OFFICE OF FISCAL ANALYSIS
Legislative Office Building, Room 5200
Hartford, CT 06106 (860) 240-0200
http://www.cga.ct.gov/ofa
sSB-888
AN ACT RESPONSIBLY AND EQUITABLY REGULATING ADULT-
USE CANNABIS.
OFA Fiscal Note
State Impact:
Agency Affected Fund-Effect FY 22 $ FY 23 $
Consumer Protection, Dept. GF - Cost 4.6 million 6.2 million
State Comptroller - Fringe GF - Cost 754,657 1.6 million
Benefits1
Social Equity Council GF - Cost Up to See Below
$500,000
Treasurer, Debt Serv. GF - Potential None Up to $2.5
Cost million
Department of Motor Vehicles TF - Cost 625,639 529,446
State Comptroller - Fringe GF&TF - Cost 210,563 218,661
Benefits
Cannabis Control Commission GF - Potential 159,178 163,953
Cost
State Comptroller - Fringe GF - Potential 65,741 67,713
Benefits Cost
Department of Emergency GF - Cost 825,000 None
Services and Public Protection;
Criminal Justice, Div.; Judicial
Dept.
Department of Revenue Services GF&TF - Revenue See Below 31.4 million
Gain
Department of Revenue Services GF - Revenue Up to 15.1 Up to 15.1
Loss million million
Department of Revenue Services GF - Cost 286,189 490,547
State Comptroller - Fringe GF - Cost 97,546 202,596
Benefits
Department of Emergency Various - See Below See Below
Services and Public Protection; Potential Cost
1The fringe benefit costs for most state employees are budgeted centrally in accounts
administered by the Comptroller. The estimated active employee fringe benefit cost
associated with most personnel changes is 41.3% of payroll in FY 22 and FY 23.
Primary Analyst: ME 4/21/21
Contributing Analyst(s): SB, RDP, DD, CG, EMG, PM, MM, AN,
MP, CP, MR, PR, ES, JS, CW, EW
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Legislative Mgmt.; Department
of Transportation; Department of
Energy and Environmental
Protection; Higher Education
Constituent Units; Department of
Economic & Community
Development
Correction, Dept.; Judicial Dept. GF - See Below See Below See Below
(Probation)
Resources of the General Fund; GF - Revenue See Below See Below
Department of Emergency Impact
Services and Public Protection
Note: GF=General Fund; GF&TF=General Fund & Transportation Fund; Various=Various
Municipal Impact:
Municipalities Effect FY 22 $ FY 23 $
Various Municipalities Revenue See Below See Below
Gain
Various Municipalities STATE See Below See Below
MANDATE2
- Potential
Cost
Explanation
The bill makes numerous changes to employment, licensing,
consumer, economic development, tax, criminal justice and traffic
enforcement laws to establish a legal recreational cannabis consumer
and business sector, which results in the following fiscal impacts:
Sections 2, 6, 15, 20, 107-113 create new violations for cannabis and
result in a marginal cost to the Department of Correction and the
Judicial Department for violations and a revenue gain from fines. On
average, the marginal cost to the state for incarcerating an offender for
the year is $2,2003 while the average marginal cost for supervision in
2 State mandate is defined in Sec. 2-32b(2) of the Connecticut General Statutes, "state
mandate" means any state initiated constitutional, statutory or executive action that
requires a local government to establish, expand or modify its activities in such a
way as to necessitate additional expenditures from local revenues.
3 Inmate marginal cost is based on increased consumables (e.g. food, clothing, water,
sewage, living supplies, etc.). This does not include a change in staffing costs or
utility expenses because these would only be realized if a unit or facility opened.
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the community is less than $7004 each year.
Sections 3-5, 7, 14, 16, 17, 136 modify allowable possession of
cannabis and result in: 1) a marginal savings to the Department of
Correction and Judicial Department due to decreased violations, and 2)
a revenue loss from less fines collected.
Sections 8-10 require the erasure of certain police and court records
resulting in a one-time cost in FY 22 of approximately $825,000. To
meet the requirements of the bill the Department of Emergency
Services and Public Protection, Division of Criminal Justice, and the
Judicial Department will require an information technology consultant
to make necessary technology changes.
These sections also result in a potential cost to municipalities to the
extent additional resources are needed due to the requirement that
certain electronic records be deleted. It is anticipated potential costs
will be isolated to municipalities with greater volumes of criminal
records.
Sections 18, 25 establish various traffic stop and law enforcement
procedures and policies related to the detection and enforcement of
cannabis by law enforcement personnel, resulting in no fiscal impact to
the state or municipalities.
Section 19 makes a procedural change involving disciplinary
policies at local and regional boards of education and does not result in
a fiscal impact.
Section 21 establishes a Cannabis Control Commission consisting of
the Commissioner of Consumer Protection and two commissioners
appointed by the Governor, resulting in a potential cost to the state. If
the two commissioners appointed by the Governor receive a salary,
4 Probation marginal cost is based on services provided by private providers and
only includes costs that increase with each additional participant. This does not
include a cost for additional supervision by a probation officer unless a new offense
is anticipated to result in enough additional offenders to require additional probation
officers.
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there is a potential cost of $224,919 in FY 22 and $231,666 in FY 23
(costs include salary and fringe benefits).
Sections 22-23 establish a Social Equity Council and requires the
council to field an RFP to conduct a cannabis study resulting in a cost
of up to $500,000 in FY 22. The exact cost will be dependent on the
responses to the RFP, requirements of the study, and negotiations with
the third-party vendor. These sections also allow the council to be
reimbursed for expenses necessary to perform their duties resulting in
an unknown cost which is dependent on the rate of reimbursements.
Sections 24, 29, 32, 35, 41-49, 56, 59-60, 75 require DCP to license,
regulate, and enforce recreational cannabis, resulting in additional
staffing needs. DCP will need to hire 24 staff in FY 22 and 24
additional staff in FY 23, for a cost of $5.4 million in FY 22 and $7.7
million in FY 23 for salaries, fringe benefits, and other expenses.
Sections 30-31 require certain applicants to submit to background
checks and result in a potential revenue gain to the Department of
Emergency Services and Public Protection (DESPP) to the extent
applicants go through DESPP for the background checks5.
Sections 34-35 allows DCP to accept applications for various
recreational cannabis licenses and results in a revenue gain to the state.
The revenue will depend on the number of applications submitted and
licenses granted.
Sections 36-39 require the Cannabis Control Commission in
collaboration with other agencies to develop a cannabis business
accelerator program, workforce training program, and adopt
regulations resulting in no fiscal impact because the Commission has
the expertise to meet the requirements of the bill.
Section 58 allows DCP to issue fines for certain violations of up to
$25,000, resulting in a potential revenue gain to the state that is
5 Applicants can satisfy the background check requirements through DESPP or a
third-party vendor.
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dependent on the number of violations and the amount of each fine.
Section 61 requires anyone entering into a transaction resulting in a
significant change to a cannabis establishment to file a written notice
with the Office of the Attorney General. This is not expected to result
in a fiscal impact to the state.
Section 63 requires the Department of Banking, in consultation with
the Department of Consumer Protection, to report on the access of
cannabis establishments to the banking industry, which has no fiscal
impact as the department has the expertise to complete the report.
Section 64 requires the Insurance Commissioner to provide a report
on the access to insurance for cannabis establishments, which does not
result in a fiscal impact because the Insurance Department has the
capacity to provide such report through existing resources.
Section 65, which requires the Alcohol and Drug Policy Council to
report by January 1, 2023 on its recommendations regarding efforts to
pursue certain public health initiatives and collect data for review, has
no fiscal impact.
Sections 83-84 allow municipalities to implement restrictions on
smoking cannabis on public property and restaurants, and to fine
anyone who violates these restrictions. This results in a revenue gain,
anticipated to be minimal, in a municipality that implements these
restrictions.
The sections also allow each municipality to vote to prohibit or
otherwise regulate the sale of cannabis in that town. This has no fiscal
impact as it is not anticipated to change the cost of administering or
enforcing any local ordinances.
Section 85 codifies requirements regarding the Department of
Public Healths administration of the Connecticut School Health
Survey and does not result in a fiscal impact.
Sections 86-87 update Clean Indoor Air Act provisions and do not
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result in a fiscal impact to the Department of Public Health.
Section 91 establishes penalties for using cannabis on state lands or
waters managed by DEEP. This is anticipated to result in a revenue
gain to the resources of the General Fund to the extent violations occur
in on state parks or forests, or other DEEP-managed properties.
Section 94 clarifies language in the Department of Children and
Families statutes and results in no fiscal impact.
Sections 95-96 result in no fiscal impact to the higher education
constituent units as the bill ensures that student cannabis use, within
certain limitations, will not impact student or federal revenues to
public colleges and universities.
Sections 97-100 establish allowed and prohibited employer actions
regarding employee cannabis use and exempt certain types of
employers and employees from these requirements. This does not
result in any fiscal impact to the state or municipalities as enforcement
is through a private right of action.
Section 114 requires the Police Officer Standards and Training
Council (POST) to determine how many drug recognition experts
(DRE) are needed for each law enforcement unit resulting in a
potential cost to various agencies6 and municipalities. If agencies with
law enforcement units and municipalities do not meet the minimum
standard developed by POST, they will need to train additional DREs
resulting in a potential cost. The estimated cost per officer is $15,000
(including the cost to send the officer to training and to cover the
missing shifts with overtime).
Section 114 requires each police officer who has not been recertified
for the first time after the initial certification to be trained in advanced
roadside impaired driving enforcement (ARIDE) resulting in a cost to
6Agencies with law enforcement personnel include Department Emergency Services
and Public Protection, Office of Legislative Management, Department of Energy and
Environmental Protections, the Department of Transportation and the higher
education constituent units.
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various agencies and municipalities for the training. For example, the
cost for the Department of Transportation to hold additional classes is
estimated at approximately $50,000 annually and the cost per officer is
estimated at $2,000.
Sections 115-117, 119-123 establish various traffic stop procedures
and policies related to the detection and enforcement of cannabis by
police officers and require municipalities to report the number of
officers that will require specialized detection training. These
provisions are not anticipated to result in a fiscal impact to the state or
municipalities.
Section 118 expands the administrative license suspension process
to drug-impaired drivers and results in a cost to the Department of
Motor Vehicles of approximately $720,400 in FY 22 and $748,107 in FY
23 for salary and fringe benefit costs for seven new positions, and a
one-time cost in FY 22 of $115,802 for information technology and
ancillary costs.
Section 124 requires DOT, in consultation with DMV and a
Statewide Impaired Driving Task Force, to make recommendations
regarding enhanced data collection, electronic warrants, and feasibility
of oral fluid testing in impaired driving investigations, which does not
result in a cost, because it is within the agencies' expertise.
Section 125 establishes an excise tax on the first sale or use of
cannabis flowers, cannabis trim, or wet cannabis by a producer,
cultivator, or micro-cultivator in the state. This results in an estimated
revenue gain of $18.9 million in FY 23 and $36.1 million in FY 24; the
annual revenue gain is expected to grow to $58.7 million by FY 27.
The bill specifies that all excise tax revenue be deposited in the
General Fund for the FY 22-FY 23 biennium, after which 55% is
deposited in the cannabis equity account, 15% is deposited in the
prevention and recovery services account, and 30% is deposited in the
General Fund.
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Section 125 results in administrative costs to the Department of
Revenue Services estimated at $383,735 in FY 22 and $693,143 in FY 23.
This includes salary and fringe benefit costs for two Revenue Agents
and five Revenue Examiners, as well as a one-time set-up and
information technology programming cost estimated at $50,000 in FY
22 only.
Sections 127-129 specify how the state sales and use tax applies to
cannabis or cannabis product sales. This results in an estimated
revenue gain of $12.5 million in FY 23 and $23.8 million in FY 24; the
annual revenue gain is expected to grow to $38.6 million by FY 27.
This revenue would be deposited in the General and Special
Transportation funds.
Sections 130-132 and 140 repeal the marijuana and controlled
substances tax, which results in a General Fund loss of less than
$100,000 annually beginning in FY 22.
Section 133 extends the angel investor tax credit program to eligible
cannabis businesses, which results in a General Fund revenue loss of
up to $15 million annually from FY 22 to FY 24.
Section 125-133 result in a revenue gain to municipalities by
establishing a 3% local sales tax on cannabis in addition to the general
sales tax. This is estimated to generate approximately $5.9 million in
FY 23 and up to $18 million annually in the out years for all
municipalities that allow the sale of cannabis. To the extent that sales
occur earlier than FY 23, there would be a revenue gain as early as FY
22.
Any revenue gain would depend on 1) whether a municipality
authorizes the sale of cannabis, and 2) the amount of sales that occur in
such municipality. The bill also specifies the uses of revenue generated
from the state excise tax on cannabis established by the bill. To the
extent that municipalities are eligible to receive this funding, there is
an additional revenue gain.
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Section 134 includes an authorization of $50 million of General
Obligation (GO) bonds in FY 22. To the extent that the bonding
authorized in the bill is fully allocated and expended, debt repayment
of up to $2.5 million could begin as early as FY 23. Total debt service
costs for $50 million of GO bonds issued at market rates in FY 22 is
estimated to be approximately $70.25 million between FY 22 and FY
42.
Section 135 requires the Department of Economic and Community
Development (DECD) and the Cannabis Control Commission to
develop a revolving loan program. Depending upon its scope in
administering the $50 million bond-funded program DECD could
incur costs to administer the program.
The Out Years
The annualized ongoing fiscal impact identified above would
continue into the future subject to: 1) inflation, 2) the number of
cannabis applications and licensees, 3) the length of time required to
erase records, 4) the number of law enforcement officers required to
receive additional training, 5) the debt service repayment schedule
established when the bonds are issued, and 6) the number of
violations.


Statutes affected:
Governor's Bill: 54-142d, 7-148, 31-40q, 1