This volume contains a report for the current year, 2023-2024, plus reports for the previous five years:
2022-2023;
2021-2022;
2020-2021;
2019-2020; and
2018-2019.
More information on rules and regulations heard by the Committee in recent years, reports of the Committee after each meeting, and state agency responses to Committee comments is available on the JCARR page.
Total receipts to the SGF for FY 2024 were $43.0 million, or 0.4 percent, below the estimate. The component from taxes only was $67.9 million, or 0.7 percent, below the estimate.
With this report, the Joint Committee on Administrative Rules and Regulations provides its comments on rules and regulations reviewed at its meeting on June 20, 2024. Agencies are asked to respond to each comment or request for information; responses are compiled and maintained by staff of the Kansas Legislative Research Department.
The most recent estimates of State General Fund (SGF) receipts for FY 2025 have been further adjusted to reflect legislation enacted during the 2024 Special Session that was held June 18.
Note: See attached memorandum regarding adjustments as of May 23 to reflect legislation enacted at the end of the 2024 Regular Session.
On May 21, 2024, the U.S. Department of Justice Drug Enforcement Administration published a notice of proposed rulemaking to transfer marijuana from Schedule I to Schedule III under the Controlled Substances Act.
Discussion of such a move began on October 6, 2022, when President Biden asked the U.S. Attorney General and the U.S. Secretary of Health and Human Services to launch a scientific review of how marijuana is scheduled under federal law. On August 29, 2023, the U.S. Department of Health and Human Services (HHS) recommended that the Drug Enforcement Administration (DEA), as part of the DOJ, reschedule marijuana to Schedule III to reflect HHS’s updated views on marijuana’s currently accepted medical use and potential for abuse and dependence.
The announcement of the proposed rule opened a period of public comment through July 22, 2024. Comments may be submitted electronically via the Federal eRulemaking Portal using the reference “Docket No. DEA-1362.” Interested parties may also request legal hearings to further debate the issue through June 20, 2024.
Note: The CSA’s definition of marijuana excludes (1) products that meet the legal definition of hemp, and (2) the mature stalks of the cannabis plant; the sterilized seeds of the plant; and fibers, oils, and other products made from the stalks and seeds. Federal law defines hemp as the cannabis plant or any part of that plant with a delta-9 tetrahydrocannabinol (THC) concentration of no more than 0.3 percent, including cannabidiol (CBD).
Drug Scheduling
Under the CSA, drugs, substances, and certain chemicals used to make drugs are classified into five distinct categories, or schedules, depending upon the drug’s acceptable medical use and the drug’s abuse or dependency potential.
Schedule I drugs, substances, or chemicals are defined as drugs with no currently accepted medical use and a high potential for abuse. Some examples of Schedule I drugs are: heroin, lysergic acid diethylamide (LSD), marijuana (cannabis), 3,4- methylenedioxymethamphetamine (ecstasy), methaqualone, and peyote.
Schedule II drugs, substances, or chemicals are defined as drugs with a high potential for abuse, with use potentially leading to severe psychological or physical dependence. These drugs are also considered dangerous. Some examples of Schedule II drugs are: combination products with less than 15 milligrams of hydrocodone per dosage unit (Vicodin), cocaine, methamphetamine, methadone, hydromorphone (Dilaudid), meperidine (Demerol), oxycodone (OxyContin), fentanyl, Dexedrine, Adderall, and Ritalin.
Schedule III drugs, substances, or chemicals are defined as drugs with a moderate-to- low potential for physical and psychological dependence. Drug abuse potential for Schedule III drugs is less than Schedule I and Schedule II drugs but more than Schedule IV. Some examples of Schedule III drugs are: products containing less than 90 milligrams of codeine per dosage unit (Tylenol with codeine), ketamine, anabolic steroids, and testosterone.
Schedules IV and V are reserved for drugs with progressively lower risks of abuse and dependence. Examples of Schedule IV drugs include Xanax, Valium, and Ambien. Schedule V drugs are often diarrhea-, cough-, or pain-relieving medicines that contain limited quantities of certain narcotics, like Robitussin AC, which contains codeine.
In addition to the general scheduling framework, the CSA includes regulatory provisions specific to marijuana, such as mandatory minimum sentencing and special registration requirements for those who manufacture marijuana for research purposes.
History of the Controlled Substances Act
In the 19th century, the United States had a disjointed federal drug regulatory scheme composed of tariffs, import and export controls, and purity and labeling requirements that skirted around the constitutional debate about banning substances outright. In 1914, Congress passed the Harrison Narcotics Tax Act to establish oversight for the legal trade of narcotics and to penalize illicit trafficking. In the following decades, federal control expanded beyond narcotics to include marijuana, stimulants, depressants, and hallucinogens.
In 1970, Congress repealed nearly all existing federal substance control laws and imposed the unified framework we know as the Controlled Substances Act. The CSA also served to satisfy the obligations in international drug-control treaties, namely the Single Convention on Narcotic Drugs (1961) and the Convention on Psychotropic Substances (1971). Marijuana has been a Schedule I drug since Congress enacted the CSA.
Rulemaking Authority and Reasoning
Congress and the Executive Branch share the authority to change the status of marijuana. Congress can change the status of a controlled substance through legislation, while the CSA empowers the DOJ/DEA to make scheduling decisions through the notice-and- comment rulemaking process. The process can be proposed by the DEA, HHS, or by petition from an interested party, like the National Organization for the Reform of Marijuana Laws has done in the past. In the present case, the U.S. Attorney General has started the rulemaking process.
Note: The Attorney General historically has ceded their CSA-granted rulemaking authority to their subsidiary, the DEA; but here, the Attorney General opted to initiate it directly.
Prior petitions for marijuana rescheduling have been denied primarily due to the DEA’s criteria for “currently accepted medical use” (CAMU). Since 1992, the DEA’s position has been that a drug has a CAMU only if either:
The U.S. Food and Drug Administration (FDA) has approved the drug under the Food, Drug, and Cosmetic Act (FDCA); or
The drug meets a five-part test that tracks the core standards developed under the FDCA:
The drug’s chemistry is known and reproducible;
There are adequate safety studies;
There are adequate and well-controlled studies proving efficacy;
The drug is accepted by qualified experts; and
Scientific evidence about the drug is widely available.
Historically, the DEA determined that marijuana cleared neither hurdle and, therefore, rejected previous rescheduling petitions. The most recent petition was denied in 2016.
With the present rulemaking proposal, the Executive Branch has added an alternative criterion that marijuana may satisfy. In response to the President’s request, HHS found that it would be inconsistent with the text and purpose of the CSA for the existing standards to be the “sole basis for determining whether a substance has a [CAMU].” Their recommendation and the subsequent Slip Opinion from the Attorney General state that, regardless of whether a drug was approved by the FDA or satisfied the DEA’s five-part test, a drug could have a CAMU if it satisfied a new, two-part inquiry, which considers:
The extent and nature of medical use, including:
whether there is “widespread current experience with medical use of the substance by U.S. Licensed health care practitioners” and the extent to which medical regulators recognize the substance having at least one medical use; and
Whether there is “some credible scientific support for at least one medical use of the substance.”
Using these parameters, HHS determined that marijuana has a currently accepted medical use and, therefore, should be eligible for rescheduling. In the Slip Opinion, the Attorney General corroborated their analysis, saying that the existing criteria were “impermissibly narrow,” and that the new two-part inquiry is sufficient to establish a basis for CAMU.
Regarding international law, previous administrations have interpreted treaty language to require marijuana to be listed as Schedule I or II. The Attorney General’s Slip Opinion changes course to say that, because the treaty language allows for the use of both laws and regulations and does not invoke the American scheduling framework, rescheduling marijuana to Schedule III, plus incorporating additional regulatory controls, would satisfy treaty requirements.
Current Legal Landscape
As of June 2024, medical marijuana use is legal in 38 states and the District of Columbia. Recreational use of marijuana is legal in 24 states and the District of Columbia. While possession and use may be legal under a state’s laws, the Constitution’s Supremacy Clause dictates that marijuana’s federal status as a Schedule I Controlled Substance means that activities involving marijuana can still be seen as a crime in the eyes of the federal government and could be subject to enforcement.
A congressional appropriations rider, although, allows states to implement their own medical marijuana programs and prohibits federal prosecution of state-legal activities involving medical marijuana. However, there is no bar on federal prosecution related to recreational marijuana.
The friction between state and federal law still manifests, though, in business and in people’s personal lives. One hallmark issue is that, although marijuana can be a state-legal business, federal anti-money laundering laws may hold the managing financial institutions in violation for handling drug-related income, often disallowing these businesses use of traditional banking services. Congress has repeatedly introduced the SAFER Banking Act to remedy this conflict. Marijuana businesses are also ineligible for certain federal tax deductions. On an individual scale, any involvement with marijuana may negatively impact a person’s immigration process or a person’s ability to receive certain federal government benefits. Additionally, users of controlled substances are federally prohibited from owning or possessing a gun, regardless of state legality.
Rescheduling Implications
Classifying marijuana as Schedule III would allow pharmacies across the country to dispense the prescription drug, pending FDA approval. The DEA and Kansas rules and regulations already permit pharmacists to dispense Schedule III, IV, and V substances. There would be no impact on the legal status of recreational marijuana.
Additionally, research involving marijuana would become easier to conduct. Research on marijuana thus far has been limited due to tight Schedule I registration requirements. Moving to Schedule III would ease these DEA registration requirements and grant researchers more flexibility in their work. Rescheduling would not affect FDA research obligations.
For state-legal businesses, rescheduling would mean that they would become eligible for certain tax credits and deductions, alongside having more access to bankruptcy courts. The law regarding financial services, though, applies to controlled substances generally, so rescheduling would not open financial services to state-legal marijuana businesses. Legislation would still be required.
This publication includes summaries of the legislation enacted by the 2024 Legislature during the 2024 Special Session. The special session commenced on June 18, 2024, and was adjourned that same day.
During the 2024 Special Session, 12 bills were introduced: 8 bills in the Senate and 4 bills in the House. Two of these bills became law (one Senate bill and one House bill).
This publication does not include a summary of any legislation associated with the 2024 Regular Session. That legislation is summarized in a separate publication.
A total of 111 bills became law during the 2024 Session, and 2 bills became law during the 2024 Special Session. Of those, 100 bills from the 2024 Session and 1 bill from the 2024 Special Session have provisions that become effective July 1, 2024 (generally referred to as“publication in the statute book”). A summary of those bills is reported below by topic and subject. Comments are included for bills that have multiple effective dates, or as additional information is warranted. Except as noted, all bills mentioned were passed during the Regular Session.
The bill would create law and amend the STAR Bond program to allow for projects involving major professional sports complexes and provide said projects with additional sources of revenue for bond repayment. The bill would also provide enhanced approval authority for the Secretary of Commerce (Secretary) and the Legislative Coordinating Council (LCC) to approve no more than two such STAR Bond projects and allow the Kansas Development Finance Authority (KDFA) to issue special obligation bonds in fiscal years (FY) 2025 and 2026 for purposes of funding said projects.
STAR Bonds Financing Act
The bill would authorize agreements with one or two major professional sports franchises for the purpose of establishing major professional sports franchise STAR Bond project districts for a major professional sports complex. The bill would require these projects to have a minimum capital investment of $1.0 billion. The authority to establish such projects would sunset on June 30, 2025, with the option of a one-year extension if approved by the LCC.
All provisions of the bill discussed within this memorandum would pertain exclusively to STAR Bond projects for a major professional sports complex only and would not be applicable to other potential STAR Bond projects described in statute.
Definitions
(Act):
The bill would establish the following definitions within the STAR Bonds Financing Act
“Major professional sports complex” would mean a project in the state that includes a stadium of no fewer than 30,000 seats for the purpose of hosting National Football League (NFL) or Major League Baseball (MLB) games and other events or a practice or training facility utilized by a major professional sports franchise. The bill would authorize such projects to include all buildings, improvements, facilities, or attractions located within the STAR Bond project district; and
“Major professional sports franchise” would mean any corporation, partnership, or other entity that owns a team or franchise that is a member of the NFL or MLB and that is located in any state adjacent to Kansas. The bill would also amend the definition of “project costs” to include the cost of a major professional sports complex that would include all costs necessary to implement a STAR Bond project for the development of a major professional sports complex including, but not limited to, costs incurred for the following:
Construction or renovation of a stadium and other buildings;
Improvements;
Structures;
Facilities;
Infrastructure improvements;
Utilities; and
Related expenses to develop and finance such complex.
Exemptions
The bill would allow major professional sports complex STAR Bond projects to include real property that is or has been part of another STAR Bond project district. Any outstanding STAR Bonds issued for such other district would have priority for repayment. For these projects, the bill would not require developed areas to contain contiguous parcels of real estate.
The bill also would exempt these STAR Bond projects from the requirement barring relocation from another area of the state.
Alternate Procedure for Approval
The bill would allow a major professional sports complex STAR bond project to be approved by the Secretary without approval by the city or county in which the project would be located.
Should the city or county in which the proposed project would reside not grant approval for the project, the bill would authorize the Secretary to assume the powers of a city or county, as provided in the Act, that would be necessary to establish and undertake the project. Such powers would include changes to the project district, except no public hearing would be required prior to action. Special obligation bonds would be issued by the KDFA and no revenue from local sales, use, or transient guest tax would be pledged as sources of repayment. The bill would also state that any special obligation bonds issued by the KDFA under the Secretary’s authority would not constitute a debt of the State of Kansas.
The bill would require the Secretary to present any proposed agreement for a major professional sports complex STAR Bond project to the LCC for review and approval of the potential agreement. If the LCC does not approve said proposed agreement, the bill would authorize the Secretary to continue negotiations with the major professional sports franchise and submit another proposed agreement for LCC review and approval.The bill would also require that the LCC review and approval process apply to the local government approval method in statute if used for a major professional sports complex project, as well as any additional bonds issued following initial approval of the project.
STAR Bond Financing
The bill would allow a STAR Bond project involving a major professional sports complex to finance up to 70.0 percent of the total costs of the project. [Note: All other STAR Bond projects are limited to 50.0 percent of total costs.] The Secretary would be authorized, with approval of the LCC, to request additional special obligation bonds to be issued in an amount exceeding the amount previously approved by the Secretary, limited to not more than 70 percent of the additional costs or expansion of the project. The bill would prohibit the terms of all special obligation bonds for these projects from exceeding 30 years.
Note: Any special obligation bonds issued by the KDFA for projects approved solely by the Secretary would pledge only state revenues from the above-mentioned revenue sources from within the confines of the district for purposes of bond repayment.
Payment of the special obligation bonds issued by the city, county, or KDFA would be payable from a pledge of the following:
Any method or combination of methods currently in statute except that tax increment revenue would include all retail sales tax collected from any business within the STAR Bond district [Note: STAR Bond repayment currently excludes sales tax collected from retail automobile sales as well as capping the amount of increment state sales tax at 90.0 percent.];
Up to 100.0 percent of revenues derived from the sale of alcoholic liquor collected from consumers purchasing alcoholic liquor within the STAR Bond district [Note: This would capture the privilege and drink taxes but would exclude the gallonage tax charged to producers.]; and
With approval of the Secretary, moneys from the Attracting Professional Sports to Kansas Fund.
The bill would also provide both the Secretary and the participating local unit of government with discretion on determining the base year amount of tax revenue from which the increment tax revenue is calculated. Note: Current law requires a STAR Bond district to calculate its base year of revenue by aggregating the 12 months of sales tax revenue for the district prior to establishment of the district.
The bill would state that if the major professional sports complex STAR Bond project was unilaterally approved by the Secretary without city or county approval, only the State portions of the aforementioned taxes could be pledged to repayment of the bonds. Should the city or county wish to participate in a Secretary-initiated project, the bill would require the local unit of government to hold a public hearing and pass a resolution or ordinance that pledges the applicable local revenues to the project within 60 days of LCC approval of the project.
The bill would also require any revenues that have been previously pledged to pay one or more STAR bonds to be used to first satisfy the remaining obligations of the previous bonds.
The bill would also authorize the Secretary to approve KDFA’s refunding of all or part of any special obligation bonds issued for a project.
Kansas Open Meetings Act and Kansas Open Records Act
The bill would grant the LCC chairperson the discretion to determine when any review, testimony, or discussion regarding proposed agreements for a professional sports complex project could be held in executive session. The bill would also require that the vote on the proposed agreement to be made in open session and be limited to an up-or-down vote.
The bill would deem a proposed agreement and any associated documentation or testimony to be confidential and not subject to the Kansas Open Records Act. Such confidentiality would expire on July 1, 2029 unless reenacted by the Legislature.
State Gaming Revenues Fund
The bill would require that the Director of the Budget and the Director of Legislative Research, on June 25, 2025, and every June 25 thereafter, certify the aggregate of all amounts that have been transferred from the Lottery Operating Fund to the State Gaming Revenues Fund (SGRF). Any moneys in excess of $71.49 million would be transferred on June 30, 2025, and each fiscal year thereafter to the Attracting Professional Sports to Kansas Fund. If the SGRF is found to have equal to or less than $71.49 million, then no transfer would occur. Note: Currently all money with the SGRF in excess of $50.0 million is transferred to the State General Fund.
Background
A joint meeting of the House Committee on Commerce, Labor and Economic Development and Senate Committee on Commerce was held on June 17, 2024. The Committees received an overview from staff from the Office of the Revisor of Statutes on a bill draft regarding STAR Bond projects and major professional sports complexes. The Committees also heard testimony from stakeholders on the draft bill.
In this joint committee informational hearing, proponent testimony was provided by representatives of the Kansas Chamber, Polsinelli Law Firm on behalf of the Kansas City Chiefs, Scoop and Score, Stinson Law Firm on behalf of the Kansas City Royals, and the Unified Government of Wyandotte County and Kansas City, Kansas. The proponents generally stated the bill could attract the Kansas City Chiefs and Kansas City Royals to relocate to Kansas, the complexes would generate sales tax and revenue that otherwise would not be generated, and that STAR Bonds would not transfer stadium construction costs to Kansas taxpayers.
Written-only proponent testimony was provided by former Kansas Governor Jeff Colyer and representatives of the Greater Topeka Chamber; Kansas Beer Wholesalers Association; Kansas City Kansas Chamber of Commerce; Kansas Economic Development Alliance; Lawrence Chamber of Commerce and EDC Lawrence – Douglas County; Manhattan, Emporia, Topeka, and Lawrence Coalition of Chambers of Commerce; Olathe Chamber of Commerce; Overland Park Chamber of Commerce; Shawnee Chamber of Commerce; Travel Industry
Association of Kansas; Unified Government of Wyandotte County and Kansas City, Kansas; and Wichita Regional Chamber of Commerce.
Opponent testimony was provided by representatives of Americans For Prosperity – Kansas and the Kansas Policy Institute. The testimony generally stated the bill was rushed and the process lacked transparency, STAR bonds only shift economic activity, and small businesses in the project area would be negatively affected.
Neutral testimony was provided by a representative of the Office of the Governor. The testimony generally stated the Governor does not have any current concerns with the bill warranting a veto. While not providing testimony, a representative of the Department of Commerce was available and answered questions from Committee members.
Written-only neutral testimony was provided by a representative of the Office of the Governor and former state Senator Chris Steineger.
Fiscal Information
No fiscal note was available at the time of the informational hearing.
During the hearing, the Committees also received the attached information from the Kansas Legislative Research Department on the distribution of traditional lottery proceeds for for fiscal years (FY) 2022 through 2025. As seen in the attached table, had the transfer provisions of the law been enacted by FY 2022, there would have been no transfer to the Attracting Professional Sports to Kansas Fund for FY 2022 because total revenues to the SGRF did not exceed $72.49 million. Transfers would have been approximately $3.3 million for FY 2023 and $4.0 million for FY 2024.
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