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 Division of the Budget http://budget.kansas.gov
Adam Proffitt, Director Laura Kelly, Governor


March 13, 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 135 by Senate Committee on Federal and State Affairs
In accordance with KSA 75-3715a, the following fiscal note concerning SB 135 is
respectfully submitted to your committee.
SB 135 would create the Medical Cannabis Regulation Act and would provide for the
regulation of the cultivation, processing, distribution, sale, and use of medical cannabis. The bill
would make related definitions and would include a list of qualifying medical conditions allowing
a patient to use medical cannabis as detailed in the bill. Various provisions of the Act would
include sunsets to expire specific sections if not renewed by the Legislature. The bill would
establish the Medical Cannabis Regulation Program, which would include different areas to be
administered by various agencies in accordance with provisions of the Act. The bill would also
create the 15-person Medical Cannabis Advisory Committee to develop recommendations on the
Program and implementation and enforcement of the Act. The bill would allow for the petition to
the Advisory Committee to request that a disease or condition be added as a qualifying medical
condition for the purposes of the Act, and the bill would include requirements for the petition and
consideration of the petition. Prior to July 1, 2027, and every three years thereafter, the Committee
would be required to review all diseases or conditions to determine if removal of any disease or
condition is appropriate.
The bill would rename the Division of Alcoholic Beverage Control within the Department
of Revenue the Division of Alcohol and Cannabis Control. The Division would be under the
direction of the Director of Alcohol and Cannabis Control (Director). All duties, powers, and
actions of the prior Division and Director would transfer to the newly created Division and Director
and would be in effect until revised, amended, revoked, or nullified pursuant to law.
The bill would include provisions related to the acceptance of gifts, gratuities, emolument,
or employment for certain individuals, would allow affected agencies to adopt rules and
regulations on the acceptance of official hospitality, and would provide for violations of the
The Honorable Mike Thompson, Chairperson
Page 2—SB 135

provisions. The bill would require actions taken by the Board of Healing Arts, the State Board of
Pharmacy, the Secretary of Health and Environment, or the Director under the Act be in
accordance with the Kansas Administrative Procedure Act and reviewable in accordance with the
Kansas Judicial Review Act.
Patients or caregivers seeking to use or administer medical cannabis would be required to
apply to the Kansas Department of Health and Environment (KDHE) for registration. The treating
physician would submit the application on behalf of the patient or caregiver in such form and
manner as prescribed by the Secretary of Health and Environment (Secretary). The bill would
outline the process and requirements for the application for registration and issuance of the
identification card and would detail the authorized use of medical cannabis, administration by
caregivers and the purchase and possession for both registered patients and caregivers. The fee
for registration or renewal would be set by rules and regulations set by the Secretary in an amount
not to exceed $50 for a patient registration; $25 for a patient registration if the patient is indigent
or is a veteran; and $25 for a caregiver registration. The bill would outline requirements for
verification of registration for various purposes, provide for penalties for violations of the
provisions related to registration, and would allow reciprocity from other states on a limited basis.
On or before January 1, 2025, KDHE would be required to make a website available for public to
access information regarding registration under the Act.
SB 135 would create the Medical Cannabis Registration Fund to be administered by the
Secretary of Health and Environment. All fees and fines collected by the Secretary pursuant to
the Act would be credited to the fund and be used for costs related to the regulation and
enforcement of the possession and use of medical cannabis by the Secretary. On or before January
1, 2025, after consultation with the Advisory Committee, the Secretary would be required to adopt
rules and regulations to administer the Medical Cannabis Regulation Program and implement and
enforce the provisions of the Act. The bill would outline items to be included in those rules and
regulations.
A physician seeking to recommend treatment with medical cannabis would be required to
apply to the Kansas State Board of Healing Arts for a certificate authorizing the physician to do
so. The Board would prescribe the form and manner for the application and the bill would outline
the requirements for the application and certificate. On or before September 1, 2024, the Board
would be required to adopt rules and regulations related to the certificate and the bill would detail
items to be include in the rules and regulations.
Any person seeking to cultivate, conduct laboratory testing of, process, distribute, or sell
at retail medical cannabis, concentrate, or other products would be required to submit an
application for the appropriate license to the Director. The Director would prescribe the form and
manner for the application and a separate application would be required for each location to be
operated by the licensee. The types of licenses would include: cultivator license, laboratory
license, processor license, distributor license, and retail dispensary license. The bill would include
requirements related to the application and licensure, as well as requirements for each of the
licensees and employees of licensees to adhere to once a license was obtained. This would include
requirements and limitations related to advertisements and location of licensed premises, security
requirements for licensed premises, as well as the process and penalties for violations of the Act.
The Honorable Mike Thompson, Chairperson
Page 3—SB 135

SB 135 would only allow for specific forms of medical cannabis as listed in the Act to be
dispensed, although a petition could be submitted to the Director for additional forms of methods
to be approved as detailed in the Act. The maximum allowed fees for the initial or renewal licenses
and applications would be as follows: $20,000 for a cultivator license application; $20 per plant
cultivated on the licensed premises for a cultivator license; $4,000 for a laboratory license
application; $35,000 for a laboratory license; $20,000 for a processor license application; $180,000
for a processor license; $20,000 for a distributor license application; $80,000 for a distributor
license; $20,000 for a retail dispensary license application; $80,000 for a retail dispensary license;
and $100 for an employee license. The fees would be non-refundable except for specific situations
listed in the bill. The bill would establish the Medical Cannabis Business Regulation Fund to be
administered by the Director. Collections from licensure fees and fines for violations would be
credited to the fund to be used for costs related to the regulation and enforcement of the cultivation,
testing, distributing, possession, processing, and sale of medical cannabis by the Division of
Alcohol and Cannabis Control. The Director would be required to propose rules and regulations
as detailed in the bill to administer the Medical Cannabis Regulation Program and implement and
enforce provisions of the Act. The Secretary of Revenue would be required to adopt such rules
after consulting with the Advisory Committee. The Director would also be required to establish
and maintain an electronic database as detailed in the Act to monitor medical cannabis from its
seed source through cultivation, testing, processing, distribution, and dispensing.
The Kansas Board of Pharmacy would be required to adopt rules and regulations on or
before January 1, 2025 to establish the requirements for retail dispensary reports and other
information to be shared through the prescription monitoring program database as detailed in the
Act. Any pharmacist seeking to operate as a pharmacist consultant for a retail dispensary would
be required to register with the Board in accordance with rules and regulations adopted by the
board and as outlined in the bill. The bill would also include requirements related to registration
and requirements of registered pharmacists and there would be a maximum allowed fee of $100
for the registration. The bill would establish the Pharmacist Consultant Registration Fee Fund to
be administered by the Board and the collection of the registration fees would be credited to the
fund to be used for costs related to the operation and maintenance of the Kansas Prescription Drug
Monitoring Program that is attributed to the Act and the regulation and registration of pharmacist
consultants.
The bill would provide an exemption from criminal law of the state for financial institutions
providing financial services to any cultivator, laboratory, processor, distributor, or retail dispensary
in compliance with the Act and all applicable tax laws. The bill would also detail what information
the Director would be required to be shared with financial institutions. The bill would specify that
nothing in the Act would authorize the Director to oversee or limit research conducted at a
postsecondary educational institution, academic medical center, or private research and
development organization that is related to cannabis and approved by the United States
government. The bill would also make clarifications and limitations of the Act in relation to
employers, property owners, and government assistance. The bill would allow intergovernmental
agreements with certain Native American Tribes to provide for a free market exchange between
entities engaged in the business of medical cannabis licensed by tribal government and those
licensed under the Act.
The Honorable Mike Thompson, Chairperson
Page 4—SB 135

SB 135 would specify that it would be unlawful to store or otherwise leave medical
cannabis or a medical cannabis product where it is readily accessible to a child under 18 years of
age. The transport of medical cannabis or medical cannabis products would only be allowed as
specified in the bill. Exceptions, definitions, and penalties for violation of these provisions would
be detailed in the bill. The bill would prohibit law enforcement officers from enforcing federal
law provisions if the substance involved in a violation was medical cannabis and possession was
authorized by the Act. The bill would amend current statutes to protect patients using medical
cannabis consistent with the Act in housing practices, anatomical gifs or organ transplants, child
welfare cases, and certain types of licensures and professional actions. In addition, the bill would
amend various statutes to be consistent with provisions of the Act.
The bill would set taxes on retail dispensaries for the sale of medical cannabis at the rate
of 10.0 percent on the gross receipts. The total remittance would be split with 20.0 percent credited
to the Local Medical Cannabis Enforcement Fund; 10.0 percent to the State Medical Cannabis
Enforcement Fund with a limit of $2.5 million per fiscal year; and the remaining amount to the
State General Fund. The bill would establish the two new funds for the tax collections, as well as
the Local Medical Cannabis Enforcement Refund Fund and would detail qualifications and use of
the new funds.
Several agencies were unable to estimate a total fiscal effect for the enactment of SB 135.
From the estimates available, additional expenditures related to passage of the bill are estimated
to be at least $12.2 million, including $10.9 million from the State General Fund for FY 2024.
Revenue generated from the bill is not anticipated until FY 2025. The estimates for each affected
agency are described below.
According to the Kansas Department of Health and Environment, enactment of SB 135
would increase expenditures by $2.5 million, all from the State General Fund, in FY 2024 and
would require an additional 18.00 FTE positions. The agency estimates $1.5 million for their share
of a cloud-based system that would interface with all other agencies necessary to implement
provisions of the bill; $302,482 for administrative costs such as background checks for employees,
costs for the Advisory Committee, and general overhead related to the new program; and $744,951
for salaries and wages for 18.00 FTE additional 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 20.50 FTE positions in FY 2025. The cost for the computer system would continue
but decrease after start-up. While some revenue would start to be seen in FY 2025, it would take
some time for the funding to build up. Based on other states’ experience, the agency estimates the
revenue would cover costs by FY 2027.
The Kansas Department of Revenue estimates passage of the bill would require additional
expenditures of $8.3 million in FY 2024, $7.5 million of this would be in the Alcohol and Cannabis
Control Division (ACC). While the bill would eventually generate enough revenue to cover costs,
the revenue would not be seen until FY 2025 and a State General Fund appropriation would likely
be necessary for the first year of implementation. The agency estimates an additional 36.00 FTE
positions would be needed to fully implement the provisions of SB 135, with a majority in the
ACC, but notes the positions would be phased in as the program got up and running. The agency
would be required to set up a new work unit for licensure and to meet other requirements within
The Honorable Mike Thompson, Chairperson
Page 5—SB 135

the bill, including the expansion of enforcement agents for regulation. For FY 2024 the agency
estimates $2.5 million for salaries and overhead for 31.00 FTE positions within the ACC, $3.0
million for the initial cost of the seed to sale tracking system, and $2.0 million for the licensing,
enforcement, and legal system that would be required. The agency anticipates after the initial start-
up costs, approximately $3.6 million would be needed annually for the ACC. In addition, the
agency estimates costs of $277,337 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 $146,000 for other IT and website related costs. Most of these costs would be ongoing.
Assuming the maximum fees allowed with two-year renewal periods, the agency estimates revenue
from licensure fees to be $11.6 million in FY 2025, $10.4 million in FY 2026, $11.6 million in FY
2027, and $10.4 million in FY 2028. The excise tax revenue is estimated to be $750,000 in FY
2025, $4.5 million in FY 2026, and $9.1 million in both FY 2027 and FY 2028.
The Kansas Highway Patrol estimates the passage of SB 135 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.
According to the Kansas Board of Pharmacy, passage of the bill would require 1.50
additional FTE positions and would increase fee fund expenditures by at least $222,500 in FY
2024. The Board currently contracts for the K-TRACS (Kansas Prescription Drug Monitoring
Program) software and data hosting services. Changes to fees and terms cannot be changed
without an agreement with the contractor. Any increase in the number of prescriptions reported
or users may affect the contract and could alter obligations. K-TRACS is not currently configured
to accept anything except controlled substance prescription medication information, medical
cannabis reporting would require software reconfiguration with a one-time implementation cost