be used exclusively for the funding of
veterans' programs, drug abuse prevention and education programs, and first responder
programs.
ESTIMATED NET EFFECT ON OTHER STATE FUNDSFUND AFFECTEDFY 2026FY 2027FY 2028Hemp Business Fund*($2,231,083)($2,363,511)($2,415,985)Total Estimated Net
Effect on Other State
Funds($2,231,083)($2,363,511) ($2,415,985)
*Collection of licensing fees and DPS-ATC and DHSS FTE costs to administer.
Numbers within parentheses: () indicate costs or losses. L.R. No. 1695H.03C
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ESTIMATED NET EFFECT ON FEDERAL FUNDSFUND AFFECTEDFY 2026FY 2027FY 2028Total Estimated Net
Effect on All Federal
Funds $0$0$0
ESTIMATED NET EFFECT ON FULL TIME EQUIVALENT (FTE)FUND AFFECTEDFY 2026FY 2027FY 2028Hemp Business Fund252525Total Estimated Net
Effect on FTE252525
☒ Estimated Net Effect (expenditures or reduced revenues) expected to exceed $250,000 in any
of the three fiscal years after implementation of the act or at full implementation of the act.
☒ Estimated Net Effect (savings or increased revenues) expected to exceed $250,000 in any of
the three fiscal years after implementation of the act or at full implementation of the act.
ESTIMATED NET EFFECT ON LOCAL FUNDSFUND AFFECTEDFY 2026FY 2027FY 2028Local Government*$0 to Unknown$0 to Unknown$0 to Unknown
*Oversight notes the violations of § 195.2555 and § 195.2560 could result in fines or penalties
that would go to local school districts. L.R. No. 1695H.03C
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FISCAL ANALYSIS
ASSUMPTION
§ 144.028 and § 195.2617– Taxes on hemp-derived consumable products
Officials from the Department of Revenue (DOR) state this proposal attempts to distinguish
between hemp-derived consumable products and marijuana. The Missouri Constitution says that
all hemp that is not “industrial hemp” is considered marijuana for the purposes of regulation and
taxation under Article XIV. Since this proposal clearly defines these hemp-derived consumable
products as being a compound found in hemp, they would already be subject to the regulations
and taxation of Article XIV.
Since this proposal also says these products are not made from industrial hemp, which is exempt
under Article XIV, then these products would already owe the marijuana licensing fees and
should be collecting the marijuana excise tax and sales tax since December 8, 2022, when Article
XIV was adopted.
DOR notes this proposal attempts to assess an excise tax at a rate of 2% on the retail purchase
price of the hemp-derived consumable products in § 144.028. DOR notes that chapter 144 is the
state sales and use tax. Sales and use tax is assessed on the purchase price of an item. Therefore,
this proposal’s newly created tax would be a sales tax. DOR notes that sales tax is applied to the
final purchase price of an item which includes all other taxes including excise taxes.
Since sellers of marijuana products and therefore these hemp-derived consumable products are
already required to remit an excise tax and a sales tax, this would be an additional sales tax that
would be assessed after the current excise tax and prior to the state sales tax. This proposal states
that this newly created tax would be deposited for the use of funding veteran’s programs, drug
abuse prevention and education programs and first responder programs.
DOR notes that some businesses may not have been remitting the required taxes. DOR notes that
Missouri makes up 2.05% of the total U.S. market share of all hemp-derived cannabinoids. In
2023, that was $56,832,841 of the $2,774,925,672 in U.S. sales.
This newly created sales tax at 2% would generate $1,136,657 in revenue.
Oversight does not have information to the contrary. Oversight notes the fiscal impact for sales
taxes for FY2026 is lesser because FY2026 is a partial year (9 months). Therefore, Oversight
will reflect the estimates as provided by the DOR as $852,493 in FY 26 and $1,136,657 in FY 27
and ongoing.
Officials from the Department of Public Safety (DPS), Division of Alcohol and Tobacco
Control (ATC) state § 144.028 establishes a 2% excise tax on the retail sale of hemp-derived L.R. No. 1695H.03C
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consumable products. It does not specify who is responsible for collecting the excise tax
generated from retail sales, but it is assumed that since it is a retail sales tax the Department of
Revenue will collect it. Therefore, the division has not estimated the collection of taxes.
Oversight does not have any information to the contrary. Therefore, Oversight will reflect a zero
impact in the fiscal note for these sections for DPS, ATC.
§ 195.900 – Intoxicating cannabinoids
Officials from the Department of Health and Senior Services (DHSS) state § 195.900 of
proposed legislation amends Chapter 195 by placing regulation of all intoxicating cannabinoids
under the Department of Health and Senior Services' authority within the framework of Article
XIV, explicitly defining intoxicating cannabinoids as marijuana and not industrial hemp. It
creates an exception for hemp-derived consumable beverage products. The proposal states that
intoxicating cannabinoids will be regulated by the Department in the same manner as it regulates
marijuana under Article XIV of the Missouri Constitution.
All or nearly all intoxicating cannabinoids in the unregulated market are produced using
chemical conversion of other cannabinoids. Intoxicating cannabinoids produced using such
chemical conversion cannot be created or sold under the Department’s Article XIV regulatory
framework. Since the Department’s Article XIV regulatory framework does not allow the
production or use of the intoxicating cannabinoids currently sold in the unregulated market, it is
assumed the Department can absorb the costs of this bill with current resources.
However, if the workload in ensuring such cannabinoids are not produced or sold significantly
increases or other legislation becomes enacted, additional resources would be requested through
the appropriation process. The department could receive additional revenues in the Veterans
Health and Care Fund and the Veterans Health Community Reinvestment Fund if some portion
of the demand for intoxicating cannabinoids that is currently met by the unregulated market
transitions to the regulated cannabinoid market. However, there is no data available on which to
estimate that potential increase in revenue.
In order to calculate such an increase, it would be important to know the current demand and
revenue associated with unregulated intoxicating cannabinoids in Missouri, which has not been
tracked over the years that market has been growing in Missouri. If that data was available, it
would then be important to consider what demand and associated revenue for unregulated
cannabinoid products may transfer to the regulated market verses transferring to non-intoxicating
product markets, to the hemp-derived consumable beverage market established in this same bill,
to no market at all, or to illicit market products. There is no good data regarding those market
choices, either, at this time. It is therefore assumed that the impact on revenue arising from the
move from the unregulated market to the regulated market is unknown.
For reference, the following are the current rules that would prohibit all or nearly all of the
unregulated intoxicating cannabinoid products currently selling in Missouri. L.R. No. 1695H.03C
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• 19 CSR 100-1.170(2) Manufacturing licensee requirements. In addition to this chapter’s
requirements for licensed facilities and licensees, manufacturing licensees shall also
comply with the following:
o (E) Any tetrahydrocannabinol, such as THC-A, Delta- 8, or Delta-10, in a
marijuana product manufactured by a manufacturing licensee shall only be
derived from marijuana cultivated in Missouri by a licensed cultivator; and
o (F) Manufactured product may not contain chemical modification, conversion,
or synthetic derivation of cannabinoids to produce intoxicating
cannabinoid isomers, including those created by heat or other process
during use by a patient or consumer, and all cannabinoids acquired from
entities other than marijuana facilities for purpose of inclusion in
marijuana product must be accompanied by a Certificate of Analysis at
time of acquisition that identifies the testing lab that tested the product and
lists the product’s ingredients.
Oversight does not have any information to the contrary. However, Oversight notes § 144.028.3
states as follows:
The revenue derived from the two percent rate levied under this section shall be used
exclusively for the funding of veterans' programs, drug abuse prevention and education
programs, and first responder programs.
Although DHSS indicates they expect “$0 to Unknown” income to the Veterans Health and Care
Fund and the Veterans Health Community Reinvestment Fund, as these funds are not specifically
mentioned in the proposal and funds will also be diverted to other programs, Oversight will not
show income into these two funds for this agency for fiscal note purposes.
Oversight notes the following activity for the two funds:
Balance at 12/31/24 Receipts in FY 24
Veterans Health and Care Fund (0606) $16,212,250 $738,483
Veterans Health Comm. Reiv. Fund (0608) $77,362,733 $8,294,559
In response to similar legislation from the 2024 Session, (HCS for HB 1781), officials from the
Office of Administration - Budget and Planning (B&P) deferred to the Department of Health
and Senior Services for the potential fiscal impact of this proposal.
Oversight notes the deferrals by DPS-MVC and B&P to DHSS for a statement of fiscal impact;
for fiscal note purposes, Oversight assumes no fiscal impact for DPS-MVC and B&P.
In response to a previous version, officials from the University of Missouri Health Care
(MUHC) have reviewed the proposed legislation and determined that as written it should not
create expenses in excess of $100,000 annually. L.R. No. 1695H.03C
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Oversight assumes the costs incurred by the MUHC related to this proposal can be absorbed
within current resource levels.
In response to a previous version, officials from the Public Schools and Education Employee
Retirement Systems (PSRS/PEERS) state, as currently drafted, this bill has no substantial
fiscal or operational impact on PSRS or PEERS of Missouri. Oversight does not have any
information to the contrary. Therefore, Oversight will reflect a zero impact in the fiscal note for
this agency.
In response to a previous version, officials fromthe Office of AdministrationOffice of the
State Treasurer, the Metro St. Louis Sewer District Employees Pension Plan, the Sheriff's
Retirement System, the Concordia R-2 School District, the University of Missouri System,
Northwest Missouri State University and each assume the proposal will have no fiscal impact
on their respective organizations. Oversight does not have any information to the contrary.
Therefore, Oversight will reflect a zero impact in the fiscal note for these agencies.
§§ 195.2555 and 195.2560 – Fines and licensing fees for certain hemp-derived consumables
Oversight notes §§ 195.2555 and 195.2560, detail the manner in which certain hemp-derived
consumable beverage must be displayed as merchandise in a retail establishment, including an
indication that such consumables are for sale only to persons 21 years of age or older. Any
person in violation of these provisions will be fined not more than $200, with subsequent
violations classified as a class D misdemeanor.
The Department of Public Safety (DPS), Division of Alcohol and Tobacco Control (ATC) must
issue licenses for the manufacture and sale of hemp-derived consumables, and any entity or
person engaged in the business of manufacturing or selling of such products that does not have a
valid license will be fined not more than $250.
Officials from the DPS, ATC state new subsection 195.2555.4 creates a fine not to exceed $250
for the first violation of this section, and any second or subsequent violation shall be a class D
misdemeanor. With limited escalation in fine and/or criminal penalty attached, there is little
deterrent to selling without a license. The division cannot quantify how many individuals or
businesses will violate the laws in this section, so the revenues from such have not been
estimated. Any fines collected under this subsection will be deposited into the state school
moneys fund.
New subsection 195.2555.5 requires the division to conduct inspections at locations where such
products are sold or distributed. This will require the division to increase staffing to be able to
conduct and track these inspections.
New subsection 195.2560.2 creates a fine not to exceed $250 for any person or entity engaging
in the manufacturing or selling of hemp-derived consumable products in Missouri without a L.R. No. 1695H.03C
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valid license. The division cannot quantify how many unlicensed persons or entities will
manufacture or sell these products, so the revenues from such have not been estimated.
Unlike subsection 195.2555.4, this subsection does not identify where fines collected under this
subsection will be deposited.
New subdivision 195.2560.4(2) provides for a license fee of $500 for a new manufacturer or
distributor license, and a license fee of $250 for a new retailer license for a maximum of $2,500
for an entity with multiple locations (maximum of 10 locations pay license fee). Manufacturers
and distributors are only required under subsection 195.2560.3 to obtain one license, no matter
how many locations they operate out of. Current manufacturers are estimated at 150 in Missouri
(Missouri cannabis manufacturing rises, hemp struggles | Cannabis | missouribusinessalert.com).
This could include some of the 407 licensed alcohol manufacturers in Missouri.
ATC estimates that there could be half the number of hemp beverage manufacturers as liquor
manufacturers. It is estimated there will be 204 new hemp beverage manufacturer locations (407
* 0.5). Around 10% of alcohol manufacturers hold multiple licenses for multiple locations, and
hemp beverage manufacturers will not be required to hold separate licenses, so the total license
count for manufacturers is estimated at 184 (204 * 0.9) for a total collection of $92,000 (184 *
$500).
There was no estimate found for current distributors. There are 274 alcohol distributors in
Missouri which they estimate will be half the number of hemp beverage distributors. It is
estimated that there will be 137 new hemp beverage distributor locations (274 * 0.5). Around
12% of alcohol distributors hold multiple licenses for multiple locations, and hemp beverage
distributors will not be required to hold separate licenses, so the total license count for
distributors is estimated at 121 (137 * 0.88) for a total collection of $60,500 (121 * $500).
Current hemp retailers (not necessarily hemp beverages) are estimated at 9,000 in Missouri
(‘Hemp sales are back on’ in Missouri after regulators limit governor's ban on THC products |
STLPR). It is unknown how many of these businesses sell/intend to sell hemp beverages. Since it
is unknown, ATC estimates that half of the licensed alcohol retailers will obtain a hemp beverage
retail license. There are 13,423 alcohol retailers licensed in Missouri, so ATC estimates there
will be 6,712 new hemp beverage retailer licenses (13,423 * 0.5 - roughly 75% of the estimated
9,000 hemp retailers in Missouri). This section provides that a retailer with multiple locations
cannot be charged for more than 10 licenses. This will drastically impact collections for retail
licensing. One example would be Casey’s General Stores which holds 360 individual alcohol
retailer licenses. If Casey’s is a licensed hemp product retailer, they will only have to pay for 10
of their 360 licenses (meaning 350 would be processed at no cost, with a net loss of $87,500 in
licensing fees (350 no-cost licenses * $250 uncharged fee = $87,500 net loss for one retailer).
There are 67 alcohol retailers with more than 10 locations, ranging from 11 to 557 locations (five
with 120+ locations), and ATC believes it will be the case with hemp beverage retailers, which
ATC estimates could reduce the license count on which fees can be collected by 18.84%. ATC
estimates that there will be 5,448 new hemp beverage retailer licenses (6,712 * 0.8116) that will L.R. No. 1695H.03C
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pay a license fee for a total collection of $1,362,000 (5,448 * $250), and an estimated 1,264
licenses that will be processed and issued with no fee. This will be very challenging for the
division to manage what retail licenses get charged a fee and when to stop charging a fee. The
total estimated collections for new manufacturer, distributor, and retailer hemp beverage licenses
are:
$92,000 from hemp beverage manufacturer licenses
$60,500 from hemp beverage distributor licenses
+ $1,362,000 from hemp beverage retail licenses
$1,514,500 total estimated collections from additional licensing
New subsection 195.2560.5 provides for an annual license renewal fee of $250 for a
manufacturer or distributor license, and a license renewal fee of $100 for a retailer license for a
maximum of $2,500 for an entity with multiple locations (maximum of 25 locations pay license
fee). The renewal fee for manufacturers and distributors is half the initial license fee, so the
estimated renewal fee collections for manufacturers and distributors are $76,250 ((184 * $250) +
(121 * $250)). The renewal fee for retailers is 40% of the initial license fee.
Additionally, entities with multiple locations will pay renewal fees on up to 25 locations as
opposed to the 10 locations that pay the initial license fee. Again, this will be challenging for the
division to manage what licenses get charged a fee and when to stop charging a fee, especially
since the initial license count with a fee will be different than the renewal license count with a
fee. There are 30 alcohol retailers with more than 25 locations, which using the same estimations
for initial retail licenses would increase the retail license renewal count from 5,448 to 5,787 that
will pay a renewal fee for a total collection of $578,700 (5,787 * $100), and an estimated 925
licenses that will be processed and renewed with no fee. Total estimated collections for
manufacturer, distributor, and retail license renewals are: $654,950 ($76,250 + $578,700)
$46,000 renewals from manufacturer licenses
$30,250 renewals from distributor licenses
+ $578,700 renewals from retail licenses
$654,950 total estimated collections from renewals
New subsection 195.2560.6 provides that the division may deny or revoke a license for
violations of §§ 195.2550 to 195.2635, or the rules promulgated thereunder. There are no options
available for the division to warn, probate, fine, or suspend a license for violations. Denials and
revocations would directly impact the businesses who have their license denied or revoked, as
they would not be able to manufacture or sell hemp beverage products. This would also impact
the Attorney General’s Office as those that are denied or revoked would likely appeal the
decision to the Administrative Hearing Commission.
Oversight does not have information to the contrary and therefore, Oversight will reflect the
estimates as provided by the DPS, ATC. L.R. No. 1695H.03C
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Officials from the Department of Revenue (DOR) state this proposal attempts to regulate the
hemp-derived consumable product industry. This proposal defines a hemp-derived consumable
product as a finished good that is intended for human ingestion and contains at least one hemp-
derived cannabinoid. A hemp-derived cannabinoid is defined as a compound found in hemp.
This proposal establishes rules for the licensing and selling of these hemp-derived consumable
products and beverages. The regulation is to be done by the Department of Health and Senior
Services (DHSS) Section 195.2560.9 requires that all fees collected by DHSS be transferred to
DOR for deposit. Most fees collected by DHSS are handled in this manner and therefore, this can
be done with existing resources by DOR.
Oversight does not have any information to the contrary. Oversight notes this proposal requires
DPS, ATC to collect and remit fees to DOR. Therefore, Oversight will reflect a zero impact in
the fiscal note for DOR for this section.
Oversight notes that violations of § 195.2555 and § 195.2560 could result in fines or penalties.
Oversight also notes per Article IX Section 7 of the Missouri Constitution fines and penalties
collected by counties are distributed to school districts. Fines vary widely from year to year and
are distributed to the school district where the violation occurred. Oversight will reflect a
positive fiscal impact of $0 to Unknown to local school districts. For simplicity, Oversight will
not reflect the possibility that fine revenue paid to school districts may act as a subtraction in the
foundation formula.
Officials from the Missouri Office of Prosecution Services (MOPS) state there is no
measurable fiscal impact to OPS. The enactment of a new crime [195.2555.4] creates additional
responsibilities for county prosecutors and the circuit attorney which may in turn result in
additional costs which are difficult to determine.
§ 195.2565 – Rule promulgation and testing of hemp-derived consumable products
Officials from the Department of Health and Senior Services (DHSS) state Section
195.2565.2 of the proposed legislation states that before April 1, 2026, the department shall
promulgate rules on the testing of hemp-derived consumable beverage products.
DHSS will require the following to fulfill these requirements:
• Two (2) Compliance Inspectors (Research Scientist) with an annual salary of $75,936
will be needed to research, write, promulgate and maintain standards and rules for
intoxicating hemp-derived consumable beverages in accordance with section
195.2565.2. Additionally, these staff will be researching novel discoveries within
the cannabis space and ensure the Department continues to address novel health
and safety concerns as they arise by adjusting the testing requirements to ensure
public health and safety. Compliance Inspectors are assumed to be telecommuter
staff with minimal travel to meetings or training. L.R. No. 1695H.03C
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• One (1) Compliance Inspection Supervisor with an annual salary of $79,733. The
Compliance Inspection Supervisor is assumed to be in office staff with minimal
travel to meetings or training.
• One (1) Legal Counsel with an annual salary of $85,000 will be needed for testing
standards and rule litigation.
• One (1) Paralegal with an annual salary of $60,408 will be needed to assist with
pending claims and litigation matters.
• One (1) Lead Administrative Assistant with an annual salary of $46,152 will be needed
to assist with administrative functions. The Lead Administrative Assistant is assumed to
be in office staff with minimal travel to meetings or training.
The Department estimates that a costs for Audit Training and Standards Training would be
$5,100 in Fiscal Year 2026.
As it is unknown the quantity of samples that will be collected by the Division of Alcohol and
Tobacco Control (ATC) for hemp-derived consumable beverage product compliance testing, the
Department assumes testing on hemp-derived consumable beverage products would likely done
by a third-party laboratory contracted through the ATC and not through the Missouri State Public
Health Laboratory (SPHL).
Oversight does not have information to the contrary and therefore, Oversight will reflect the
estimates as provided by the DHSS.
§ 195.2600 and § 195.2607
Officials state § 195.2600 requires all brands distributed or available for distribution
in the state to be registered with the division. ATC is currently building an online licensing
system for liquor licensing with an outside vendor. In addition to licensing configuration,
functionality will need to be incorporated into the alcohol brand registration system, which is
estimated to cost approximately $250,000.
ATC has several licensing and brand registration reports available on the ATC website from
data.mo.gov that allows cities and counties to see who has an active liquor license, helps
licensees know that they are transacting with active licensees, and shows all registered products
in the state. ATC anticipates the need to have similar reports available for hemp beverage
licensees. The division would work with the licensing vendor to create these reports but would
also need ITSD to integrate these reports into data.mo.gov and make them available on the ATC
website. ATC estimates that building these reports could be as much as $12,000.
Additional staff will also be required to manage the processing of all brand registrations. L.R. No. 1695H.03C
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New § 195.2607 requires the division to conduct randomized inspections, and periodically
sample, analyze, and test hemp-derived consumable beverage products distributed in the state.
The division is not equipped to do such testing and would have to pay the proper entity to
conduct the testing of samples collected by the division. The cost for this testing is unknown but
is anticipated to be a significant cost.
Following is the specific breakdown of the additional staff that will be needed for a total cost of
$1,133,450:
9 - Special Agents – Total salary of $540,000 ($60,000 * 9) - Special Agents will be the
key contact people for licensees to direct their questions and application
problems. Agents will review all license applications, investigate violations, and
enforce all statutes and regulations as authorized by this bill. This would equate to
approximately 745 licensees per agent. Two agents will be located in Jefferson
City central office and Kansas City and Springfield district offices, and 3 in the
St. Louis district office.
2 - District Supervisors – Total salary of $140,000 ($70,000 * 2) - The District
Supervisor will supervise the licensing and enforcement in their territory. There
will be 1 located in the St. Louis and 1 in the Kansas City district offices.
4 - Administrative Support Assistants – Total salary of $166,000 ($41,500 * 4) - Two
Administrative Support Assistants will be assisting in the large amount of clerical
work related to the implementation and ongoing licensing of hemp beverage
businesses, to include processing licenses, data entry, tracking statistics, and
facilitating the composition of reports, and administrative responsibilities related
to disciplinary action processes. Two Administrative Support Assistants will be
responsible for processing all brand registration applications and changes. All five
will be located in the Jefferson City central office.
1 - Administrative Support Professional – Salary of $44,000 - The Administrative
Support Professional will be the lead for brand registration and will ensure all
requirements are adhered to. They will be located in the Jefferson City central
office.
1 - Licensing and Compliance Supervisor – Salary of $66,000 - The Licensing and
Compliance Supervisor will assist in the review and approval of license
applications and manage reporting. They will be located in the Jefferson City
central office.
1 - Hemp Beverage Program Coordinator – Salary of $75,000 – The Hemp Beverage
Program Coordinator will supervise the licensing and enforcement of the hemp
beverage program. They will be located in the Jefferson City central office. L.R. No. 1695H.03C
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Current ATC staff that will need to dedicate time to the start-up of this program:
State Supervisor - $22,102 - 20% of time dedicated to the hemp beverage program
overseeing hemp beverage program and developing/maintaining regulations.
Chief of Enforcement - $17,750 - 20% of time dedicated to the hemp beverage program
performing disciplinary duties and developing/maintaining regulations.
Deputy Chief of Enforcement - $15,493 - 20% of time dedicated to the hemp beverage
program performing disciplinary duties and developing/maintaining regulations.
Director of Finance and Compliance - $17,206 - 20% of time dedicated to the hemp
beverage program managing financials, budget, legislation, and
developing/maintaining regulations.
Legal Counsel - $16,000 - 20% of time dedicated to the hemp beverage program
providing legal counsel and developing/maintaining regulations.
Administrative Support Professional - $7,369 - 15% of time dedicated to the hemp
beverage program handling all financials and purchasing.
HR Generalist - $6,529 - 15% of time dedicated to the hemp beverage program
processing payroll and performing other personnel duties.
Equipment and Expense – Total equipment and expense is $1,623,999 for the first year with
$1,107,875 being one-time costs - Includes basic office equipment and law enforcement
equipment, which includes firearms, ammunition, ballistic vest, vehicles, travel expenses, etc.
See below:
Equipment:
Computer Equipment – $28,386
Motorized Equipment – $636,000
Office Equipment – $50,524
Other Equipment – $122,700
Expense:
Travel – $30,000
Supplies – $67,885
Professional Development – $12,000
Communication Services and Supply – $61,158
Professional Services – $262,000
Maintenance & Repair – $216,731
Miscellaneous – $2,250
Leasing Expense - $ 9,365
Capital Improvement Expense - $ 125,000
This bill establishes the requirements for hemp beverage licensing, operations, enforcement, etc.,
which will require additional staff, additional space, equipment, and expenses. The division’s
executive staff and two others will also be involved in some functions of this bill such as
establishing regulations, disciplinary actions, financials, payroll, and budget (shown above). L.R. No. 1695H.03C
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The bill also establishes the license fees for the hemp beverage licenses, which are to be
deposited into the hemp business fund and used solely for the administration of these sections.
With two agencies being responsible for different sections in this bill, it is assumed that a portion
of the fees will be appropriated to DHSS and a portion to ATC. Whatever that portion would be
for each agency, even if 100% of the estimated funds gets appropriated to ATC, it is not enough
to cover the estimated annual expenses for the division.
The alcohol and tobacco control fund is comprised solely from 70% of liquor license fees and
may only be used for the administration of chapter 311 and §§ 407.925 to 407.934, and any
duties under such chapter and sections relating to licensing, training, technical assistance, and
regulations (see 311.735, RSMo), and therefore could not be used for the administration of these
sections. Even if the alcohol and tobacco control fund could be used, it could not support the
hemp beverage program on a long-term basis. The division will have to request funding from the
general revenue fund in order to fully administer this bill.
Oversight does not have information to the contrary. Oversight notes that current DPS, ATC
staff will be utilized to implement portions of this proposal at a cost of $189,950 in FY 2026,
$230,604 in FY 2027, and $233,321 in FY 2028 and on-going for salary and fringe. Because
DPS, ATC is already funded for these positions, Oversight assumes costs for additional job
duties assigned to existing DPS, ATC staff are absorbable. Oversight will reflect the
estimates for new staff, expenses and equipment, etc. as provided by DPS, ATC.
Responses regarding the proposed legislation as a whole
Officials from the Office of Attorney General (AGO)
arising from this proposal can be absorbed with existing resources. However, the AGO may seek
additional appropriations if the proposal results in a significant increase in litigation or
investigation costs.
Oversight does not have any information to the contrary. Therefore, Oversight assumes the
AGO will be able to perform any additional duties required by this proposal with current staff
and resources and will reflect no fiscal impact to the AGO for fiscal note purposes.
Officials from the Department of Corrections (DOC) state, as misdemeanors fall outside the
purview of the DOC, this legislation will have no impact on the department.
Officials from the Department of Public Safety (DPS) - Missouri Veterans Commission
(MVC) defer to the DHSS for the potential fiscal impact of this proposal.
Officials from the Department of Commerce and Insurance, the Department of Elementary
and Secondary Education, the Department of Labor and Industrial Relations, the
Department of Mental Health, the Department of Natural Resources, the Department of
Public Safety – Director’s Office, Missouri Highway Patrol, the Department of Social L.R. No. 1695H.03C
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ServicesMissouri Department of Transportation, the MoDOT & Patrol Employees’
Retirement System, the Missouri Department of Agriculture, the Office of Administration -
Administrative Hearing Commission, the Office of the State Public Defender, the State Tax
Commission, the City of Kansas City, the Branson Police DepartmentKansas City
Police Department, the Newton County Health Department, the Phelps County Sheriff’s
Department, the County Employees Retirement Fund, the Kansas City Civilian Police
Employees' Retirement, the Kansas City Police Retirement System, the Kansas City Public
School Retirement System the Public Education Employees' Retirement System, the Office
of Administration, the Office of the State Treasurer, the St. Louis County Police
Department, the Sheriff's Retirement System, the Office of the State Courts Administrator,
and the , each assume the proposal will have no fiscal impact
on their respective organizations. Oversight does not have any information to the contrary.
Therefore, Oversight will reflect a zero impact in the fiscal note for these agencies.
In response to similar legislation from the current session (HB 393), officials from the Kansas
City Employees' Retirement System, the Kansas City Firefighter's Pension System, the
Metro St. Louis Sewer District Employees Pension Plan, the Rock Community Fire
Protection District Retirement Plan, the University of Missouri System, Missouri State
University, Northwest Missouri State University and the University Of Central Missouri,
each assume the proposal will have no fiscal impact on their respective organizations. Oversight
does not have any information to the contrary. Therefore, Oversight will reflect a zero impact in
the fiscal note for these agencies.
Oversight only reflects the responses received from state agencies and political subdivisions;
however, other cities, county commissioners, local public health agencies, nursing homes, county
clerks, sheriffs’ departments, police departments, ambulance districts, schools, hospitals and
colleges were requested to respond to this proposed legislation but did not. A listing of political
subdivisions included in the Missouri Legislative Information System (MOLIS) database is
available upon request.
Rule Promulgation
Officials from the Joint Committee on Administrative Rules assume this proposal is not
anticipated to cause a fiscal impact beyond its current appropriation.
Officials from the Office of the Secretary of State (SOS) note many bills considered by the
General Assembly include provisions allowing or requiring agencies to submit rules and
regulations to implement the act. The SOS is provided with core funding to handle a certain
amount of normal activity resulting from each year's legislative session. The fiscal impact for
this fiscal note to the SOS for Administrative Rules is less than $5,000. The SOS recognizes that
this is a small amount and does not expect that additional funding would be required to meet
these costs. However, the SOS also recognizes that many such bills may be passed by the
General Assembly in a given year and that collectively the costs may be in excess of what the
office can sustain with its core budget. Therefore, the SOS reserves the right to request funding L.R. No. 1695H.03C
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for the cost of supporting administrative rules requirements should the need arise based on a
review of the finally approved bills signed by the governor.
FISCAL IMPACT – State GovernmentFY 2026
(10 Mo.)
FY 2027FY 2028GENERAL REVENUE FUNDIncome – DOR (§ 144.028 and
§ 195.2617) 2% Tax levy p. 3$852,493$1,136,657$1,136,657
ESTIMATED NET EFFECT ON
THE GENERAL REVENUE FUND*$852,493$1,136,657$1,136,657
*Oversight notes funds from the 2% Tax levy shall be used exclusively for the funding of
veterans' programs, drug abuse prevention and education programs, and first responder
programs.
HEMP BUSINESS FUNDIncome – DPS, ATC (§§ 195.2555 to
195.2565) licensing fees p. 8$1,514,500$654,950$654,950
Costs – DPS, ATC (§§ 195.2555,
195.2600 and 195.2607) p. 6, 10-12
Personal service($865,308)($1,059,136)($1,080,319) Fringe benefits($596,855)($724,550)($733,040) Equipment and expense($600,999)($488,852)($498,629) Motorized equipment($636,000)$0$0 Capital Improvement($125,000)$0$0 Licensing and brand registration
software p.($250,000)$0$0
Total Costs – DPS, ATC($3,074,162)($2,272,538)($2,311,988) FTE Changes191919Costs – OA, ITSD/ATC (§§ 195.2555 to
195.2565) To add reports to the ATC
website p. 10($12,000)$0$0 L.R. No. 1695H.03C
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FISCAL IMPACT – State GovernmentFY 2026
(10 Mo.)
FY 2027FY 2028Costs – DHSS (§ 195.2565) p. 9-10 Personal service($352,638)($431,628)($440,261) Fringe benefits($220,297)($267,749)($271,209) Equipment and expense($81,386)($46,546)($47,477) ISO 17025 Audit training p. 10($3,900)$0$0 ISO 17025 Standards training p. 10($1,200)$0$0Total Costs - DHSS($659,421)($745,923)($758,947) FTE Changes666ESTIMATED NET EFFECT ON
THE HEMP BUSINESS FUND($2,231,083) ($2,363,511)($2,415,985)
Estimated Net FTE Change on the
Hemp Business Fund252525
FISCAL IMPACT – Local GovernmentFY 2026
(10 Mo.)
FY 2027FY 2028LOCAL SCHOOL DISTRICTSIncome – (§ 195.2555 and § 195.2560)
– Civil penalties p. 9$0 to Unknown$0 to Unknown$0 to Unknown
ESTIMATED NET EFFECT ON
LOCAL SCHOOL DISTRICTS
$0 to
Unknown
$0 to
Unknown
$0 to
Unknown
FISCAL IMPACT – Small Business
The proposed legislation places hemp-derived intoxicating cannabinoids under framework of
Article XIV and associated rules. Any small businesses currently producing or selling these
products outside of the regulatory framework would no longer be able to do so. (§ 195.900)
FISCAL DESCRIPTION
TAXATION
This bill specifies that an excise tax of 2% on retail sales of hemp-derived consumable products
will be imposed for all tax years beginning on or after January 1, 2026. Revenue derived from L.R. No. 1695H.03C
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this tax will fund veterans' programs, drug abuse prevention and education programs, and first
responder programs. (§ 144.028 and § 195.2617)
"INTOXICATING CANNABINOID CONTROL ACT"
The bill specifies that hemp, industrial hemp, and hemp-derived products that do not contain
intoxicating cannabinoids will not be considered marijuana and must not be subject to the legal
framework contained in the Missouri Constitution. This bill specifies that any intoxicating
cannabinoid, in any form and from any source, is subject to the regulations promulgated by the
DHSS under Article XIV of the Constitution and treated as marijuana under such regulations and
sold only at dispensaries licensed by the Department. No person or entity, aside from a
comprehensive marijuana dispensary facility, medical marijuana dispensary facility, or
microbusiness dispensary facility licensed under the provisions of the Constitution, will conduct
business or carry on, under a name that contains as part of the name the word "dispensary" or any
similar word. (§ 195.900)
AGE RESTRICTIONS
The bill restricts the sale or distribution of hemp-derived consumable products to persons under
21, as well as the sale and distribution of hemp-derived consumable products in a public setting.
A retailer must keep all hemp-derived consumables, besides hemp-derived consumable beverage
products, in a restricted area that cannot be easily accessed by persons under 21. Any
hempderived consumable beverage products for sale must be merchandised in a manner
indicating the products contain hemp-derived cannabinoids, as defined in the bill, and are not for
sale to individuals under 21. Any person who violates this provision will be subject to penalties,
as listed in the bill, that will be enforced by the Division of Alcohol and Tobacco Control within
the Department of Public Safety. (§ 195.2555)
LICENSING
This bill specifies that any person that is in the business of hemp-derived consumable products in
this State must obtain a license from the Division. Any license granted to a retailer will be
location specific; any license granted to a manufacturer or distributor will not be location
specific. The bill lists the steps necessary to obtain and maintain a license for a retailer,
distributor, and manufacturer, as well as the amount of time a license is valid and fees associated
with license renewal. Beginning on the effective date of this Section, no new retail establishment
offering hemp-derived consumables will be within a certain proximity of schools. Any retail
establishments that were within the listed proximity of a school prior to the effective date of this
Section will be allowed to continue to operate. (§ 195.2560)
"HEMP BUSINESS FUND"
The bill creates the "Hemp Business Fund". All fees collected relating to the licensure of
manufacturers, distributor, and retailers of hemp-derived consumable products as described L.R. No. 1695H.03C
Bill No. HCS for HB 593
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above will be deposited into this Fund. Administration of moneys from this Fund will be used
solely for the purposes of Sections 195.2550 to 195.2635. (§ 195.2563)
TESTING
The division shall conduct randomized inspections of hemp-derived consumable beverage
products distributed or available for distribution in this state for compliance with the
requirements of §§ 195.2540 to 195.2620. (§ 195.2607)
REGISTRATION
The bill specifies that every hemp-derived consumable product distributed or available for
distribution in this State must be registered with the Division through an application that includes
identifying information about the product and applicant, and a COA from an independent testing
laboratory. The Division may deny incomplete applications and may require a new registration if
updated information is needed for a product. (§ 195.2600)
INSPECTIONS
The Division will conduct randomized inspections of hemp-derived consumable products
distributed within the State to ensure compliance with the requirements listed in this bill.
(§ 195.2607)
ON-PREMISES SALES AND CONSUMPTION
This bill specifies that all establishments offering hemp-derived consumable beverage products
must be licensed as required by this bill. A beverage product may be sold by on-premises
retailers or in food service establishments only if they have been registered in accordance with
Section 195.2600. These establishments must not sell Hemp-derived consumable products at a
temporary event without first obtaining a license and permit to do so. A person that is under 21 is
not allowed to sell hemp-derived beverage products unless they are an employee of the
establishment, over 18, and under the supervision of someone 21 or over. Beverage products can
only be sold for on-site consumption to individuals who are 21 or over based on proof of age or
an ordinary person standard as stated in the bill. Unless stated otherwise in Section 195.2610, all
hemp-derived beverage products being sold for on-site consumption must be prepackaged,
cannot be added to ingestible food products, may be combined with non-alcoholic ingestible
beverage products, and cannot be provided to an individual that appears intoxicated. Upon
request, an on-premises retailer must provide identifying information about a hemp-derived
consumable beverage product to a customer. On-site samples of hemp-derived beverage products
may be provided if the person sampling the product is 21 or over and the sampling procedure is
responsibly done. (§ 195.2610)
FRANCHISE, DISTRIBUTOR, AND MANUFACTURER RELATIONSHIP L.R. No. 1695H.03C
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This bill specifies that if more than one franchise for the same brand or brands of hemp-derived
consumable beverage products is granted to different distributors, manufacturers cannot
discriminate between distributors with respect to any language concerning the franchises. Any
manufacturer that wishes to terminate any franchise with a distributor must have good cause to
do so and any distributor may bring a cause of action against any manufacturer for any violation
of Section 195.2620. (§ 195.2620)
This legislation is not federally mandated and would not duplicate any other program. It would
require additional capital improvements and rental space.
SOURCES OF INFORMATION
Administrative Hearing Commission
Attorney General’s Office
Budget and Planning
Department of Commerce and Insurance
Department of Corrections
Department of Elementary and Secondary Education
Department of Health and Senior Services
Department of Labor and Industrial Relations
Department of Mental Health
Department of Natural Resources
Department of Public Safety
Director’s Office
Missouri Highway Patrol
Missouri Veterans Commission
Department of Revenue
Department of Social Services
Joint Committee on Administrative Rules
Missouri Department of Agriculture
Missouri Department of Transportation
MoDOT & Patrol Employees’ Retirement System
Missouri Office of Prosecution Services
Office of Administration
Office of the Secretary of State
Office of the State Courts Administrator
Office of the State Public Defender
Office of the State Treasurer
State Tax Commission
University of Missouri System
City of Kansas City
Newton County Health Department
Phelps County Sheriff’s Department
Branson Police Department L.R. No. 1695H.03C
Bill No. HCS for HB 593
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Kansas City Police Department
St. Louis County Police Department
County Employees Retirement Fund
Kansas City Civilian Police Employees' Retirement
Kansas City Police Retirement System
Kansas City Public School Retirement System
Metro St. Louis Sewer District Employees Pension Plan
Public Education Employees' Retirement System
Sheriff's Retirement System
Concordia R-2 School District
Northwest Missouri State University
University of Central Missouri
Julie MorffJessica HarrisDirectorAssistant DirectorFebruary 13, 2025February 13, 2025