Staff: Cannabis excise, sales tax up year-to-date; allocation for control board and prevention funds still unsettled

Budget staff told the Legislature’s Appropriations Committee on April 15 that combined adult-use cannabis excise and sales tax receipts through March of fiscal year 2025 total about $21.4 million, roughly 19% higher than the same period last year, but warned the monthly trend may be flattening.

Budget staff (identified in the transcript as Speaker 4) said excise tax receipts through March totaled $15.1 million compared with $12.7 million in the prior fiscal year and that sales tax receipts were roughly $6.2 million versus $5.3 million a year earlier. The presentation used a monthly-updated cannabis revenue tracker to compare month-to-month and year-to-date collections.

The revenue picture matters because state law and budget practice route excise and sales tax receipts first into cannabis regulation funds, with a portion later transferred to the general fund; the Legislature’s budget then directs 30% of the transferred amount to a substance misuse prevention fund. Speaker 4 said the FY25 transfer to FY26 availability produces a net available amount of about $8.4 million under current calculations, but that a re-run of the numbers could raise that to about $12.8 million, which staff estimated would translate to roughly $3.0 million of additional general fund revenue and $1.3 million extra for substance-misuse prevention.

Speaker 4 explained how the funding mechanics are being handled in the budget spreadsheets: the control board’s FY26 expenses are being paid in part from a one-time transfer of FY25 excess excise revenues, fees collected by the market, and a retained amount intended to cover the board’s operating costs in FY26. Staff estimated annual fees at about $2.5 million and the Cannabis Control Board’s operating budget in the mid- to high-$6 million range; staff said the budget plan retains roughly $4.0 million from the transfer to cover the board’s net costs in FY26 (control board costs net of fees).

Committee members asked how the cannabis regulation fund and transfers work across fiscal years, whether the 30% for substance misuse is capped at any threshold, and which programs receive prevention funding. Speaker 4 said the prevention dollars flow through existing budget sections that grant to many programs; specific recipients and the advisory or recommendation process are handled by the agencies and boards identified in budget language. Speaker 4 and other members said they would provide a consolidated table showing substance-misuse and prevention fund line items to reduce confusion across agencies.

Members discussed whether to continue dedicating a portion of excise receipts directly to the Cannabis Control Board or to deposit receipts to the general fund and appropriate board costs from there. Several committee members said the choice is a policy decision tied to appropriations strategy; staff noted both approaches are feasible. Speaker 4 added that for FY27 the Legislature will need to decide whether a portion of future excise tax should flow to the control board before general-fund transfers or whether the board should receive an annual appropriation from the general fund.

Speakers also cautioned that new cannabis markets often see an initial surge followed by a second-year dip. Speaker 4 warned that the market is not yet mature and that relying on sustained growth to fund ongoing programs carries risk. The presentation noted that March was the first month in the adult-use market’s history to show a year-over-year monthly decline, which staff described as possibly a blip but also a signal to be cautious when tying recurring spending to revenue that may fluctuate.

On discrete budget items, staff noted a one-time $500,000 appropriation to a cannabis business development fund that was included in prior legislation. The spreadsheet shown to committee members segmented sources (excise revenues, fees) and uses (control board expenses, business development appropriation, transfers to general fund and substance-misuse programs) and explained the timing differences between when excise receipts become available in regulation funds versus when the budget was drafted.

The committee did not take a formal vote on allocation options during the briefing. Staff committed to follow up with the committee, Joint Fiscal Office staff, and stakeholders such as the Center Alliance with additional tables and documentation to clarify prevention funds and recovery-program line items. The item will return for appropriations decisions later in the budget process.

The presentation and subsequent questions spanned multiple members and staff and included requests for a consolidated table listing prevention and recovery fund line items across agencies.

Budget staff direct quotes in this article are taken from the committee transcript and attributed to the labeled speakers below. If a statement in the transcript could not be tied to a named speaker, it is presented in the article as staff or committee discussion rather than attributed to an individual.