Bill Summary – FastDemocracy

Fiscal Note
                                       Fiscal Services Division
SF 2352 – Consumable Hemp, Penalties and Licensing (LSB5341SV)
Staff Contact: Austin Brinks (515.725.2200) austin.brinks@legis.iowa.gov
Fiscal Note Version – New
Description
Senate File 2352 makes various changes to the Iowa Hemp Act.
Division I of the Bill does the following:
• Updates the definition of a consumable hemp product to require that the product’s maximum
   tetrahydrocannabinol (THC) concentration be less than or equal to the maximum THC
   concentration allowed in Iowa Code section 124.204(7).
• Updates the requirements for manufacturing, selling, or consuming a consumable hemp
   product to require that the product complies with restrictions set forth in rules adopted by the
   Department of Health and Human Services (HHS).
• Prohibits a person from possessing, using, manufacturing, marketing, transporting,
   delivering, or distributing a consumable hemp product if the product is capable of inhalation
   by using a method outlined in Iowa Code section 204.14A. A person who violates this
   provision is guilty of a serious misdemeanor.
• Creates a civil penalty not to exceed $10,000 per day for a person who is engaged in the
   retail sale of a consumable hemp product and has failed to register with the HHS.
• Creates a serious misdemeanor for a person who is engaged in the retail sale of
   consumable hemp products but has not registered with the HHS and for selling a
   consumable hemp product that is advertised as a consumable hemp product but is not a
   consumable hemp product.
• Creates a simple misdemeanor for a person who sells, gives, or distributes a consumable
   hemp product to a person under the age of 21.
• Specifies that a person under the age of 21 who consumes, possesses, purchases, or
   attempts to purchase a consumable hemp product is subject to a scheduled violation. In
   addition, the person is subject to a court appearance where the court shall sentence the
   person to a number of hours of community service depending on the number of violations.
   A person under the age of 21 does not violate the Bill if the person is possessing a
   consumable hemp product as part of the person’s employment or if the person is working
   under the direction or consent of the Department of Public Safety (DPS) or local law
   enforcement.
• Provides scheduled violations for a person under the age of 21 who violates the Bill. For a
   first violation, there is a scheduled fine of $70; for a second violation, a scheduled fine of
   $135; and for a third or subsequent violation, a scheduled fine of $325. These scheduled
   violations are not subject to the Crime Services Surcharge or court costs otherwise added to
   scheduled violations. Any fines paid for these violations are retained by the city or county
   that enforced the violation.
• Allows the HHS to order the confiscation and disposal of a hemp product if the product is in
   violation of this Bill, requires the HHS to deliver any sample of the product to the DPS or
   local law enforcement, and requires a person who is registered with the HHS to pay for the
   cost incurred by the HHS for the destruction of the product.
                                                 1
Division II of the Bill does the following:
• Adds the prohibition of a person holding a retail alcohol license and the person’s agents or
   employees from selling, giving, or otherwise supplying any alcoholic beverage containing
   THC, as described in Iowa Code chapter 124 and Iowa Code section 123.49.
• Prohibits a person holding a license, permit, or certificate of compliance from manufacturing,
   importing, or selling at wholesale an alcoholic beverage containing THC as described in
   Iowa Code chapter 124.
Background
Iowa Code chapter 204, known as the Iowa Hemp Act, was created in 2019 and governs the
production and sale of products derived from hemp. Hemp is defined as a species of cannabis
that has a maximum concentration of delta-9 THC that does not exceed 0.3% on a dry weight
basis. The current definition does not include hemp products that are intended to be inhaled
and does not specify an age limit on the use of consumable hemp products.
The Iowa Hemp Act prohibits a person from possessing, using, manufacturing, marketing,
transporting, delivering, or distributing harvested hemp or a hemp product if the intended use is
introduction into the body through an electronic, chemical, or mechanical process, or a device
such as a cigarette, cigar, cigarillo, or pipe. Any person who manufactures or sells a
consumable hemp product must register with the HHS.
Iowa Code chapter 123 provides regulation on alcoholic beverages in the State. A violation of
Iowa Code section 123.49 is a simple misdemeanor, while a general violation of Iowa Code
chapter 123 is a serious misdemeanor for a first and second offense and an aggravated
misdemeanor for a third and subsequent offense.
A simple misdemeanor is punishable by confinement for up to 30 days in jail and a fine of at
least $105 but no more than $855. A serious misdemeanor is punishable by confinement for up
to one year and a fine of at least $430 but no more than $2,560. An aggravated misdemeanor
is punishable by confinement for up to two years and a fine of at least $865 but no more than
$8,540.
Assumptions
• There may be an increase in simple, serious, and aggravated misdemeanors as a result of
   this Bill, but the number is unknown.
• There may be an increase in the number of scheduled violations as a result of this Bill, but
   the number is unknown.
• Registration revenue collected by the HHS may decrease, but the amount of this decrease
   is unknown.
• Marginal costs for county jails cannot be estimated due to a lack of data. For purposes of
   this analysis, the marginal cost for county jails is assumed to be $50 per day.
• The marginal cost per day in prison is $24.94.
Correctional Impact
Senate File 2352 creates and expands criminal offenses. As a result, the correctional impact
cannot be estimated due to a lack of existing data. Figure 1 shows estimates for sentencing to
State prison, parole, probation, or Community-Based Corrections (CBC) residential facilities;
length of stay (LOS) in months under those supervisions; and supervision marginal costs per
day for serious and aggravated misdemeanors. A conviction for a simple misdemeanor does
not result in a prison sentence but does carry the possibility of confinement in jail for up to 30
days. Refer to the Legislative Services Agency (LSA) memo addressed to the General
Assembly, Cost Estimates Used for Correctional Impact Statements, dated January 16, 2024,
for information related to the correctional system.
                                                 2
                               Figure 1 — Sentencing Estimate and Length of Stay (LOS)
                                  FY 2023                                       Percent            Percent          FY23
                         Percent Avg LOS Margina Percent FY23 Field Avg Cost sentenced Marginal Ordered             Field Marginal
                         Ordered in Prison l Cost Ordered Avg LOS per Day       to CBC      Cost      to   Marginal  Avg Cost per
                         to State   (All   per Day   to       on        on     Residential CBC per County Cost per LOS on   Day
Conviction Offense Class Prison Releases) Prison Probation Probation Probation   Facility    Day     Jail  Day Jail Parole Parole
Aggravated Misdemeanor     47.6%    10.6     $24.94   67.6%      25.1    $   7.67     5.2%     $ 20.00   55.9%    $ 50.00   6.7   $   7.67
Serious Misdemeanor        1.7%     6.6      $24.94   53.0%      19.2    $   7.67     1.2%     $ 20.00   74.2%    $ 50.00   N/A   $   7.67
          Minority Impact
          Senate File 2352 creates and expands criminal offenses, and the minority impact cannot be
          determined due to lack of conviction data. Refer to the LSA memo addressed to the General
          Assembly, Minority Impact Statement, dated January 16, 2024, for information related to
          minorities in the criminal justice system.
          Fiscal Impact
          The fiscal impact cannot be estimated due to a lack of existing data. Figure 2 shows the
          average State cost per offense for an aggravated misdemeanor, serious misdemeanor, and
          simple misdemeanor.
                                   Figure 2 — Average State Cost Per Offense
                                          Offense Class          Average Cost
                                    Aggravated Misdemeanor $7,500 to $10,800
                                     Serious Misdemeanor        $400 to $6,900
                                      Simple Misdemeanor          $40 to $400
          Revenue from scheduled violations paid to cities and counties for violations under the Bill
          cannot be estimated.
          There may be a loss of revenue from registration fees associated with consumable hemp
          products, but the impact is unknown.
          Sources
          Criminal and Juvenile Justice Planning, Department of Management
          Department of Health and Human Services
          Legislative Services Agency
                                                                                         /s/ Jennifer Acton
                                                                                         February 28, 2024
          Doc ID 1446705
          The fiscal note for this Bill was prepared pursuant to Joint Rule 17 and the Iowa Code. Data used in developing this
          fiscal note is available from the Fiscal Services Division of the Legislative Services Agency upon request.
                                                           www.legis.iowa.gov
                                                                    3
Statutes affected: 
Introduced: 204.2, 124.204, 204.7, 204.12, 204.14A, 204.14E