From taxes to business licenses: Lawmakers look to tweak Montana’s marijuana laws

The Montana Cannabis Control Division worked with an interim legislative committee over the last year and a half to both clean up the relatively new regulatory framework and communicate with marijuana providers about the industry’s hurdles. 

Montana passed marijuana legalization in 2020 and the market came into effect in 2022 after lawmakers set out what essentially became the first draft of regulations. The Legislature has continued to fiddle with those those levers in the succeeding sessions as the market matures. 

On Friday, Sen. Josh Kassmier, R-Fort Benton, introduced two of those bills. One is a regulatory “cleanup” bill that would streamline the commercial leasing process for providers and standardize how taxes are applied on the sale of marijuana products. Montana leverages a 20% tax on recreational marijuana and 4% tax on medicinal products. Many local jurisdictions, either counties or cities, have elected to place additional taxes on marijuana sales. 

Because different businesses use different point of sales systems, taxes had not been evenly applied across different businesses, particularly when discounts are applied. One provision of Kassmier’s Senate Bill 74 would apply the tax rate at the final price the customer pays when checking out at a dispensary. 

Other bills pose more philosophical debates about the industry. 

Senate Bill 27, sponsored by Sen. Ken Bogner, R-Miles City, attempts to thread the needle between the natural growth of a new and popular industry and longstanding aversions to legalized marijuana among many Montana lawmakers. 

Later this year, a moratorium on new business licenses will expire, potentially opening the floodgates for new dispensaries across the state where marijuana businesses are allowed to operate.

“I guarantee you, if we open this thing up, big business is coming,” said J.D. “Pepper” Petersen, CEO of the Montana Cannabis Guild, in a Wednesday committee hearing for SB 27. “If you don’t like what you see now, then buckle up for the roller coaster that comes if you open this thing up.”

Marijuana possession and consumption is legal in all 56 counties, but 27 do not allow businesses in the jurisdiction.

And while new business licenses were capped at a certain number, those businesses were effectively allowed as many properties as they could operate. 

The deal SB 27 attempts to strike would put a freeze on new facility licenses, rather than new business licenses, through 2027. Prospectors could still enter the market, preventing a scarcity of licenses that would give them value like liquor licenses.

Those prospectors could theoretically buy other providers’ existing facilities, but no more dispensaries or other facilities could be built to expand the industry’s footprint through 2027. 

Montana already has about 1,000 cannabis sites, about half of which are dispensaries. The Cannabis Control Division estimated from looking at other states that about 500 more licensed cannabis sites would open without SB 27’s provisions. 

Some lawmakers questioned whether the industry supported this measure because it would protect existing providers’ turf.

Kate Cholewa, government affairs specialist with the Montana Cannabis Industry Association, said it was more restrictive than protective, given the enterprise’s continued growth here. 

“It’s about managing what’s happening and it’s not forever,” Cholewa told the Senate Business, Labor and Economic Affairs Committee. “It’s two years.”

The committee approved Bogner’s bill on an 8-3 vote on Friday, sending the proposal to the Senate floor. 

And while this session has already seen some consensus between legislators and the marijuana industry, a few bills still in development show some appetite for cracking down on cannabis. 

Sen. Greg Hertz, R-Polson, is working on a bill that would require recreational marijuana consumers to purchase a $200 identification card, not unlike medical marijuana consumers have when they get a prescription, which provides them a lower sales tax rate. That card would, however, only be available to in-state residents. 

“It’s illegal in other states, they shouldn’t come here and do it,” Hertz said Friday. 

Senate Majority Leader Tom McGillvray, R-Billings, had a bill to create a marijuana law enforcement office under the Montana Department of Justice, but said Friday he will likely abandon the draft legislation due to its expansion of government agencies. He also confirmed Friday he has a bill in the works to delineate the different substances that are found in a person who is charged with driving under the influence to include marijuana. 

And on Monday, Rep. Kerri Seekins-Crowe, R-Billings, will introduce House Bill 331 to limit where and how marijuana businesses can advertise. A similar proposal Seekins-Crowe brought during the 2023 Legislature failed to pass muster.