Where’s recreational weed money going?

Pot advocates aren’t keen on a bill draft to make I-190 a reality

By: - March 19, 2021 10:42 am

A worker touches plants at a cannabis greenhouse at the growing facility of the Tikun Olam company on March 7, 2011 near the northern city of Safed, Israel. In conjunction with Israel’s Health Ministry, Tikon Olam are currently distributing cannabis for medicinal purposes to over 1800 people in Israel. (Photo by Uriel Sinai/Getty Images)

The long-awaited plan to implement the adult-use recreational marijuana program that voters approved in the last election has arrived at the Capitol and could land in a legislative committee as early as next week, setting the stage for one of this session’s key policy debates.

At hand is a gargantuan 260-page bill from Rep. Mike Hopkins, R-Missoula, that looks like a distant relative of the ballot initiative it sets out to effectuate, making several key changes to the I-190 language that voters passed with 57% support in 2020.

While the bill avoids some of the worst fears of marijuana legalization advocates — such as tracking how much pot recreational users purchase — it makes sweeping adjustments to how revenue generated by a 20% tax on cannabis would be allocated and creates restrictions on growing, selling and consuming the plant that aren’t in the original initiative. It also requests $6 million for 51 full-time employees and moves the administration of both Montana’s medical and recreational marijuana programs into the Department of Revenue; the former is currently contained in the Department of Health and Human Services.

Hopkins’ bill, which is still being edited by legislative drafters, is the result of a months-long process that’s played out largely away from the public eye between the Governor’s Office and a select group of stakeholders and lawmakers. When language first surfaced on Wednesday, it was the first time that most involved in drafting the underlying initiative had seen something resembling a complete proposal. And while not all involved are happy with the end product, for legalization proponents, it certainly beats other legislation proposed this session that would have repealed the initiative or set implementation back a year.

Among the most significant changes from that initiative is an almost complete reversal of how much money from legalization goes into the state general fund as opposed to the conservation and wildlife programs that were a top priority of some backers of the ballot proposal. Initiative 190 would have set aside more than 37% of the money in a marijuana revenue fund for securing conservation easements and access to public lands through programs like Habitat Montana, with additional monies going to trail and park maintenance and wildlife preservation. Only 10% of the proceeds would go to the state general fund.

Hopkins’ bill, on the other hand, doesn’t set aside any money for conservation easements, funneling $6 million first to tribal healthcare and the HEART Fund, a yet-to-be-approved substance abuse treatment program proposed by Gov. Greg Gianforte that legislative appropriators have so far declined to finance. Almost 90% of the remaining revenues would go to the state general fund, with what’s left going to parks, trails and wildlife — a change that has given considerable heartburn to public lands hunters and environmentalists, a key constituency of support for the initiative.

The ballot measures were a clear mandate by the voters,” said Nick Gevock, conservation director with the Montana Wildlife Federation, echoing a common refrain among Democrats and other initiative backers. Several members of his organization, sportsmen’s groups and others came to the Capitol on Thursday to voice their support for conservation funding from marijuana revenues, though it’s not clear how successful they’ll be.

“It’s time for Montana lawmakers to honor that spirit,” Gevock said.

He added that the initiative’s backers had promised an additional $13 million for Habitat Montana a year. That kind of cash could help the state secure more conservation land and shore up public access to large swaths of private forest.

“Last year, private landowners proposed $33 million in conservation easements and land trusts to Montana Fish, Wildlife and Parks, and we were able to fund $21 million,” Gevock said. “The need is there.”  

In the eyes of Hopkins and other lawmakers, the Legislature has no obligation to heed the allocation of revenues outlined in I-190. Constitutionally, only the legislative branch has the power to make appropriations, he said — not the citizenry, no matter how intent they are on doing so.

“There was no move. This is a point I’ll be very clear on,” Hopkins said. “At any point, if anyone sees anything in an initiative that in any way directs or deals with dollars, that’s fake.

“There’s a very specific reason…why it’s prohibited in the constitution. If I can actually move state tax dollars through an initiative, I guarantee you you’ll see a 50% property tax break from myself in initiative form in the next election.”

Hopkins said he saw I-190 as a simple yes-or-no proposition on the legalization of marijuana, moving it into the legal realm of alcohol and tobacco. On the spending side, it’s up to the Legislature, where he said there are other mechanisms and bills for securing the kind of funding that some proponents of the initiative were seeking.

“That’s a constitutional authority that we protect rather jealously,” he added.

Even the architects of I-190 have acknowledged this point.

“That’s their job,” said J.D. “Pepper” Petersen, president of the Montana Cannabis Guild, who helped draft the initiative. “We wrote I-190 with suggestions for how to spend the money.”

As for why there’s a need to put so many millions of dollars of both medical and recreational marijuana revenues into the general fund, Hopkins said it’s the responsible thing to do for a state that relies heavily on income tax for its bottom line.

“I think part of it is just … we don’t know what revenue actually looks like once it launches, so connecting that revenue to specific programs that have ongoing expenses without a clear indicator probably isn’t the most responsible budgeting on planet earth,” he said.

Estimates for how much money the program would generate have fluctuated, but generally sit around the $50 million per year mark once fully implemented. Some lawmakers have looked to this sum as a mechanism for keeping revenues stable even as the GOP pursues aggressive income tax cuts. Rep. Llew Jones, R-Conrad, the House Appropriations Committee chair, said last week that he believes marijuana revenues can help keep the state in compliance with language in the American Rescue Plan Act, the recent congressional COVID-19 aid package that requires states to maintain net revenue positivity if they’re cutting taxes.

Aside from revenues, Hopkins’ bill takes a more stringent regulatory approach than the initiative in some areas, though it does allow tribal nations in Montana to operate dispensaries within a radius outside the reservation (under federal law, they can’t sell marijuana on their land), and gives medical dispensaries an 18-month head start on entering the recreational market, a period six months longer than in I-190.

It also stipulates that potential licensees under the program cannot have a conviction for a drug offense in any state — originally, the initiative only placed such a prohibition for felony convictions of “fraud, deceit, or embezzlement or for distribution of drugs to a minor within the past 5 years,” and even then allowed for the person to receive a license in some instances.

This runs contrary to the ideals of restorative justice that many in the legalization realm have pushed for — that, as long as the plant is being legalized and liberalized, those who have faced disproportionate criminalization for charges like simple possession should have an opportunity to get in on the frenzy. Criminal justice reform organizations like the ACLU of Montana have said they’d fight to remove that restriction in the amendment process.

“That’s a joke,” Petersen said. “That’s the reason we passed this law, so people can be restored to their standing as a citizen. While people can get their Montana records expunged, are they ineligible to be an owner if they got arrested with a joint in 1972 in Florida?”

The bill makes similar interdictions for those who have defaulted on their student loans.

Montana’s legalization regiment has no provisions for automatic expungement and release, but gives the courts the ability to revise sentences for past convictions addressed in the bill upon petition.

The bill also sets a cap on THC content in recreational flower of 35%, something that most states with recreational programs have avoided. It requires that counties “opt-in” to having legalized marijuana rather than “opt-out,” as was in the initiative, and it bans outdoor growing, a source of aggravation for Petersen, who sees it as a sign that the less lucrative hemp industry is trying to control turf.

The sun grows plants. They’re trying to use the excuse that we’re gonna damage the hemp industry because somehow our pollen is gonna get on their plants,” Petersen said. “But we don’t grow male plants.”

In California’s “green triangle” of Humboldt County, policymakers explicitly did the opposite, Petersen noted, banning the outdoor cultivation of hemp products.

They’re the ones growing tens of thousands of plants outdoors,” he said. “That’s why they banned hemp grows in California. Hemp pollinates marijuana and creates low-grade, low-THC product that’s useless.”

The bill is still at the very beginning of its lifespan. As early as next Wednesday — by which time lawmakers in the House will have done the majority of their work on this biennium’s spending plan — it could land in the House Business and Labor Committee, said that panel’s chair, Rep. Mark Noland, R-Bigfork.

Democrats have been largely in the dark throughout the process. Rep. Derek Harvey, D-Butte, has been his caucus’ lead on the bill, but only saw the complete version for the first time on Wednesday. He said his party would fight for greater conservation funding and to sharpen the focus on criminal justice reform, among other areas, noting that Democrats would not start to support the plan as it stands now.

“The revenue piece has been the big conversation,” Harvey said. “Even though it wasn’t set in stone in the initiative, our caucus wants to respect the will and intention of the voters.”

He said that Democrats are also interested in reverting back to opt-out language for local governments who don’t want legal cannabis.

I think we’re going to see some changes before it hits committee,” Harvey said. 

Hopkins noted that he’d like to maintain as much of his language as possible, though he expected to see amendments to the bill as it moves forward.

“What we’re going to be delivering forward is a proper, legitimate, working, controlled and responsible implementation of recreational possession, taxation, use, sale of adult-use marijuana,” Hopkins said.

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Arren Kimbel-Sannit
Arren Kimbel-Sannit

Arren Kimbel-Sannit is an Arizona-bred journalist who has covered politics, policy and power building at every level of government. Before getting his dose of northern exposure, Arren worked as a reporter in all manner of Arizona newsrooms, for the Dallas Morning News and for POLITICO in Washington, D.C. He has a special interest in how land-use decisions affect working-class people, which he displayed through reporting on the epidemic of pedestrian deaths in the U.S. for the Los Angeles Times and PBS Newshour. He's also covered housing, agriculture, the Trump presidency and more.