Montana preps for big change in cannabis rules

Published on July 11, 2019 · Last updated July 28, 2020
Montana's Governor has a more narrow view of legal cannabis than his voters. (Brickclay, young84/iStock)
Montana's Governor has a more narrow view of legal cannabis than his voters. (Brickclay, young84/iStock)

The next 18 months are shaping up to be a time of upheaval and change for Montana’s chaotic cannabis space.

'Tethering' disappears in 2020: Patients will finally be able to buy from more than one dispensary.

A new law passed by the state legislature in May will allow medical marijuana patients to purchase from any dispensary in the state, ending the frustrating practice of “tethering” each patient to a single dispensary. Patients now will be able to purchase up to five ounces of cannabis per month, but the tax will bump from 2% to 4%.

Meanwhile, voters may consider one—and possibly two—statewide adult-use legalization initiatives in November 2020.

So what are hundreds of dispensary owners and legalization activists are doing this summer? Getting ready for a whirlwind of change.

A system constantly in flux

Montana’s medical marijuana program has been bedeviled with setbacks and resets since it was first passed into law in 2004.

After an initial explosion of dispensaries and years of what state officials characterized as “minimal oversight,” federal authorities began raiding Montana’s dispensaries. Then in 2011 the state Legislature approved a measure that limited dispensaries to serving no more than three total patients.

Implementation of that law was delayed by years of court challenges. But it finally took effect in 2016 and effectively booted 93% of Montana’s medical cannabis patients off the state program and into the illicit market.

Later that year, voters approved a new statewide measure repealed the three-patient rule. It’s taken nearly three years for the program to return its patient base to its pre-2011 levels. Today, about 30,000 patients are registered to use medical cannabis in Montana.

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Need funds for enforcement

Legal compliance continues to be a major sticking point, though, and the state’s inability to enforce its own laws has become a source of frustration and embarrassment. Earlier this year the state’s Department of Public Health and Human Services (DPHHS), which oversees the medical marijuana program, discovered that Lionheart Wellness, the state’s largest provider, had never been in full compliance with state rules.

“We needed more inspectors on the ground,” said state Sen. Tom Jacobson (D-Great Falls), who has been a leading voice on cannabis issues in the state capital of Helena.

Tax doubling

Jacobson hopes a new law that he sponsored will change that.

The current 2% medical cannabis tax will double to 4%.

That law, which passed as Senate Bill 265, will overhaul many aspects of the Montana Medical Marijuana Act. Beyond doing away with the state’s longstanding “tethering” system, it also raises taxes on marijuana starting October 1st, 2019, in order to provide more funds for oversight of the state’s exploding industry. The current 2% tax on medical cannabis will double to 4% this October.

“Two percent is not adequate to fund the number of positions and costs that DPHHS has budgeted,” Jacobson told Leafly. Additional revenue, he explained, will be put towards funding alternative pain management education, like for opioid recovery treatment.

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“I felt that because of my involvement with marijuana legislation in 2017…it was partly my responsibility to help correct this in 2019,” Jacobson added.

Providers prepare to ‘untether’

Tethering has long prevented the medical cannabis market from flourishing in Montana. “If you’re on the road all the time and your provider is in Missoula, you have no choice but to shop the black market, or stock up and plan adequately,” said Emmie Purcell, co-owner of Greenhouse Farmacy, a dispensary with two locations in Missoula that serve roughly 1,000 patients. “It’s crazy.”

When untethering goes into effect—the date is currently undetermined, but by law it must be implemented before July 1, 2020—it may prove to be a sink-or-swim moment for many cannabis companies.

Greenhouse Farmacy owner Purcell is preparing for a likely flood of new patients. She recently signed a ten-year lease on a second grow space—a (literally) underground 13,000 square foot spot in downtown Missoula, adjacent to a recording studio.

“Right now, stockpiling is the name of the game,” Purcell told Leafly.

A different strategy

A couple miles away, on the outskirts of town, Adam Machain, the owner and grower at Stokes Dispensary, is keeping his operation small, at least for the time being. Machane provides cannabis for about 80 patients, and the company has only three employees: Machain; Eli Frederick, who handles inventory and compliance; and Keegan Serig, the processing manager.

Machain hopes that the quality of his cannabis will speak for itself and allow him to weather the storm of increased competition. “Staying afloat is just about providing the right product,” he told Leafly. “People are going to produce as much as they can [when untethering happens]…that’s not where I want to go.”

New 5 oz. limit already in effect

Under the new law, patients now will be able to purchase up to five ounces of cannabis a month, and no more than one ounce per day. (That rule has already gone into effect, according to the state health department.) A tracking system will allow dispensaries to see how much a patient has purchased. Patients who need more than the legal limit, like cancer patients, will be able to petition DPHHS for additional cannabis.

New patient purchase limit: 5 ounces per month.

“That was an amendment that was added to my bill,” Jacobson said. “Five ounces won’t work for everyone.”

Because providers in Montana are required to be vertically integrated, each cannabis company must handle growing, processing and selling in-house. The new SB 265 regulations will define them by the size of their grow canopy, not the amount of cannabis they produce. Larger tiers require that a particular amount of space be set aside for cultivation. Furthermore, a preexisting requirement that each dispensary allocate no more than 30 square feet of space per patient will not change under the new law.

Skepticism still abounds

Despite the promise of SB 265, some business owners remain wary. Over at Stokes, Machain and his business partners are concerned about the challenges and confusion associated with staying in compliance. Changes in labeling standards, for instance, are expected to produce tons of waste.

“We’ve transitioned through five to seven tags just to get [the flower] in jars, not to mention byproducts from trim,” Machain said. “[Compliance laws] are changing all the time, and keeping up with them is a pain,” he added.

Jacobson, for his part, says that now the law has been passed, oversight will fall on the state health department.

“[Legislators] have ninety days to do our job [once every two years] and then we go home. Then, we turn the keys over to the department to get the bus to where it needs to go,” he said. “It’s understandable that providers were skeptical based on how ineffectively the department implemented the rules the first time. I have full confidence that the department is paying attention to this and doing it well. If not, we’ll revisit the issue.”

A 2020 adult use initiative?

Adding to a feeling that substantial change is coming to Montana, two advocacy groups, MontanaCan and Coalition 406, are attempting to get adult-use cannabis initiatives on the ballot next year. MontanaCan presented its proposal, the Marijuana Regulation Act (Ballot Issue 5), to the Montana Secretary of State’s office last month for legal review. If it gets the okay, the next step will be collecting the 25,000 signatures needed to put it on the 2020 ballot. Coalition 406 is still developing the details in its proposal.

“I definitely think it’s feasible,” Jacobson said of full legalization in Montana. “It’s good to go to the people [for a vote] on a controversial issue like marijuana.”

No matter how the fight for recreational cannabis plays out in Montana, however, the success of Senate Bill 265 is a reminder that it’s not enough to merely pass medical marijuana or an adult-use bill and call it a day. You need to do it the right way.

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Max Savage Levenson
Max Savage Levenson
Max Savage Levenson likely has the lowest cannabis tolerance of any writer on the cannabis beat. He also writes about music for Pitchfork, Bandcamp and other bespectacled folk. He co-hosts The Hash podcast. His dream interview is Tyler the Creator.
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