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Montana lawmakers debate changes to how marijuana tax revenues are used

Montana House
Posted at 7:43 PM, Mar 31, 2023
and last updated 2023-04-03 14:40:19-04

HELENA - Lawmakers are looking at several different visions for how the state will use marijuana tax revenue going forward as the Montana Legislature’s 68th session nears its three-quarter mark.

Initiative 190, the 2020 ballot measure that legalized recreational marijuana in Montana, laid out proposed ways to spend the tax revenue from legal sales.

In 2021, the Legislature reshaped those funding allocations when it passed House Bill 701, the bill that finalized the legal framework for the adult-use marijuana program.

The distribution of marijuana taxes has remained a big topic this session.

I-190 called for about half of the money to go to public lands. The largest share – 37% – was planned for the Habitat Montana program, which uses state funds for wildlife habitat conservation projects.

It also proposed shares for addiction services, support for veterans and their families, and Medicaid-funded health care providers.

However, the state constitution doesn’t allow citizen initiatives to appropriate money, meaning the Legislature had the final say on how the revenue would actually be used.

HB 701 reduced Habitat Montana’s share to 20%, maintained funding for other public lands accounts and for veterans’ services, added a payment for crisis intervention training and directed the first $6 million per year to Gov. Greg Gianforte’s HEART Fund — used as matching funds to bring in federal support for substance abuse treatment and additional Medicaid services.

On Friday, the Montana House gave initial approval to House Bill 669, sponsored by Rep. Bill Mercer, R-Billings, which would maintain the appropriation for the HEART Fund but remove all other specific allocations. The remaining revenue would go into the state general fund.

HB 669 passed a preliminary vote 65-35, with all but three Republicans in support and all Democrats opposed. Mercer said the bill was intended to make a point that initiatives can’t – and shouldn’t – appropriate money.

The bill was amended in committee to provide one-time-only funding for the programs that currently receive marijuana tax revenue: $8.7 million for Habitat Montana, $5.25 million for other public lands programs and $2.5 million for veterans’ services — plus $2.5 million for conservation districts, another area lawmakers have looked at using marijuana money.

“We're going to preserve the status quo,” Mercer said. “But from this point forward, when we come back in 2025, that money will all be going into the general fund, and we will have a fresh look at how we want to prioritize spending.”

Opponents of HB 669 said it was the Legislature, not I-190, that established the current spending, and they criticized the idea of taking away guaranteed funding sources for these programs.

“Certainly, the voters had an opinion on how the money should be spent,” said Rep. Kim Abbott, D-Helena, the House minority leader. “And we don't have to follow the voters’ opinion on that – but just because we don't have to, doesn't mean that we should ignore them.”

On the Senate side, a budget committee has advanced an alternate proposal for marijuana taxes.

Senate Bill 442, sponsored by Sen. Mike Lang, R-Malta, would have initially removed the 20% of revenue earmarked for Habitat Montana and directed it to improve rural county roads, with a focus on improving access to wildlife habitat.

However, the Senate Finance and Claims Committee amended it this week, keeping the road funding and putting another 20% into a new “Habitat Legacy Account” that would fund Habitat Montana and other wildlife and conservation projects.

The amended SB 442 passed through Finance and Claims unanimously on Thursday. The full Senate will debate it on Monday.

Gianforte’s budget proposal supported redirecting marijuana tax revenue from Habitat Montana. The governor has repeatedly said that the program has more than enough funding and doesn’t need that revenue.

Lawmakers are considering more changes to marijuana laws than simply how the taxes are used.

On Friday, the House endorsed House Bill 903, sponsored by Rep. Mike Hopkins, R-Missoula, 82-18. That bill would clear up a loophole in HB 701 that prevented marijuana growers from expanding their operations while using the licenses guaranteed to each Montana tribe.

It would also end a provision allowing existing marijuana growers in the state to quickly expand their cultivation activities.

On Thursday, the Senate Business, Labor and Economic Affairs Committee voted down Senate Bill 546, sponsored by Sen. Keith Regier, R-Kalispell, which would have completely eliminated adult-use dispensaries in Montana.

The committee had previously rejected House Bill 351, sponsored by Rep. Kerri Seekins-Crowe, R-Billings, which would have further limited how marijuana businesses in Montana can advertise, and House Bill 611, sponsored by Rep. Jane Gillette, R-Bozeman, which would add more required warnings to marijuana labels.