Objection 1. It would seem that indulgences cannot be granted by one who is in mortal sin. For a stream can no longer flow if cut off from its source. Now the source of grace which is the Holy Ghost is cut off from one who is in mortal sin. Therefore such a one can convey nothing to others by granting indulgences.
Objection 2. Further, it is a greater thing to grant an indulgence than to receive one. But one who is in mortal sin cannot receive an indulgence, as we shall show presently (27, 1). Neither, therefore, can he grant one.
On the contrary, Indulgences are granted in virtue of the power conferred on the prelates of the Church. Now mortal sin takes away, not power but goodness. Therefore one who is in mortal sin can grant indulgences.
I answer that, The granting of indulgences belongs to jurisdiction. But a man does not, through sin, lose jurisdiction. Consequently indulgences are equally valid, whether they be granted by one who is in mortal sin, or by a most holy person; since he remits punishment, not by virtue of his own merits, but by virtue of the merits laid up in the Church's treasury.
Reply to Objection 1. The prelate who, while in a state of mortal sin, grants an indulgence, does not pour forth anything of his own, and so it is not necessary that he should receive an inflow from the source, in order that he may grant a valid indulgence.
Reply to Objection 2. Further, to grant an indulgence is more than to receive one, if we consider the power, but it is less, if we consider the personal profit.
Source: Summa Theologica (New Advent)