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
February 23, 2021
The Honorable John Barker, Chairperson
House Committee on Federal and State Affairs
Statehouse, Room 285A-N
Topeka, Kansas 66612
Dear Representative Barker:
SUBJECT: Fiscal Note for HB 2184 by House Committee on Federal and State Affairs
In accordance with KSA 75-3715a, the following fiscal note concerning HB 2184 is
respectfully submitted to your committee.
HB 2184 would create the Kansas Medical Marijuana Regulation Act which would permit
the growing, harvesting, processing, dispensing and use of marijuana under specific conditions.
The Kansas Department of Health and Environment (KDHE) would register patients and
caregivers, the Kansas Department of Agriculture (KDA) would license growers and laboratories,
and the Alcohol and Beverage Control (ABC) of the Kansas Department of Revenue (KDOR)
would license dispensaries. An advisory committee would be established to provide recommenda-
tions and establish policies regarding medical marijuana regulation. On or before July 1, 2022,
KDHE, KDA, KDOR and the Board of Healing Arts would be required to adopt rules and
regulations relating to the Act.
The bill would permit civil fines to be assessed if false or fraudulent information is
submitted. KDOR could revoke or refuse to renew a license if false or fraudulent information is
given and the decision could be appealed to the court. All monies relating to use would be
deposited into the Medical Marijuana Registration Fund. All monies relating to cultivation would
be deposited into the Medical Marijuana Cultivation Regulation Fund. All monies relating to
dispensing would be deposited into the Medical Marijuana Business Entity Fund. The Medical
Marijuana Registration Fund, Medical Marijuana Cultivation Regulation Fund and Medical
Marijuana Business Entity Fund would be new funds created by the bill. The bill would allow the
Director of Alcoholic Beverage Control to establish a closed-loop payment processing system.
The State Treasurer would create transactional accounts to be used only by registered patients and
The Honorable John Barker, Chairperson
Page 2—HB 2184
caregivers at licensed retail dispensaries and all licensed cultivators, laboratories, processors, and
distributors.
The bill would prohibit a registered patient from possessing more than a 90-day supply of
medical marijuana and any paraphernalia or accessories as specified in rules and regulations. The
bill would permit KDHE to negotiate a reciprocity agreement with any other state under which a
medical marijuana registry identification card or equivalent authorization that is issued by the other
state is recognized in Kansas.
Financial institutions that provide services to any licensed cultivator, laboratory, processor,
distributor or retail dispensary would be exempt from any criminal law of Kansas. Persons who
consume medical marijuana cannot be denied housing, employment, being an organ recipient, a
professional license or be considered an unfit parent solely because of the use of medical
marijuana. Persons covered under the Act would not be subject to criminal prosecution or be
subject to revocation of a medical or medically related professional license.
KDOR indicates the Medical Marijuana Business Entity Fund would be administered by
ABC. This fund would include monies collected from all fees and fines paid by the processors,
distributors, and retail dispensaries. To calculate the estimate, ABC used the maximum amount
for fees stated in the bill. The bill provides that fees are allowed “up to” a certain maximum
amount. ABC also notes it used processor, distributor, and retail dispensary counts that were in
the upper range of its estimate of the number of counts. ABC estimates the license fees paid for
FY 2023 would be $8.1 million and for FY 2024 would be $14.6 million based upon the count of
each type of license.
KDOR also estimates that the sales tax revenue would be $1.4 million in FY 2023 and
$2.84 million in FY 2024. Of these amounts, $1.2 million would be deposited into the State
General Fund and $0.2 million in the State Highway Fund in FY 2023. For FY 2024, the deposit
into the State General Fund would be $2.38 million and the State Highway Fund would be $0.5
million.
KDOR estimates that the administrative fiscal effect on expenditures would be $3,705,161
from the Medical Marijuana Business Entity Regulation Fund. These expenditures would include
$10,500 for information technology and $3,694,661 for salary and wages expenditures for 17.00
new FTE positions, contractual services and other costs.
KDA indicates the Medical Marijuana Cultivation Regulation Fund would include monies
collected from the payment of all fees. For the estimate, KDA used the maximum amount for fees
as stated in the bill. The bill provides that fees are allowed “up to” as certain maximum amount.
The estimated number of applications and licenses was projected based upon the current program
in Missouri and converted based upon the population difference of the two states. According to
Missouri information, 22,706 individuals required medical marijuana in 2019. Applying a
population conversion between the two states, approximately 12,350 individuals in Kansas would
require medical marijuana. At a rate of one half a pound per year per person and 0.6 pounds per
The Honorable John Barker, Chairperson
Page 3—HB 2184
square foot grown, a total space of a little over 65,000 square feet would be necessary to grow the
required crop. It is assumed that some applications would be denied in order to meet the necessary
square footage demand and, as a result, it is estimated that only five applicants in each category
would be licensed. The agency states that it is uncertain of the number of labs necessary to
complete medical marijuana testing, but for seven total licenses, one should be sufficient. The
estimated number of licenses at both cultivator license levels to meet that level of demand would
be:
Total
Type Square Feet Number Square Feet
Cultivator 1 25,000 2 50,000
Cultivator 2 3,000 5 15,000
Total 65,000
Based on the estimates of each type of licensee and application fee paid during the first
year of the program, KDA’s estimate for the Medical Marijuana Cultivation Regulation Fund is as
follows:
Medical Marijuana Cultivation Regulation Fund
Estimated
Count Fee Total
Cultivator 1 Application 4 $ 20,000 $ 80,000
Cultivator 1 License 2 180,000 360,000
Cultivator 2 Application 10 2,000 20,000
Cultivator 2 License 5 18,000 90,000
Laboratory Application 1 2,000 2,000
Laboratory License 1 18,000 18,000
Total $570,000
The result is an increase in revenue of $570,000 to be deposited into the Medical Marijuana
Cultivation Regulation Fund. However, the revenue would be offset by expenses incurred by
KDA. The agency estimates that the fiscal effect on expenditures would be $570,000 for FY 2022,
which would include 1.00 FTE position in the lab and 1.00 FTE positions in the program dealing
with cultivation of medical marijuana ($150,000); lab equipment ($250,000); information
technology costs ($50,000); vehicle costs ($41,000); administration costs ($30,000) and other costs
($49,000). The agency assumes the revenue would continue over time and expenses could be
reduced after the first year for one-time expenditures.
KDHE indicates that enactment of HB 2184 would have no fiscal effect on revenue for FY
2022, but the bill would increase revenue by $719,719 in FY 2023, $1.4 million in FY 2024, and
$2.9 million in FY 2025 which would be deposited into the Medical Marijuana Registration Fund.
However, the revenue would not be enough to fully fund program costs. As a result, KDHE
The Honorable John Barker, Chairperson
Page 4—HB 2184
estimates the bill would require additional expenditures from the State General Fund. The
expenditures are listed below:
KDHE Estimated Expenditures
FY 2021 FY 2022 FY 2023
FTE Expense FTE Expense FTE Expense
Salaries and Fringe 7.75 $113,495 12.5 $1,027,947 20.00 $1,527,216
Information Technology -- 3,500,000 1,500,000
Website -- 150,000 48,000
Advisory Committee -- 9,000 9,000
Other 37,220 266,897 301,681
Total $150,715 $4,953,844 $3,385,897
The Board of Healing Arts indicates that HB 2184 would require the agency to create a
new type of certificate for medical professionals. The agency assumes many, if not all, medical
professionals would apply for this certification. The agency would need $46,610 for additional
salary and fringe benefit and other expenses for a part-time paralegal position for FY 2022.
The Office of the State Treasurer indicates that HB 2184 would increase salary and fringe
benefit expenditures by $156,000 for 2.00 FTE Programmer positions to support the functions of
the closed-loop payment processing system and by $114,750 for 1.00 FTE General Counsel
position for FY 2022. The Office is unable to estimate how many accounts would be utilized nor
how many transactions may occur. However, previous research related to similar transactional
accounts indicated that each account would have a monthly maintenance fee estimated at $4 per
account per month. This amount could increase or decrease depending upon the total number of
transactions that occur per account each month.
The Kansas Bureau of Investigation (KBI) indicates that enactment of HB 2184 would
require the KBI Forensic Laboratory to develop additional capacity. KBI does not have validation
methods to quantitate above 0.03 percent THC. New methods and procedures would need to be
validated. KBI anticipates an increase in quantitative requests to the laboratory requiring
additional specialized equipment and the need for operational redundancy. To gain this capacity,
specialized analytical equipment and supplies would be required. The KBI estimates $182,718
from the State General Fund would be needed in FY 2022, including $15,547 for consumable costs
and $167,171 for capital costs. Any additional revenue received from the state and national
criminal history record check requests sent to the KBI would be offset by expenditures related to
staffing for and maintenance of required information technology systems and repositories
necessary for the maintenance and dissemination of criminal history record information.
The Office of Judicial Administration, the Board of Pharmacy and the League of Kansas
Municipalities indicate that the enactment of HB 2184 would have a fiscal effect on expenditures
for the respective entities; however, they are unable to determine a fiscal effect. The Office of the
The Honorable John Barker, Chairperson
Page 5—HB 2184
Attorney General and the Department of Corrections indicate the bill would have no fiscal effect
on the operations of their respective agencies. Any fiscal effect associated with HB 2184 is not
reflected in The FY 2022 Governor’s Budget Report.
Sincerely,
Adam Proffitt
Director of the Budget
cc: Lynn Robinson, Department of Revenue
Willie Prescott, Office of the Attorney General
Paul Weisgerber, KBI
Debbie Thomas, Judiciary
Dan Thimmesch, Health & Environment
Lauren Tice Miller, Office of the Treasurer
Kellen Liebsch, Agriculture
Connie Hubbell, Aging & Disability Services
Alexandra Blasi, Board of Pharmacy
Wendi Stark, League of Municipalities
Randy Bowman, Corrections
Statutes affected: As introduced: 21-5703, 21-5705, 21-5706, 21-5707, 21-5709, 21-5710, 23-3201, 38-2269, 44-501, 44-706, 44-1009, 44-1015, 65-1120, 65-28b08, 79-5201, 79-5210