Lawmakers probe transfer of marijuana tax proceeds as SUD grant authority moves to DMH and DOC

Lawmakers asked for clarity over a governor‑recommended reshuffle of substance‑use disorder funding that would move authority for many SUD grants from the Department of Health and Senior Services to other agencies while increasing transfer authority for adult‑use cannabis proceeds.

Representative Black and others noted a governor’s recommendation that reduced DHSS’s SUD grant core from roughly $16 million to $3.8 million in FY27. Budget director Maddie Starnes said the new decision item would establish transfer authority to send adult‑use cannabis proceeds to the Department of Mental Health (DMH) and the Department of Corrections to carry out SUD initiatives that align with the state constitution. "The new decision item on page 104 is requesting transfer authority for proceeds from the same funding to be transferred to the Department of Mental Health and the Department of Corrections," Starnes said.

Committee members pressed DHSS officials on whether the apparent reductions were real cuts or simply a reallocation of funds to other state agencies. Starnes said the transfers would provide funds to those agencies, but she deferred to DMH about how they would spend the dollars once transferred. "I would defer to DMH on how they are using the funds that are transferred to them," Starnes told the panel.

Lawmakers cautioned that cuts to SUD grant authority could reduce community grant opportunities. DHSS officials said awards already made remain funded for the current year but that fewer dollars would be available through DHSS‑administered RFPs in the coming fiscal year unless other agencies explicitly fund the same programs. Committee members asked for a detailed list of how DHSS will spend the $3.8 million remaining authority and for clarification from DMH about planned use of the transferred funds.