OFFICE OF FISCAL ANALYSIS

Legislative Office Building, Room 5200

Hartford, CT 06106 (860) 240-0200

http://www.cga.ct.gov/ofa

sHB-5450

AN ACT CONCERNING THE PALLIATIVE USE OF MARIJUANA.

AMENDMENT

LCO No.: 4348

File Copy No.: 486

House Calendar No.: 307

OFA Fiscal Note

State Impact:

Agency Affected

Fund-Effect

FY 17 $

FY 18 $

Consumer Protection, Dept.; Comptroller Misc. Accounts (Fringe Benefits)1

GF - Cost

3.6 million

14.38 million

Resources of the General Fund

GF - Revenue Gain

27.757 million

103.65 million

Note: GF=General Fund

Municipal Impact: None

Explanation

The amendment results in a revenue gain to the state by permitting the production, processing and retail sale of marijuana for recreational use.

The table below shows the estimated revenue gain to the state by each tax listed within the amendment. This analysis assumes regulations are completed and sales begin on April 1, 2017. The FY 18 estimate is the annualized revenue estimate of the policy.2

To the extent that regulations take longer to complete, there may be a delay in the revenue gains indicated below. 

Tax

Rate

FY 17

FY 18

Wholesale Excise Tax

25.0%

               10,000,000

           40,000,000

Sales Tax

6.35%

                  3,175,000

           12,700,000

Retail Excise Tax

25.0%

               12,500,000

           50,000,000

 

Total

               25,675,000

         102,700,000

Licensing Fees

The amendment also includes a $3,000 application fee and a $1,500 renewal fee for a production, processing, or retailer license. This will result in a revenue gain, dependent upon the number of licenses granted.

Assuming Connecticut experiences the same number of licensures as Washington State, relative to population levels, the fee revenue generated would be up to $1.9 million to the state in FY 17 and $950,000 in FY 18.

Costs

The bill results in a cost to the state of $3.6 million in FY 17 and $14.38 million in FY 18 for regulatory staff within the Department of Consumer Protection. These costs include salaries, fringe benefits, equipment (computers, vehicles and other office supplies) and other expenses. It is estimated that regulatory costs will be approximately 14% of the total tax revenues each year.

The preceding Fiscal Impact statement is prepared for the benefit of the members of the General Assembly, solely for the purposes of information, summarization and explanation and does not represent the intent of the General Assembly or either chamber thereof for any purpose. In general, fiscal impacts are based upon a variety of informational sources, including the analyst's professional knowledge. Whenever applicable, agency data is consulted as part of the analysis, however final products do not necessarily reflect an assessment from any specific department.

1 The 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 39.94% of payroll in FY 17 and FY 18.

2 It should be noted that other states that have legalized recreational marijuana (e.g. Colorado and Washington) have seen strong growth in revenue collections in the second and third years of enactment.

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