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Committee considers wholesale alcohol and cannabis excise tax proposal tied to behavioral health funding; discussion, not a vote
Summary
Senators debated a committee substitute to raise excise taxes at the wholesale level for alcohol (and adjustments to cannabis allocations) to fund behavioral health grants and Medicaid components; as a tax bill it was discussed for possible inclusion in a tax package but not voted on in committee.
The committee heard testimony and discussion on a proposed wholesale excise tax increase on alcohol — and an associated reallocation of some cannabis receipts — that would direct a share of revenue to behavioral health programs and Medicaid reimbursements for community treatment.
Senator Scherer, sponsor of the committee substitute, said the substitute levies taxes at the wholesale/distributor level to avoid creating new collection systems and to make administration simpler for the Taxation and Revenue Department. She said the proposal would put money into a Behavioral Health Grant Fund created by the bill, shift some cannabis revenue into behavioral health systems and use existing distributor networks to collect the tax.
Representatives of petroleum marketers, beverage distributors and local retailers testified in opposition, calling the increase regressive and urging caution while the state has other budget priorities. Total Wine testified in support of the committee substitute, saying wholesale leveled taxes are administratively simpler and fairer than retail excise approaches. The Veterans and Military Families Caucus testified in support, citing long‑standing inflation erosion of a county DWI program fund that the tax has historically supported.
Committee members focused discussion on coordination with House Bill 417, which also proposes alcohol tax reforms, and on allocation details in the committee substitute (including percentages directed to behavioral health, DWI funds and Medicaid). Committee staff clarified language changes in the committee substitute; sponsors emphasized the substitute increased behavioral health allocations from earlier drafts and included Medicaid reimbursement components.
Because the measure is a tax bill, senators held discussion without a committee vote; the sponsor indicated she would coordinate further with House bills and other tax package elements before potential placement in a tax package.
