Two proposals for marijuana tax revenue advance in wake of Senate Bill 307 failure

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Montana lawmakers last week advanced two bills seeking to change the allocation of taxes on recreational marijuana as the 69th Legislature closes in on its final days. 

Both bills revise the funding for conservation initiatives that the Legislature established in 2021 following voters’ passage of Initiative 90, which legalized recreational marijuana and sought — much to lawmakers’ dismay — to direct how the taxes levied upon it would be spent.

House Bill 932 and Senate Bill 537 are similarly situated in the legislative process, having cleared floor votes in one chamber and committee votes in the other chamber. Both seek to create a habitat legacy account, which would use marijuana tax revenue to support private land habitat improvement projects such as invasive species removal, riparian restoration, fence modification or removal, and the construction of collision-reducing wildlife crossings.

The proposals differ in that SB 537 changes other marijuana tax distributions while HB 932 maintains the status quo for programs marijuana taxes support that fall outside of the conservation umbrella. 

HB 932 and SB 537 have emerged in the wake of the failure of Senate Bill 307, which aimed to remove all conservation and recreation funding from the marijuana revenue account in favor of increased allocations to treat substance use disorder, educate Montanans on the effects of marijuana use, and ensure that marijuana growers and retailers are complying with the law. The Senate Finance and Claims Committee narrowly rejected SB 307 on April 1.

This year’s proposals come after an extended tug-of-war over marijuana funding between the legislative and executive branches that came to a dramatic head during the closing days of the 2023 session. 

HOUSE BILL 932 

During his introduction of HB 932 on April 15, Rep. Ken Walsh, R-Twin Bridges, told members of the Senate Fish and Game Committee that the habitat legacy account established by HB 932 would “get rid of some of the bureaucracy” associated with conservation funding and facilitate its use by private landowners, conservation districts, tribal governments and noxious weed control districts.

Most of the habitat legacy account funding — 75% — would initially be funneled toward the land and wildlife stewardship account, a new fund, which would be managed by Montana Fish, Wildlife and Parks. Another 20% would go toward the Wildlife Habitat Improvement Project account, or WHIP — a fund with a heavy emphasis on noxious weed mitigation thatthe Montana Legislature established in 2017— and 5% would go toward an account dedicated to wildlife crossings and accommodations that lawmakers recently endorsed with passage of House Bill 855. After $50 million amasses in the stewardship account, revenue would go entirely toward WHIP and wildlife crossings.

In addition to supporting private-land conservation projects, the habitat legacy account would allow FWP to continue to use marijuana revenue to support Habitat Montana, the FWP-administered program lawmakers established in 1987 to support the acquisition and management of wildlife management areas and conservation easements.

Proponents of HB 932 include Montana Wildlife Federation, Wild Montana, The Nature Conservancy, Rocky Mountain Elk Foundation, the Teddy Roosevelt Conservation Partnership, Backcountry Hunters and Anglers, the Montana Wild Sheep Foundation, the Montana Conservation Voters Education Fund, the Montana Conservation Society and Trust for Public Land.

Montana Fish, Wildlife and Parks’ chief financial officer, Lena Havron, spoke in support of the bill in anticipation of amendments being added to it that would, among other things, allow some of the funding to go toward water storage projects. Havron highlighted the broad range of applications the funds could be used for in her testimony on HB 932.

“Expanding the types of habitat improvement that we can do with these dollars will help us conserve habitat for wildlife as well as get these dollars on the ground,” Havron said, adding that she was tired of “getting beat up over my fund balances.” (In recent years, lawmakers have often criticized FWP for carrying too large a balance in the Habitat Montana fund.)

Proponents touted the inclusion of landowners in conservation initiatives and funding for wildlife crossings to reduce the proliferation of collisions between vehicles and wildlife on Montana highways.

Montana Wildlife Federation lobbyist and former Democratic lawmaker Tom Jacobson praised the emphasis on “cost-shared, locally led efforts.”

“This bill is not only good for wildlife, it’s sound fiscal policy. Montana’s ag economy contributes over $5 billion per year. This bill helps protect that productivity through weed control, improved range and soil conservation,” Jacobson said. “Outdoor recreation adds $2.5 billion and 2,600 jobs to our economy, much of it reliant on healthy, accessible land.”

There was one opponent at the April 15 hearing: Amy Adler, who serves as the Rosebud County’s noxious weed coordinator and as vice chair of the Montana Weed Control Association. She said her position as a “soft opponent” was related to her desire for greater emphasis on noxious weed reductionin keeping with former lawmaker Kelly Flynn’s vision of wildlife habitat improvement through noxious weed management. She said she’d also like to see more money dedicated toward the administration of weed-reduction projects.

During executive action on HB 932, lawmakers and FWP’s chief financial officer struggled to describe the implications of two amendments to the bill offered in the hours preceding the hearing. Ultimately, the committee decided that an amendment to revise the funding formula would improve the bill and its prospects, but decided it would be best to introduce an amendment to the bill when it goes up for floor debate before the full Senate. The committee on April 15unanimously voted the proposal into the full chamber for consideration. 

SENATE BILL 537

Senate Bill 537 sponsor Daniel Zolnikov, R-Billings, calls his measure the “cops and conservation bill.” Like HB 932, SB 537 would establish a habitat legacy accountto receive revenue alongside Habitat Montana. As with Walsh’s proposal, the funding level for conservation initiatives would stay the same as the current allocation: 20% for habitat and conservation,4% for parks, 4% for non-game wildlife management and 4% for trails and recreational facilities. (Walsh’s bill maintains the current allocations for parks, non-game wildlife management, and trails and recreational facilities.)

“Right now, 32% goes to conservation. We don’t take away from that 32%, we don’t touch it, except to bucket it in ways that works with the conservation community,” Zolnikov said during his April 17 bill introduction before the House Taxation Committee.

Unlike the House’s proposal, SB 537 adjusts the funding disbursements for a variety of other programs and causes. Substance use disorder treatment, police department operations, homelessness support and sexual assault examination kits would see new or increased allocations under the bill, to name a few. To fill those buckets, SB 537 strips the current marijuana tax revenue set aside for the General Fund, the catch-all funding pot that lawmakers divvy up between a variety of services, programs and infrastructure initiatives that are at least partially funded with state dollars. Programs supported with General Fund expenditures range from K-12 education and Medicaid to bridge construction and Department of Justice funding. The General Fund would take a more than $30 million hit as a result, according to the bill’s fiscal note. 

During Senate floor debate on the bill April 4,Zolnikov said his proposal funds the kind of law-and-justice initiatives Republican lawmakers have traditionally backed as well as the conservation and recreation priorities that Democratic legislators tend to prioritize. At the public hearing on his bill before the House Taxation Committeea week and a half later, Zolnikov expanded upon the need for more enforcement and  compliance resources.

“There are only a handful of lawyers in the [Department of Revenue] to actually go after … bad actors,” Zolnikov said. “There’s a lack of enforcement.”

A few conservation groups spoke in favor of the bill, describing it as a measure with the right mix of flexibility and policymaker buy-in to sustainably fund conservation work.

“It increases the pace and scale of habitat stewardship and restoration treatments across rural Montana to improve our land, wildlife and water resources in the face of drought, wildfire, invasive species and other deteriorating wildlife habitat conditions,” Wild Montana lobbyist Jake Brown told committee members April 17. “This program expansion would facilitate better partnerships between ranchers, tribes, hunters, local governments, conservation districts, wildlife managers and other conservation nonprofits [and] ag groups.” 

Kearstyn Cook, with the Montana Conservation Voters Education Fund, described the establishment of the habitat legacy account as a “more long-term, sustainable framework” to implement conservation initiatives.

Other groups that supported the bill include Montana Audubon, the Montana Department of Justice and the Montana Weed Control Association and the Montana Coalition to Solve Homelessness.

Ella Smith with the Montana Coalition to Solve Homelessness said there is a growing need for services given the rapid rise in the percentage of Montanans who are reporting temporary or chronic homelessness.

“This is a problem that is being experienced very acutely here in Montana,” Smith said. “We are extremely appreciative of the sponsor’s inclusion of some efforts to address homelessness, particularly from the behavioral health perspective.”

During the April 17 hearing, 10 proponents and no opponents testified on SB 537.

During an April 8 press conference, Tom McGillvray, the Senate majority leader who had carried SB 307, told Montana Free Press that he likes Zolnikov’s proposal and emphasized his support for putting marijuana tax collections toward addiction and enforcement. McGillvray also speculated the measure could get crosswise with Gov. Greg Gianforte, which was something he considered as he was crafting his now-tabled proposal for marijuana tax revenue.

“That’s why I didn’t use General Fund,” he said. “I was kind of hands-off on the General Fund.”

Senate Bill 442, a 2023 proposal to put 20% of the marijuana tax collections toward county road maintenance and establish a habitat legacy fund similar to what’s in HB 932 and SB 537 sparked a late-session showdown between Gianforte and lawmakers. The Secretary of State sent out a veto override poll for SB 442, nearly a year after Gianforte vetoed the bill and the2023 Legislature adjourned. The measure failed to garner sufficient votes for an override.

“}]] Both Senate Bill 537 and House Bill 932 seek to establish a habitat legacy account, which could be used to fund habitat improvement projects on private land as well as acquire new Montana Fish, Wildlife and Parks-administered wildlife management areas.  Read More  

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