Committee weighs change to marijuana tax distribution; members seek three‑year review if state share increases
Summary
JBC staff briefed the committee on amendments that would shift part of the marijuana excise tax from local governments to the state and add a transfer to a marijuana entrepreneur fund, freeing roughly $9.4 million for state use in fiscal 2025‑26.
John Catlett, JBC staff, and Craig Harper briefed the Joint Budget Committee on changes to the marijuana tax cash fund proposed in the chambers.
Catlett laid out the numbers: the fund's beginning balance for fiscal 2025‑26 was projected in staff materials at about $110 million, and the March forecast projected revenue of roughly $130.4 million. Senate and House actions altered distributions: the House ultimately restored a $550,000 transfer for a marijuana entrepreneur fund and the House floor revised the local share amendment to reduce the local percentage to 3.5 percent (the Senate had reduced it to 5 percent in the introduced package).
"The change in allocation would move about $9.4 million from the local share to the state share," Catlett said, summarizing the fiscal effect for the marijuana tax cash fund.
Members expressed concern that a mid‑year reduction in the local share would hit municipal budgets unevenly and asked staff to evaluate the timing mismatch between municipal fiscal years and the state's fiscal year. Staff said that delaying the change to the calendar year would reduce the state's 2025‑26 gains by roughly half (about $5 million) and that the committee had to weigh that timing impact against the state’s need for the revenue to support marijuana‑related enforcement and the Marijuana Enforcement Division (MED).
Several members said they would accept a chamber compromise only if the committee required a legislative review after a fixed period. The committee discussed adding a three‑year review to examine whether the allocation share remained appropriate for state and local needs; several members supported that approach as a way to provide local governments time to adjust while preserving state enforcement funding.
Committee disposition: staff to return with language to reflect the committee’s conference direction — keep the technical/house changes that restore the entrepreneur fund transfer, maintain the net state benefit from the allocation change as adopted by one chamber, and include a three‑year review provision to revisit the distribution share.
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