LEGISLATIVE FISCAL OFFICE
Fiscal Note
Fiscal Note On: HB 707 HLS 24RS 738
Bill Text Version: ENGROSSED
Opp. Chamb. Action:
Proposed Amd.:
Sub. Bill For.:
Date: May 6, 2024 2:10 PM Author: JORDAN
Dept./Agy.: Health/Alcohol Tobacco Control/State Police
Subject: Cannabis Regulation Analyst: Richie Anderson
DRUGS EG INCREASE SG RV See Note Page 1 of 2
Provides relative to the regulation of cannabis
Proposed law authorizes the Department of Health (LDH) to create and issue cannabis production facility licenses valid for five years;
requires applicants and subcontractors to undergo finger printing and a state and national criminal background check; provides for annual
production facility license fee not to exceed $100,000; excludes therapeutic marijuana. Proposed law requires LDH to develop a $75
annual personal cultivation permit for individuals to cultivate and possess cannabis plants for personal use. Proposed law authorizes the
Commissioner of the Office of Alcohol and Tobacco Control (ATC) to issue retailer permits valid for two years; requires an initial retailer
permit fee up to $1,000 per year; establishes penalties for violations; qualification of retail applicants; limits cannabis retailers to sell up to
one ounce of cannabis to any individual per day.
EXPENDITURES 2024-25 2025-26 2026-27 2027-28 2028-29 5 -YEAR TOTAL
State Gen. Fd. INCREASE INCREASE INCREASE INCREASE INCREASE
Agy. Self-Gen. INCREASE INCREASE INCREASE INCREASE INCREASE
Ded./Other $0 $0 $0 $0 $0 $0
Federal Funds $0 $0 $0 $0 $0 $0
Local Funds SEE BELOW SEE BELOW SEE BELOW SEE BELOW SEE BELOW
Annual Total
REVENUES 2024-25 2025-26 2026-27 2027-28 2028-29 5 -YEAR TOTAL
State Gen. Fd. $0 $0 $0 $0 $0 $0
Agy. Self-Gen. INCREASE INCREASE INCREASE INCREASE INCREASE
Ded./Other $0 $0 $0 $0 $0 $0
Federal Funds $0 $0 $0 $0 $0 $0
Local Funds SEE BELOW SEE BELOW SEE BELOW SEE BELOW SEE BELOW
Annual Total
EXPENDITURE EXPLANATION
Proposed law will increase expenditures in FY 25 including the following estimates: the LA Department of Health (LDH) at $776,565 for the
licensing and regulation of cannabis production facilities; the Department of Revenue, Office of Alcohol and Tobacco Control (ATC) at
$689,696 for issuance and regulation of retailer permits; and the Office of State Police at $2.1 M. The proposed law may result in an
indeterminable expenditure increase for District Attorneys, and local governmental entities. Should SGR revenue collections related to
cannabis not fully fund the expenditures, SGF will be required.
LA Department of Health (LDH) - LDH estimates SGF expenditures will increase by $776,545 in FY 25. The proposed law requires LDH
to create and issue cannabis production facility licenses valid for five years. The LFO assumes facilities will be licensed and requires LDH to
immediately need staff, equipment, and vehicles to inspect, regulate, and test the product at facilities. To the extent any number of
production facilities are licensed, LDH anticipates needing 9 additional T.O. positions: one (1) Sanitarian 5 position, four (4) Sanitarian 4
positions, and (4) Administrator Coordinator 3 positions.
Continued on page 2
REVENUE EXPLANATION
There is potential for a significant increase in SGR revenues for LDH from the creation and licensing of cannabis production facilities. To
the extent any number of facilities are licensed, LDH will receive up to $100,000 in annual license fees for each production facility.
Additionally, the personal cultivation permits could generate revenue as each one will cost $75 per year; however, the potential number
that will seek these licenses and permits is unknown.
The proposed law will result in a significant increase in SGR revenues for the Office of Alcohol and Tobacco Control (ATC) from the
permitting of cannabis retailers. Similar to CBD permits, ATC estimates issuance of up to 1,000 retailer permits within the initial year, ATC
would receive $1 M (1,000 x $1,000) in initial license fees that they anticipate could increase up to $2 M (2,000 x $1,000) over the next
three fiscal years. However, the potential number of retailers that will seek permits is unknown.
Additionally, a fine of $100 to $500, or imprisonment of 30 days to 6 months, or both on a person convicted of selling cannabis without a
retailer permit could generate revenue that would accrue to local government entities. The number of individuals who may be convicted of
selling cannabis without a retailer permit is speculative and indeterminable.
Senate Dual Referral Rules House
x 13.5.1 >= $100,000 Annual Fiscal Cost {S & H} x 6.8(F)(1) >= $100,000 SGF Fiscal Cost {H & S}
Patrice Thomas
x 13.5.2 >= $500,000 Annual Tax or Fee 6.8(G) >= $500,000 Tax or Fee Increase
Change {S & H} or a Net Fee Decrease {S} Deputy Fiscal Officer
 LEGISLATIVE FISCAL OFFICE
Fiscal Note
Fiscal Note On: HB 707 HLS 24RS 738
Bill Text Version: ENGROSSED
Opp. Chamb. Action:
Proposed Amd.:
Sub. Bill For.:
Date: May 6, 2024 2:10 PM Author: JORDAN
Dept./Agy.: Health/Alcohol Tobacco Control/State Police
Subject: Cannabis Regulation Analyst: Richie Anderson
CONTINUED EXPLANATION from page one: Page 2 of 2
LA Department of Health (LDH) - The total FY 25 cost estimate includes nine months of salaries ($399,392) and related benefits
($199,697) for the nine positions, operating services ($101,862) for travel and sample testing costs, one-time equipment costs ($25,614),
and one time professional services ($50,000) for the development of an application for handling processes and payments associated with
the new personal-use program in FY 25; costs for equipment and professional services are anticipated to decrease in future fiscal years as
seen in the chart below. In subsequent fiscal years, this fiscal note assumes a 3% market rate adjustment in personal services for
classified staff as seen in the chart below. The LFO anticipates that LDH will use the revenues from licensing cannabis production facilities
to partially cover its anticipated costs. However, the department estimates revenues will not be sufficient to fully cover these expenditures
and it will require an additional appropriation of SGF. The LFO cannot corroborate the needs outlined by LDH. To the extent the additional
workload is less than what LDH anticipates, the additional workload may be absorbable, either wholly or partially, using existing staff and
resources or may be achievable with fewer positions.
FY 25 FY 26 FY 27 FY 28 FY 29
Personal services* $599,089 $822,749 $847,431 $872,854 $899,040
Operating services $101,862 $184,524 $184,524 $184,524 $184,524
Professional services $50,000 $10,000 $10,000 $10,000 $10,000
Equipment $25,614 $4,500 $4,500 $19,908 $14,454
Total LDH $776,565 $1,021,773 $1,046,455 $1,087,286 $1,108,018
LA Department of Revenue (LDR), Office of Alcohol and Tobacco Control (ATC) - ATC estimates SGR expenditures will increase by
$689,696 in FY 25. The proposed law requires ATC to issue cannabis retailer permits. The LFO assumes retailers will be permitted and
requires the ATC to immediately need staff, equipment, and vehicles to issue permits. To the extent any number of retailers are permitted,
ATC anticipates needing nineteen (19) positions for the administration and enforcement of cannabis retailers including: eight (8) ATC
Agents ($540,584), eight (8) Administrative Coordinator positions ($263,936), two (2) Attorneys ($179,418), and one (1) Director
($84,581) for a total annual personal services cost of $1 M once all positions have been filled in FY 28. ATC plans to stagger hiring over
the next four fiscal years beginning with 11 positions in FY 25, 16 in FY 26, 17 in FY 27, and 19 in FY 28. In FY 25, only six months of
expenditures are anticipated for salaries and related benefits. In subsequent fiscal years, this fiscal note assumes a 3% market rate
adjustment in salaries and related benefits for ATC staff (total expenditures of $849,518 in FY 26, $973,927 in FY 27, $1 M in FY 28 and
FY 29). ATC also estimates various costs for operating expenses, including travel and supplies, professional services, and equipment costs,
presented in the table below. The LFO cannot corroborate the needs outlined by ATC. To the extent the additional workload is less than
what ATC anticipates, the additional workload may be absorbable, either wholly or partially, using existing staff and resources or may be
achievable with fewer positions. To the extent these costs are not fully funded by permit revenues, additional resources may be needed.
FY 25 FY 26 FY 27 FY 28 FY 29
Personal services* $325,741 $787,192 $912,601 $1,037,398 $1,068,520
Operating services $0 $0 $0 $0 $0
Professional services $5,000 $2,500 $1,500 $0 $0
Equipment $358,955 $59,826 $59,826 $59,826 $0
Total ATC $689,696 $849,518 $973,927 $1,097,224 $1,068,520
Department of Public Safety and Corrections, Office of State Police (OSP) - Based on the experience of other states with legalized
recreational marijuana, OSP anticipates that legalizing the sale of cannabis at retail locations will have a significant indirect impact on lab
expenses associated with testing impaired drivers for THC and testing the components of products found at illegal marijuana retailers and
manufacturers. In FY 25, only six months of expenditures are anticipated for personal services and operating services. Public Safety
anticipates needing four (4) Crime Lab Analysts positions ($424,337 salary and related benefits) as well as operating services ($1 M), lab
supplies ($42,928), one-time acquisition of lab equipment ($1.1 M), and telephone and data services ($3,960). In subsequent fiscal years,
this fiscal note assumes a 2.6% market rate adjustment in salaries and related benefits for staff. Annual expenditures will total
approximately $1.5 M for future fiscal years as seen in the table below. The LFO cannot corroborate that the provisions in the proposed
law will result in an indirect expenditure exposure of this magnitude.
FY 25 FY 26 FY 27 FY 28 FY 29
Personal services* $424,337 $435,546 $447,092 $458,984 $471,233
Operating services $490,556 $981,112 $981,112 $981,112 $981,112
Supplies $42,928 $42,928 $42,928 $42,928 $42,928
Equipment $1,094,517 $0 $0 $0 $0
IAT to OTS $3,960 $3,960 $3,960 $3,960 $3,960
Total OSP $2,056,298 $1,463,546 $1,475,092 $1,486,984 $1,499,233
Louisiana District Attorneys Association (LDAA) - The proposed law may result in an indeterminable expenditure increase for District
Attorneys as it creates penalties ranging from misdemeanor to felony for a violation of the retailer permit requirements. LDAA reports that
it cannot estimate the fiscal impact because it is unable to determine the number of these cases that would be charged.
Local Governmental Entities - The proposed law may result in an indeterminable increase in Local Funds expenditure if a person is
convicted of selling cannabis without a retailer permit and housed in local jails. The imprisonment term is at least 30 days to a maximum
of 6 months for this misdemeanor offense.
*NOTE: LDH and ATC estimate personal services costs to increase by 3% annually. DPSC estimates personal services costs to increase by
2.6% annually.
Senate Dual Referral Rules House
x 13.5.1 >= $100,000 Annual Fiscal Cost {S & H} x 6.8(F)(1) >= $100,000 SGF Fiscal Cost {H & S}
Patrice Thomas
x 13.5.2 >= $500,000 Annual Tax or Fee 6.8(G) >= $500,000 Tax or Fee Increase
Change {S & H} or a Net Fee Decrease {S} Deputy Fiscal Officer