The New Frontier of Legal Marijuana

“Recreational marijuana is here, whether we like it or not,” Rep. Derek Skees, R-Kalispell, said before the state House Business and Labor Committee during this year’s legislative session. “The goal of this bill is not to make it overly complicated, and to do the best not to grow state government.”

Skees was one of three Republican lawmakers to introduce legislation to implement recreational marijuana in the state of Montana following the passage of Initiative 190 and Constitutional Amendment 118 by voters with a 57% margin in November, which legalized the possession, growing and transporting of adult-use cannabis in low quantities across the state. 

All three bills — HB 670, introduced by Skees; HB 707, authored by Rep. Brad Tschida, R-Missoula; and HB 701, brought forth by Rep. Mike Hopkins, R-Missoula — offered differing visions from tax rates to revenue funds to licensing, but all drew a healthy amount of criticism throughout the session. 

“When we walked into this session the question before us was not should I-190 be law … that is the law right now in the state of Montana,” Hopkins said in one of the final days of House debate on his bill. “The question is do we think the language in the initiative for the program and appropriations is better than what you see in 701 right now, and I would say there is no way anybody could come to that conclusion.”

“The program you have in front of you is the most controlled, responsible adult-use program in the United States,” he continued. 

The version of recreational marijuana that survived the session was Hopkins’ bill, HB 701, which passed the final reading in the House on a bipartisan 67-32 vote on April 27, and was signed by Gov. Greg Gianforte on May 18, ending a month-long debate in Helena and giving Montana a roadmap for legal recreational marijuana. 

What Will Legal Marijuana Look Like in Montana?

House Bill 701 was introduced with the highest number of initial cosponsors among the three bills, as well as the backing of Gianforte. The bill, like the other two that were drafted, drew significant criticism for straying from the I-190 language by channeling the majority of revenue into the general fund rather than toward conservation efforts and requiring counties to opt into the recreational marijuana market. 

Both of those issues were altered in the final iteration of the law. 

As signed, Montanans are currently allowed to possess one ounce of cannabis, with a maximum allowance of eight grams in concentrated form and 800 milligrams of THC in edible form. Beginning on Jan. 1, 2022, individuals will be able to legally purchase cannabis in roughly half of Montana’s counties. 

To transport legal cannabis in a vehicle, it must be in its unopened original packaging, locked in a trunk or storage compartment or in a closed container in an area not occupied by a passenger. 

Individuals are allowed to cultivate two mature marijuana plants and two seedlings at a private residence, with provisions that any usable marijuana produced in excess of the one-ounce limit is kept in a locked space, not visible to the public. Medical cardholders will still be allowed to grow four mature plants and four seedlings. 

The state will tax adult-use cannabis at a rate of 20%, and a county or municipality may levy an additional local excise tax of up to 3% upon voter approval. Local governments are not required to use the revenue for marijuana-related needs. 

In counties where I-190 did not pass with majority support, marijuana businesses may not operate unless the county holds a separate vote to approve any such businesses. Adult-use cannabis may still be possessed in and transported through counties that have not opted into the recreational business opportunity. 

One of the most contentious parts of the legislative marijuana debate was over the breakdown of revenue the state expects to collect. The I-190 language directed a majority of tax revenue to conservation programs, substance abuse treatment and veteran’s services.  

The first order of tax revenue under the new law establishes the Healing and Ending Addiction Through Recovery and Treatment (HEART) Fund, proposed by Gianforte. Up to $6 million will be funneled into the account to be used for substance use disorder prevention, mental health promotion, crisis treatment and recovery services for substance abuse and mental health disorders, with the goal of increasing the number of individuals who choose treatment over incarceration. 

After the initial $6 million, 20% of tax revenue will go to Montana Fish, Wildlife and Parks, to be used solely by Habitat Montana, a program that pays for permanent easements and maintenance.  Additionally, 4% is given each to state parks, trails and recreational facilities and nongame wildlife. For fiscal year 2022, these amounts are capped at $650,000, but for FY 2023, the cap bumps to $1,082,000.

The state Senate restored the funding to FWP in the last few days of the session, prompting celebration from conservation groups. 

“Passing House Bill 701 isn’t just a victory for Montana’s state parks, trails, public access, working lands, and habitat, it’s a historic investment in the future of communities across the state and a commitment to conserving out outdoor way of life for generations to come,” Montana Wilderness Association State Policy Director Noah Marion said in a statement. “HB 701 sets us on a course to ensure that all Montanans can continue to enjoy and benefit from our great outdoors.”

In addition, a special revenue account for veterans and surviving spouses will receive $200,000 or 3%, whichever is less; the Department of Justice will get $300,000 to administer funding to law enforcement to purchase and train drug-detection dogs and handlers; and the board of crime control will receive $150,000 to fund crisis intervention team training. 

All remaining revenue will go into the general fund. 

The law also details how licensing will work for dispensaries and growers, including an 18-month moratorium on issuing licenses to out-of-state companies, giving Montana businesses a leg up in the industry. Additionally, it outlines requirements for packaging and labeling, and offers a route for individuals to expunge marijuana-related offenses from their criminal records.

Local Legislator Concerns

Before the first ballots were cast in the 2020 election, Skees drafted a placeholder bill to repeal I-190 in the event it passed, but later backed off the repeal efforts after seeing the initiative’s support, including a majority of Flathead County voters. Skees maintains that the initiative’s language, which directed much of the potential revenue to conservation and veterans, was a sleight-of-hand method for garnering support for a law he doesn’t believe Montanans want. 

“What we should have done is not implemented it at all and put it back on the ballot with just recreational marijuana,” Skees said. “The people have spoken and the reason I jumped on board is because there have been so many failures in states that have implemented it — Colorado and Washington — that I wanted to reach out to them and figure out how to do it right.”

Skees’ bill, a 95-page document written with help from Rep. Matt Regier, R-Kalispell, had two key components that didn’t make it into the compromised final version of HB 701. 

The tax rate proposed by Skees would have been 15%, lower than the I-190 initiative and that proposed in 701. It also would have put a third of the revenue generated into a trust fund to “address the future negative impacts of this drug.” 

“It’s going to have a cost in battling cartels, dealing with health, dealing with minors, dealing with schools and candies,” Skees said. “There’s a lot of problems that are going to come from recreational marijuana and people having access to it, and not a dime of the legislation goes to it.”

Along with many Republican legislators, Skees is concerned about the rise of the black market if adult-use cannabis is taxed too high, along with the cost of fighting that down the line.  

“We don’t have to reinvent the wheel,” Skees said. “Legalization has been done in multiple states, and it’ll be interesting to see how the Legislature deals with it in the next cycle.”

But he added: “I think in terms of the future of Montana, this is a horrible thing we’ve done.”

Existing Providers Get a Head Start

Roughly 1,000 patients visit Tamarack Dispensary on U.S. Highway 93 for their medical marijuana needs. Manager Mary Keehfuss expects her customer base to skyrocket, but not just from an influx of recreational users. 

“In the first year not only are we going to have this huge wave of recreational users, both state residents and tourists, but we’re going to have this big wave of medical patients that want to shop medicinally but were always afraid to get their card,” Keehfuss said, citing common misconceptions such as a medical card disqualifying a person from owning a gun. “I’m personally excited for them to just be involved in this, and be able to walk in comfortably and buy something anonymously, and just to continue to dispel the stigmas and misconceptions.”

Tamarack owner Erin Bolster says estimates of recreational participation rate range from 10% all the way up to 35% of the legal population, which was seen in Canada when the nation legalized marijuana in 2018, with a correlation between tax rate and participation rate. 

“In the states with the lowest taxes you see a much higher participation rate, which to me is showing that people are choosing the legal market over the black,” Bolster said. “It becomes a risk-reward game, where some consumers will stay with their current black market provider until the risk becomes too great. However, people are getting smarter about quality and safety, and I think that will keep people in the legal market.”

Montana currently has around 40,000 medical patients, and providers are preparing for the estimated quadrupling once the recreational market opens. One unknown is what will happen when tourists flock to Montana throughout the year. 

“Whitefish saw around three million people last year, and if only 10% of them are participating, that’s more consumers than the entire state, concentrated in one area,” Bolster said. 

Montana’s new law offers a leg up for currently licensed medical facilities to get a head start on the recreational market by grandfathering them in to a higher tier (size) license immediately, and putting an 18-month moratorium on non-existing companies to apply for licenses.  

The year-and-a-half lead time gives local producers time to scale up their operations. Boster said she is already planning to double Tamarack’s growing facility this year, and double it again next year, with a third increase possible if necessary to meet demand. 

“It’s really exciting that the people who have been in this for so long, for 10 or 12 years, are going to get that head start and that this law was crafted in a way to protect local industry,” Bolster said. “It allows expansion to happen pretty quickly for the existing providers, and we get to move up in tiers without any hoops to jump through.” 

Adult-use cannabis can’t be sold until January 2022, but Keehfuss said a few dozen people have come into Tamarack assuming they can purchase it already. 

“The Montana voters have mostly been in the dark about what’s happening … a lot of the time the only place they get their information is from the dispensary,” she said. “We’re trying to serve the public as a trusted source that’s read the law, that’s well versed, that’s checking up on the rulemaking.”

Every two weeks the Montana Department of Revenue publishes the latest updates to any administrative rules. Keehfuss said each week employees at the dispensary call their patients to provide updates.

“We want people to come in here and even if they can’t partake yet, we want them to feel comfortable enough asking questions and talking to us,” she said. 

There are still several provisions to the law that proponents hope will be addressed down the line, such as the laws regarding advertising, which are far stricter than those surrounding alcohol or tobacco, but those in the industry are thrilled to be finally moving forward. 

“We’re excited about the law; it’s really a workable solution and gets the big pieces accomplished,” Bolster said. “To get two-thirds of Montanans to agree on anything right now is pretty miraculous, so the fact that they agree on this, that’s pretty cool and I think it bodes well for the future of the state.”