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Legislative staff, DPHHS outline how marijuana taxes and tobacco settlement dollars flow and who they fund
Summary
Legislative fiscal staff and DPHHS briefed the interim Children, Families, Health and Human Services committee on marijuana tax receipts (about $65.7M in FY25) and the tobacco master settlement distribution, highlighting a shift to a percentage-based HEART fund payment and persistent gaps in prevention funding.
Legislative Fiscal Division analyst Joseph Bann told the committee that Montana’s marijuana account received roughly $65.7 million in the last fiscal year, with adult‑use sales accounting for about $57 million. Bann said dispensaries collect a 20% adult‑use sales tax and a 4% medical sales tax, along with license fees and sporadic administrative fines, and that the Department of Revenue deducts administrative costs before transfers to dedicated accounts.
Bann said a change approved last session shifts the HEART fund from a flat $6 million payment to an 11% share of marijuana distributions starting in fiscal 2026, which will modestly increase the fund beyond the previous flat amount. He described how the remainder of the marijuana receipts are distributed by statute and noted counties may levy an optional 3% local adult‑use sales tax that is split between the county and the municipality where a dispensary is located.
Stacy Campbell, DPHHS public health and safety administrator, reviewed Montana’s use of tobacco master settlement agreement (MSA) dollars. She said Montana joined the MSA in 1998 and that a 2002 voter initiative (I‑146) directed 32% of the tobacco settlement trust to tobacco prevention and chronic disease programs. Campbell described statutory priorities under MCA 17‑6‑607 — prevention and cessation — and provided binders showing current grantees and program distributions.
Advocates who testified during public comment linked both funding streams to prevention needs. Jackie Semmens of the American Heart Association testified that Montana’s tobacco prevention funding is below CDC recommendations and urged exploring additional taxes on untaxed nicotine products. Prevention specialists and clinicians told the committee the state’s prevention infrastructure is fragmented and underfunded compared with the scale of marijuana tax receipts.
Committee members asked DPHHS and fiscal staff for clarification about statutory constraints on how settlement and HEART funds may be used. Bann and DPHHS staff said they will follow up with more detailed breakdowns and materials provided in the meeting binder. The committee did not take formal action on allocations during the session; staff said the materials will support future drafting and budget decisions.
The committee received handouts and a flowchart of receipts and distributions and asked staff to provide additional detail on the exit‑envelope labeling requirement and whether links to online education resources could be incorporated.
