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Indiana lawmakers haven’t advanced efforts to legalize marijuana this year, but they are still considering legislation to regulate and tax low-THC products.
Republican Sens. Travis Holdman and Chris Garten authored Senate Bill 478. The legislation would create a three-tiered permitting system for retailing, distributing and manufacturing of both low-THC hemp products and hemp flower. On Wednesday, lawmakers on the House Ways and Means Committee voted to add a 15% excise tax to the mix.
The legislation moves to the full House for consideration.
Holdman said it was his fourth year working on the legislation, which aims to regulate sales of hemp products legalized under the 2018 Farm Bill. The bill largely applies the same restrictions that currently apply to alcohol to THC products. For example, retailers cannot sell products to customers under the age of 21.
Indiana code defines “low-THC hemp products” as those with less than 0.3% of delta-9 concentration by weight. Lawmakers also seek in the legislation to regulate hemp flower, which is the harvested reproductive organ of the female hemp plant. THC, short for tetrahydrocannabinol, is the primary active ingredient in marijuana and is responsible for its intoxicating effect. Delta-9 is the primary form of THC found in the cannabis plant.
The Indiana Alcohol Tobacco Commission worked with lawmakers to craft the nearly 90-page bill. If it passes into law, the commission would be charged with overseeing permitting, enforcement, and reviewing packaging and advertisements.
Chris Serak, the executive secretary of the commission, agreed with lawmakers on Wednesday in calling current THC sales “the Wild West.” The products are being sold, though, and the commission currently does not have regulations. He said that is the impetus for the agency’s involvement.
With a 15% tax on top of Indiana sales tax at 7%, the legislation would effectively mean a 22% tax on THC products. Lawmakers, including House sponsor Rep. Jake Teshka, R-North Liberty, said the tax level might drive Hoosiers seeking the products to go online or to retailers in other states.
House Ways and Means Committee Chair Rep. Jeff Thompson, R-Lizton, told the committee that he was open to discussions on the tax rate.
Committee members on House Ways and Means voted 20-2 to move the bill forward. Rep. Ed DeLaney, D-Indianapolis, called the measure “half-serious” and voted against it because it stops short of legalizing marijuana. Rep. Elizabeth Rowray, R-Yorktown, also voted against it.
The Indiana Alcohol Tobacco Commission would need to take on more staff if the bill passes. Serak told the lawmakers that while current employees could likely handle the permitting workload, the state may need about 20 more excise police to handle the additional enforcement work.
The additional costs could be covered by permitting fees, according to the bill’s fiscal note. For two-year permits, the state would require retailers to pay $1,000 for an initial permit, while distributors and manufacturers would have to pay $5,000. The state would require all permittees to pay $1,000 to renew or have permits reinstated.
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