FISCAL NOTE
Date Requested: January 15, 2026
Time Requested: 04:33 PM |
| Agency: |
Health, WV Department of |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1896 |
Introduced |
HB4371 |
|
|---|
| CBD Subject: |
Health; Taxation |
|---|
|
FUND(S):
N/A
Sources of Revenue:
General Fund Special
Legislation creates:
Creates New Program, Creates New Fund:
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
The purpose of this bill is to legalize the personal use and possession of cannabis by adults; providing for a county option election to allow for the production and sales in that county; providing for regulation by the Bureau of Health; authorizing an excise and local sales tax on cannabis; prohibiting underage use; and preserving current laws relating to allowing employers and property owners to prohibit use or possession.
This legislation, if passed, will require the creation of a new program within the Department's Office of Medical Cannabis (OMC). It will operate alongside the Medical Cannabis Program and function under the direction of the OMC director. Management, legal, financial, and clerical support for the Medical Cannabis Program will also provide services for this new program at no additional cost. This new program will require new positions; field investigators to perform onsite inspections of facilities and Administrative Services Assistants to review applications, issue licenses, and ensure compliance.
According to the New Jersey Cannabis Regulatory Commission's 2022/2023 Adult Use Annual Report (https://www.nj.gov/cannabis/documents/reports/NJCRC_2022-2023_AU_AnnualReport_FINAL.pdf), NJ received 2,461 Adult Use cannabis license applications in its first full year of Adult Use legalization, of which 1,695 licenses were approved. This is in addition to its already existing Medical Cannabis licensure issuance process.
Assumptions must be made in order to estimate revenue should this proposed legislation pass. The unpredictability of the county opt-in referendum process makes permits applications difficult to project, but based on 2025 U.S. Census Bureau population data, if WV is examined proportionally against the statistics for NJ cited above, the Department estimates it could expect to receive ~425 applications to operate Recreational Cannabis establishments (cultivation, testing, manufacturing, and retail) and issue ~335 permits. The Department anticipates that approximately 20 of the applications to operate a Recreational Cannabis establishment received will be from Medical Cannabis facility applicants.
The Department estimates fiscal impact would be approximately $711,233 the first year and $647,869 upon full implementation in FY2029. This legislation is estimated to generate revenue of $2,130,000 the first year and $3,185,000 million upon full implementation.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2026
Increase/Decrease
(use"-") |
2027
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
711,233 |
647,869 |
| Personal Services |
0 |
602,661 |
602,661 |
| Current Expenses |
0 |
108,572 |
45,208 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
2,130,000 |
3,185,000 |
Explanation of above estimates (including long-range effect):
Estimated Personal Services costs for SFY2027 and ongoing is $602,661 and include salaries and employee benefits. Salaries, totaling $446,416 include 2.00 FTEs Administrative Services Assistant 3 positions at $115,814 (2.00 FTEs x $57,907) to review applications and issue and renew licenses; 4.00 FTEs Field Investigators, similar to the classification of an Environmental Inspector at $255,480 (4.00 FTEs x $63,870) to perform onsite inspections across the State; and 1.00 FTE Investigator Supervisor, similar to the classification of an Environmental Inspector Supervisor at $75,122 to train and supervise field staff. Employee Benefits are estimated at $156,245 ($446,416 x 35%).
Estimated Current Expense cost for SFY2027 is $108,572; SFY2028 is $45,208; and upon full implementation in SFY2029 is $63,100 and includes landline telephone service at $4,200 ($50 per month x 12 months x 7.00 FTEs); cell/smart phone service at $3,900 ($65 per month x 12 months x 5 cell/smart phones); iPad service at $3,600 ($60 per month x 12 months x 5 iPads); office supplies at $700 ($100 per FTE x 7.00 FTEs); dedicated fax line at $600 ($50 per month x 12 months); office space rental for field investigators positioned regionally across the State at $14,400 ($300 per month x 12 months x 4 Inspectors); and in-state travel for performing onsite inspections of cultivation, manufacturing, testing, and retail establishments at $17,892 (150 miles per inspection trip x $0.56 per mile x 213 inspections). One-time costs for SFY2027 are $63,280 and include $50,000 for modifications to the WV Cannabis system to include personal use cannabis; computer equipment, warranty, and monitors at $9,345 ($1,335 x 7.00 FTE's); iPad at $1,500 ($300 x 5 iPads); cell/smart phone at $285 ($57 x 5 cell/smart phones); fax machine at $400; network printer at $500; desktop printers at $1,250 ($250 x 5 desktop printers). Upon full implementation in SFY2029, there will be 425 licensed establishments (213 licensed in FY2027 + 212 licensed in FY2028) to be inspected at $35,700 (150 miles per inspection trip x $0.56 per mile x 425 inspections).
Assuming that each establishment is required to submit an application and pay the $5,000 application fee reflected in this proposed legislation regardless of the number of facilities or stores the establishment owns and operates and the Department receives one-half (213) of the 425 applications in FY2027 and the remaining 212 in FY2028, revenue from application fees would be $1,075,000 in FY2027 ($5,000 application fee x 213 applications from new applicants, plus $500 x 20 applications from existing Medical Cannabis applicants) and $1,075,000 in FY2028 ($5,000 x 212 applications from new applicants, plus $500 x 30 applications from existing Medical Cannabis applicants). As per §16A-17-6(d)(2) of the proposed legislation, the Department is interpreting that 50% of application fees collected are to be retained by the Department with the remaining 50% to be distributed to the counties and municipalities in which the applicants desire to operate. The Department would retain $537,500 in FY2027 and $537,500 in FY2028. As per §16A-17-7 of the bill, no revenue from excise and sales taxes will be available for Cannabis program operations.
License terms, license fees, and renewal license fees are either absent or unclear in this proposed legislation. The Department is presuming that a separate initial license fee can be established, as outlined for Medical Cannabis permits, with a license term of one year that is renewable annually. The initial license fee would be $10,000, with renewal license fees at $5,000. Assuming that the Medical Cannabis one year term and license fee schedule applies under this legislation and the Bureau issues one-half (213) of the estimated 425 initial licenses in FY2027 and the remaining 212 in FY2028, revenue from initial license fees would be $2,130,000 in FY2027 and $3,185,000 in FY2028 (which would also include the 213 one year renewals @ $5,000 each from prior year) if the license fee is determined to be non-refundable with the Cannabis Program retaining 100%.
Memorandum
It is important to note that should HB4371 become effective, it will have a negative effect on the Medical Cannabis Program activities and revenue. The application fee under this proposed legislation is $5,000 versus the Medical Cannabis application fee of $50,000.
A required application fee of $5,000 is included in HB4371, but license and renewal license fees are not reflected in this proposed legislation. Additionally, it is unclear if fees are refundable or non-refundable which could greatly impact revenue collections.
It is unclear in HB4371 if an establishment that owns and operates multiple facilities or stores will be required to pay one fee (application or license) that covers all of its facilities or stores or if the intent of this legislation is to require a separate fee for each facility or store.
A technical defect occurs in the bill, in that §16A-17-7(c) specifies collection of a local sales tax of 6%, whereas the county referendum language laid out in §16A-17-4 specifies ballot language that speaks to a 5% local sales tax.
This proposed legislation requires the Department to adopt legislative rules necessary for implementation of HB4371 no later than July 1, 2027 and begin accepting and processing applications by October 1, 2027. Should HB4371 pass and become effective upon passage, it is likely that this new program would start prior to funds being available to hire staff and before Rules can be written. It is important to note that the Department will need time to write rules and hire staff to create and develop this new program before any applications can be accepted or processed.
Person submitting Fiscal Note: Alex J Mayer, Cabinet Secretary
Email Address: OSAfiscalnotes@wv.gov