Montana lawmakers approve Cannabis Tax Act

The Montana legislature on Monday passed legislation to allocate revenue from recreational marijuana taxes and sent the bill to Republican Gov. Greg Gianforte’s desk for consideration. The bill, Senate Bill 442, was approved by the Montana Senate in a final vote Monday after the state House of Representatives passed an amended version of the bill last week.

Montana voters legalized recreational marijuana in 2020 with the passage of Initiative 190, a voting measure that passed with nearly 57% of the vote. The initiative imposed a 20% tax on recreational marijuana products, with revenue from the tax reserved for Habitat Montana, a 30-year-old wildlife habitat acquisition initiative that, according to a report by the Montana Free Press.

The governor requested a redistribution of cannabis taxes

Before the start of this year’s legislative session, the governor expressed his desire to reallocate state recreational marijuana taxes from habitat purchases and instead spend the money on law enforcement resources related to marijuana legalization. Lawmakers responded with several new proposals, arguing that redistributing taxes on recreational marijuana would allow the state to meet other pressing budgetary needs and give lawmakers more control over revenue.

In the original version of Senate Bill 442, introduced by Republican Senator Mike Lang in February, a portion of cannabis tax revenue was diverted from the Habitat Fund and allocated to fund county roads instead. Supporters of the proposal claimed that the bill would support access to rural areas and open spaces. But wildlife advocates opposed the proposal, claiming it went against the will of voters as expressed through Initiative 190.

Lang then amended the bill to split the bulk of cannabis tax revenue between the state’s general fund, county road funding, and a new Habitat Legacy Account that would be used for wildlife enhancement on public and private lands. Smaller allocations would also be made to fund substance abuse programs, veteran services, and state parks and trails funding.

“I think we’ve made some pretty smart changes here that are designed to invest in rural Montana’s roads, lands and hunting opportunities while also supporting our veterans and the growing need for drug treatment,” Lang said after revising the bill. “Ultimately, we want to give our local counties and local people the tools and resources they need to improve the conditions of the land and be good stewards of Montana.”

The amended bill received support from state lawmakers and groups representing business interests, including the Montana Stockgrowers Association and the Montana Petroleum Association, as well as conservation organizations such as Wild Montana, Helena Hunters and Anglers and the Citizen’s Elk Management Coalition, all of whom expressed their support for the proposal registered. Many county commissioners and the Montana Association of Counties also expressed their support for the measure.

“Our county roads are being used more than ever today,” said Roman Zylawy, president of the Montana Association. “Recreation and farming are part of the way we live in Montana, and this bill recognizes the importance — and need — of including everyone through an investment in our county roads. … The Montana Association of Counties thanks you all and we respectfully encourage Governor Gianforte to sign SB 442 and continue to invest in our highways.”

Competing Bill dies in Senate

A separate bill passed in the House of Representatives last month would have channeled all cannabis tax revenues into the state’s general fund. Supporters of the measure, House Bill 669 by Rep. Bill Mercer, argued that the legislature would be able to control the allocation of tax revenues and direct them to state budget priorities.

“Under 669 it would just say that that revenue should go into the general fund and that the Legislature as a whole should decide how to spend that revenue,” Mercer told members of the House Appropriations Committee last month. “One of the reasons I wanted to introduce this bill is because I’m concerned that if you basically start allocating dollars to special revenue accounts, they’ll constantly escape scrutiny. Anytime we have a redirect to a specific revenue account, I worry it won’t get the same type of scrutiny as the general fund.”

But Jim Vashro, president of Flathead Wildlife Inc, said the will of Montana voters, as expressed in the 2020 ballot measure to legalize recreational marijuana, should prevail.

“We hope that the legislature will listen to the voice of the people,” Vashro said. “We are trying to protect funding for Habitat Montana, which was the stated intent of Initiative 190.”

House Bill 669 was introduced by a Senate committee late last month. Senate Bill 442 has been sent to the Governor’s desk awaiting action by Gianforte. On Monday, a spokesman for Gianforte said the governor had “significant concerns” about Senate Bill 442 but gave no further details on his position.