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


May 13, 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 2436 by House Committee on Federal and State Affairs
In accordance with KSA 75-3715a, the following fiscal note concerning HB 2436 is
respectfully submitted to your committee.
HB 2436 would establish the Kansas Medical Marijuana Regulation Act, which would
make legal certain marijuana products for medical use. The bill would also establish the Kansas
Innovative Solutions for Affordable Healthcare Act, which would expand Medicaid in Kansas.
Kansas Medical Marijuana Regulation Act
The bill would permit the growing, harvesting, processing, dispensing and use of certain
forms of marijuana under specific conditions. Medical marijuana would include oils, tinctures,
plant material, edibles, patches, or any other form approved by Kansas Department of Health and
Environment (KDHE). The bill would prohibit the smoking or vaporization of medical marijuana.
The bill would establish the Kansas Medical Marijuana Regulation Program. Under the Program,
KDHE would provide for the registration of patients and caregivers and the Division of Alcoholic
Beverage Control in the Department of Revenue would license cultivators, laboratories,
processors, distributors, and retail dispensaries. HB 2436 would take effect upon its publication
in the Kansas Register, however, most of the provisions in the Kansas Medical Marijuana
Regulation Act would become effective July 1, 2023, or FY 2024.
The bill would establish the Medical Marijuana Advisory Committee, which would include
13 members appointed by the Governor and Legislature. The Committee would consist of
members from the medical cannabis industry, healthcare, law enforcement, academic research,
and behavioral sciences. The Committee would also include a patient and the Secretary of Health
and Environment or the Secretary’s designee. The initial appointments to the Committee would
be made on or before July 31, 2021. The Committee would be required to develop policies and
procedures for the review, approval, and denial of petitions for approval of qualifying medical
The Honorable John Barker, Chairperson
Page 2—HB 2436

conditions. The Committee would also make recommendations to KDHE and the Division of
Alcoholic Beverage Control regarding offenses that would disqualify an applicant from
registration or licensure. Any person may submit a petition to the Committee requesting that a
disease or condition be added as a qualifying medical condition. Any person may submit a petition
to the Division of Alcoholic Beverage Control requesting that a form or method of using medical
marijuana be approved. The Division could consult the Committee regarding the petitions for
approval of other forms of medical marijuana.
Patients or caregivers, or physicians acting on the patient’s or caregiver’s behalf, must
apply to KDHE for registration. The bill includes the requirements of and procedures for applying
for registration. Information collected by KDHE would be confidential until July 1, 2026, unless
an extension is enacted by the Legislature. The maximum fees for initial registration or renewal
would be $50 for a patient registration, or $25 if the patient is indigent or a veteran, and $25 for a
caregiver registration. Registrations would be valid for one year. KDHE would assign a unique
identification number to each registered patient and caregiver. Registered patients or caregivers
would be allowed to possess a maximum of a 90-day supply of medical marijuana and any
approved paraphernalia. KDHE would be required to adopt rules and regulations to administer
the Kansas Medical Marijuana Regulation Act. KDHE would be authorized to enter into
reciprocity agreements with other states.
The bill would establish the Medical Marijuana Registration Fund, which would be
financed from all fees and fines imposed and collected by KDHE. Monies in the fund would be
used for the payment or reimbursement of costs related to KDHE’s regulation and enforcement of
the possession and use of medical marijuana.
Physicians wishing to recommend treatment with medical marijuana must apply to the
Board of Healing Arts for certification. The bill lists the requirements of certification. The Board
of Healing Arts would be required to adopt rules and regulations regarding certification on or
before July 1, 2023.
Cultivators, processors or distributors of medical marijuana or individuals wishing to
conduct laboratory testing of medical marijuana must apply to the Division of Alcoholic Beverage
Control for a license. Each applicant for a cultivator license, laboratory license, processor license,
distributor license or retail dispensary license would be subject to a criminal history check by the
Kansas Bureau of Investigation. The bill includes the requirements for licensure. A license would
be valid for one year. The bill includes the requirements of a cultivator licensee, processor
licensee, distributor licensee, laboratory licensee and retail dispensary licensee. The bill would
establish the following license fees:
Fee Description Maximum Fee
Level I Cultivator License Application Fee $20,000
Level I Cultivator License Fee $180,000
Level I Cultivator License Renewal Fee $200,000
Level II Cultivator License Application Fee $2,000
Level II Cultivator License Fee $18,000
The Honorable John Barker, Chairperson
Page 3—HB 2436

Level II Cultivator License Renewal Fee $20,000
Laboratory License Application Fee $2,000
Laboratory License Fee $18,000
Laboratory License Renewal Fee $20,000
Processor License Application Fee $10,000
Processor License Fee $90,000
Processor License Renewal Fee $100,000
Distributor License Application Fee $10,000
Distributor License Fee $90,000
Distributor License Renewal Fee $100,000
Retail Dispensary License Application Fee $5,000
Retail Dispensary License Renewal Fee $70,000
Associated Employee License Application Fee $500 for each employee
Key Employee License Application Fee $250 for each employee
Support Employee License Application Fee $100 for each employee
The fees would take effect on and after July 1, 2023. Monies collected from fees and fines
would be deposited into the Medical Marijuana Business Entity Regulation Fund, which would be
a new fund created by the bill. Monies in the fund could be used for the payment or reimbursement
of Division of Alcoholic Beverage Control costs for the regulation and enforcement of the Kansas
Medical Marijuana Regulation Act. The monies could also be used to cover the cost of Medicaid
expansion.
The Division of Alcoholic Beverage Control may revoke or suspend a license or issue civil
penalties for certain violations of the Act. The Department of Revenue would be required to adopt
rules and regulations to administer the Kansas Medical Marijuana Regulation Program and
implement the provisions of the Kansas Medical Marijuana Regulation Act on or before July 1,
2023. The Division of Alcoholic Beverage Control would also be required to create a database to
monitor medical marijuana products through the entire supply chain and each distribution channel.
The Division of Alcoholic Beverage Control, in cooperation with the State Treasurer, could create
a closed-loop payment processing system.
Financial institutions that provide services to any licensed cultivator, laboratory, processor,
distributor, or retail dispensary would be exempt from any criminal law of the state. Persons who
consume medical marijuana cannot be denied housing, employment, workers compensation
benefits, 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 Kansas Medical Marijuana
Regulation Act would not be subject to criminal prosecution or be subject to revocation of a
medical or medically related professional license.
Kansas Innovative Solutions for Affordable Healthcare Act
HB 2436 would establish the Kansas Innovative Solutions for Affordable Healthcare Act
to expand eligibility of medical assistance benefits. The Kansas Department of Health and
Environment would be required to submit to the U.S. Centers for Medicare and Medicaid Services
The Honorable John Barker, Chairperson
Page 4—HB 2436

(CMS) any state plan amendment, waiver request or other approval request to implement the Act.
Upon approval from CMS, Medicaid services would be expanded on or after January 1, 2022 to
any adult applicants under 65 years of age who are not pregnant and whose income does not exceed
138.0 percent of the federal poverty level (FPL) to the extent allowed under the federal Social
Security Act and subject to the 90.0 percent Federal Medical Assistance Percentage (FMAP) for
Medicaid expansion. If at any point the FMAP becomes lower than 90.0 percent, KDHE must
terminate coverage under the Act over a 12-month period beginning on the first day the percentage
becomes lower than 90.0 percent. On or before January 9, 2024, and on or before the first day of
the regular session of the Legislature in each subsequent year, KDHE must submit a report on the
cost savings from the movement of certain covered individuals to the expansion population and
the higher FMAP rate.
The bill would require a $25 monthly fee to be charged to each person enrolled in the
program, not to exceed $100 per month per family. KDHE could grant hardship exemptions, as
determined by the Secretary of Health and Environment. The state’s share of revenue collected
from the monthly fee would be credited to the State General Fund. KDHE would be allowed to
use the Debt Setoff Program administered by the Department of Administration for any covered
individual who is delinquent by 60 days or more. Also, KDHE could require managed care
organizations to collect the monthly fee. KDHE would be required to submit a report to the
Legislature in January of each year on the monthly fees collected.
KDHE would be authorized to establish a health insurance coverage premium assistance
program for individuals whose income is greater than 100.0 percent FPL but does not exceed 138.0
percent FPL who are eligible for employer health insurance coverage but cannot afford the
premiums. An individual’s payment for a health insurance coverage premium cannot exceed 2.0
percent of the individual’s modified adjusted gross annual income. Also, total premium payments
cannot exceed 2.0 percent of a household’s modified adjusted gross income for all members of the
household who participate in the premium assistance program.
The bill would require KDHE to refer all non-disabled adults receiving benefits from the
Kansas Innovative Solutions for Affordable Healthcare Act and who are unemployed or working
less than 20 hour a week to the KANSASWORKS program administered by the Department of
Commerce. The Department of Commerce would be required to track employment outcomes for
Medicaid expansion participants. Full-time postsecondary education institution or technical
school students would be exempt from the referral program. KDHE and the Department of
Commerce would be required to submit a report annually to the Legislature.
The bill would create the Medicaid Expansion Privilege Fee Fund in the state treasury.
Privilege fee revenues connected to Medicaid expansion members would be deposited in the new
fund and could only be spent on assistance payments for members. On or before January 9, 2024,
and on or before the first day of the Legislative Session of each subsequent year, KDHE would be
required to submit a report on revenues and expenditures of the Medicaid Expansion Privilege Fee
Fund.
The Honorable John Barker, Chairperson
Page 5—HB 2436

All revenues from drug rebates associated with current and expanded medical assistance
members would be credited to the State General Fund. Under current law, revenues from drug
rebates are remitted to the Medical Programs Fee Fund in KDHE. KDHE would be required to
certify to the Director of Legislative Research and the Director of the Budget the amount of monies
received from drug rebates. “Drug rebates” would be added as a separate line on State General
Fund receipt reports produced by the Legislative Research Department and the Division of the
Budget.
The bill would create the Federal Medical Assistance Percentage Stabilization Fund. The
fund would be financed by any monies recovered by the Office of the Attorney General on behalf
of Kansas in the civil action Texas v. Rettig. If the state’s share of Medicaid costs increases as a
result of a change to the FMAP, funds would be transferred from the Federal Medical Assistance
Percentage Stabilization Fund to the State General Fund to cover the costs. If the state’s share of
Medicaid costs decreases because of a FMAP change, funds would be transferred from the State
General Fund to the Federal Medical Assistance Percentage Stabilization Fund. The Director of
Legislative Research and the Director of the Budget must certify any Medicaid cost increases or
decreases. KDHE would be required to submit a report to the Legislature each September that
details Federal Medical Assistance Percentage Stabilization Fund expenditures and transfers.
HB 2436 would require the Department of Corrections to coordinate with county sheriffs
who request assistance in facilitating Medicaid coverage for any state or county inmate
incarcerated in a Kansas prison or jail. The Department of Corrections would be required to submit
a report to the Legislature identifying any cost savings to the state from Medicaid reimbursements
for inmate inpatient hospitalization.
The bill would require Legislative Post Audit to conduct an audit of the direct economic
impact of the Kansas Innovative Solutions for Affordable Healthcare Act on the State General
Fund. Also, KDHE would be required to submit a report to the House Committee on
Appropriations and the Senate Committee on Ways and Means that summarizes the costs, cost
savings and additional revenues from the Act.
The bill would create the Rural Hospital Advisory Committee to manage the new Rural
Hospital Transformation Program. The advisory committee would include KDHE; the
Department of Labor; the Board of Regents; the Kansas Hospital Association; the Kansas Medical
Society; the Community Care Network of Kansas; the Association of Community Mental Health
Centers of Kansas; the Board of Healing Arts; the Kansas Farm Bureau; the Emergency Medical
Services Board; and other public and private stakeholders. The advisory committee would identify
one or more consulting firms to work with target hospitals, as defined in the bill, to develop
transformation plans as part of a Rural Primary Health Center Pilot Initiative.
The Kansas Insurance Department would be required to study and prepare a report on any
risks associated with converting the health benefit exchange operated in Kansas under the federal
Patient Protection and Affordable Care Act from a federally facilitated exchange to a state-based
exchange. The study must be submitted to the Legislature on or before January 10, 2022. The bill
would authorize the Kansas Insurance Department to make expenditures from the Insurance
The Honorable John Barker, Chairperson
Page 6—HB 2436

Department Service Regulation Fund for FY 2022 and FY 2023 for costs related to conducting the
study and preparing the report. Additionally, the Kansas Insurance Department would be required
to submit a report to the Legislature on or before January 9, 2023, and each subsequent year
detailing any cost shifting from hospitals to commercial health plans as a result of implementation
of the Kansas Innovative Solutions for Affordable Healthcare Act.
KDHE, in coordination with the Kansas Hospital Association, Kansas Medical Society,
Community Care Network of Kansas and other private and public stakeholders, would be required
to establish a task force to develop a plan to measure and report uncompensated care provided by
healthcare providers and hospitals in Kansas. A report must be submitted to the Legislature on or
before January 9, 2023, and each subsequent year.
The bill would authorize KDHE to make expenditures from the State General Fund or any
special revenue fund for FY 2021 and FY 2022 to submit a waiver request to CMS to allow for
Medicaid reimbursement for inpatient psychiatric acute care.
During calendar year 2022 and calendar year 2023, the Robert G. (Bob) Bethell Joint
Committee on Home and Community Based Serv