FISCAL NOTE
Date Requested: January 20, 2026
Time Requested: 04:53 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 2759 |
Introduced |
SB534 |
|
|---|
| CBD Subject: |
Agriculture; Alcoholic Liquors and Beers; Taxation |
|---|
|
FUND(S):
Agricultural Fees Fund, Kratom Licensure Fund, Fight Substance Abuse Fund, Kratom Consumer Protection Fund
Sources of Revenue:
Special Fund
Legislation creates:
Creates New Revenue, Creates New Expense, Increases Existing Expenses, Creates New Program, Creates New Fund: Kratom Consumer Protection Fund
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
The stated purpose of this bill is to create the West Virginia Kratom Consumer Protection Act and establish the Kratom Consumer Protection Fund under the jurisdiction of the Tax Department.
Under the current law, there is a tax levied on kratom at a rate of 11 percent of the retail sales price and all funds collected are deposited into the Agricultural Fees Fund. Funds are then distributed as follows: 65 percent remain in the Agricultural Fees Fund; 5 percent are transferred to the Fight Substance Abuse Fund; 30 percent are deposited into the Alcohol Beverage Control Enforcement Fund. During the first 28 months of the current law regulating kratom sales, there were $6.1 million of revenue collections from taxes and fees. The first fiscal year of available data was FY2025 and revenue collections for that period totaled $2.4 million.
This bill would create the West Virginia Kratom Consumer Protection Act and establish a new fund to be administered by the West Virginia Tax Division. Proceeds to the newly established Kratom Consumer Protection Fund would be distributed as follows: 65 percent of funds collected by the taxes imposed by this article would stay in the Kratom Licensure Fund; 5 percent of the funds would transfer to the Fight Substance Abuse Fund; and 30 percent of the funds would be distributed to the Agricultural Fees Fund. The Tax Commissioner would be responsible for permitting manufacturers, distributors, and sellers of kratom products in the state. Additionally, the Tax Commissioner would be tasked with collecting application fees and taxes on the sale of kratom products.
According to the West Virginia Department of Agriculture’s most recent annual report, there were 1,669 registered hemp and kratom retailers in West Virginia that generated approximately $720,000 in revenue during fiscal year 2024. This bill would impose a one-time application fee of $1,500 for each retailer and an annual licensure fee of $300 as well as a privilege tax equal to 11 percent of retail sales of kratom products to be collected on a quarterly basis. According to our interpretation, there would be no revenue impact from the passage of this bill. The 11 percent tax is already collected, and there is no change in the fee structure. The provisions of this bill would only change the distribution formula relating to proceeds from existing tax program.
Additional administrative costs incurred by the State Tax Division would be $147,750 in FY2026 and $90,000 in subsequent fiscal years.
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 |
147,750 |
90,000 |
90,000 |
| Personal Services |
90,000 |
90,000 |
90,000 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
1,650 |
0 |
0 |
| Other |
56,100 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
Under the current law, there is a tax levied on kratom at a rate of 11 percent of the retail sales price and all funds collected are deposited into the Agricultural Fees Fund. Funds are then distributed as follows: 65 percent remain in the Agricultural Fees Fund; 5 percent are transferred to the Fight Substance Abuse Fund; 30 percent are deposited into the Alcohol Beverage Control Enforcement Fund. During the first 28 months of the current law regulating kratom sales, there were $6.1 million of revenue collections from taxes and fees. The first fiscal year of available data was FY2025 and revenue collections for that period totaled $2.4 million.
This bill would create the West Virginia Kratom Consumer Protection Act and establish a new fund to be administered by the West Virginia Tax Division. Proceeds to the newly established Kratom Consumer Protection Fund would be distributed as follows: 65 percent of funds collected by the taxes imposed by this article would stay in the Kratom Licensure Fund; 5 percent of the funds would transfer to the Fight Substance Abuse Fund; and 30 percent of the funds would be distributed to the Agricultural Fees Fund. The Tax Commissioner would be responsible for permitting manufacturers, distributors, and sellers of kratom products in the state. Additionally, the Tax Commissioner would be tasked with collecting application fees and taxes on the sale of kratom products.
According to the West Virginia Department of Agriculture’s most recent annual report, there were 1,669 registered hemp and kratom retailers in West Virginia that generated approximately $720,000 in revenue during fiscal year 2024. This bill would impose a one-time application fee of $1,500 for each retailer and an annual licensure fee of $300 as well as a privilege tax equal to 11 percent of retail sales of kratom products to be collected on a quarterly basis. According to our interpretation, there would be no revenue impact from the passage of this bill. The 11 percent tax is already collected, and there is no change in the fee structure. The provisions of this bill would only change the distribution formula relating to proceeds from existing tax program.
Additional administrative costs incurred by the State Tax Division would be $147,750 in FY2026 and $90,000 in subsequent fiscal years.
Memorandum
Person submitting Fiscal Note: Mark Muchow
Email Address: RADfiscal@wv.gov