Current Issues

Proposed Rules

August 3, 2021

The Department of Revenue has filed proposed rules that focus primarily on advertising. The proposed rules create a black and white generic veneer for a thriving statewide industry, demanding signs only case in black and white. Some restrictions make sense. Cannabis businesses should not appeal to minors. But much of the rules are over-the-top. 

The rules disallow businesses to support and sponsor local events. The state can use the industry taxes. Local government can use a local tax on cannabis. But businesses can’t use their own money to support their own communities? 

The rules on advertising seem roughly based on rules regarding tobacco. Is that the right model for cannabis?

Hearing August 13. 

Where are we at?

July 13, 2021

HB 701 passed the 2021 legislative session and completely re-tooled the regulations from I-190 initiative to legalize adult use of cannabis. We believe the legislative changes represent improvement when it comes strictly to the regulation portion of the initiative. Strict vertical integration will no longer be required. Those not licensed in the medical marijuana program at the time of the 2020 election must wait until July 2023 to apply for licenses and must enter no higher than a tier 2 license. Montana licensees with a tier 4 or lower license can apply to “tier up” to a tier 5 without meeting the usual requirements to receive approval for additional square footage. 

In addition to the 20% tax in the initiative, the legislation allows local governments to impose an additional 3% local sales tax on cannabis purchases. 

Medical cardholders with chronic pain narrowly escaped being kicked out of the program. Democrat Senator from Missoula, Ellie (Hill) Boldman led the charge in Senate Finance in the effort to capture greater revenue from marijuana customers. After outcry on social media, she backed away from the position. The legislation that cut off chronic pain patients also reduced revenue distribution to conservation causes. The two attacks together led to the effort’s demise in the 11th hour. 

Currently, the rulemaking process is underway. The MTCIA will continue to work to provide the best market possible for Montana’s customers. 

Adult use sales are slated for January 2022. 

The 2021 Legislative Session Begins

January 4, 2020

So it begins. The 2021 legislative session. There are more than 40 bill draft requests in related to cannabis. The MTCIA will work to assure fair competition, a functional system, protection for medical users, public health and safety, and regulations the drive the industry to optimize for quality. 

Coming Back Around – Legislature on the Horizon

December 2020

The legalization initiative, I-190, passed in November. There are currently 42 bill draft requests in relating to cannabis for the upcoming 2021 legislative session. Modifications must be made to the new law in order to be fair to those who have built the Montana market over the last 15 years. The MTCIA is working with membership to identify the holes in the new law and mechanisms that undermine those who have built businesses in the state over the past years. 

COVID 19 means the legislative session will be rockier than usual and issues of access will be challenging. But the MTCIA will be there doing the ongoing work of creating a safe, fair, competitive, customer-focused cannabis market in Montana. 

More on the Dark Money in the Legalization Initiative

September 22, 2020

Dark Money

September 16, 2020

It’s so difficult to talk about the New Approach legalization initiative. The big talking points – “weed for all” and “taxes, taxes!” – throw shade for any number of concerning details. Stans for the initiative like to call those who voice those concerns “greedy,” as though concerns about market structure and corporate structure are not prevailing issues of our times. It is also a strange insult to hurl at those who work in medical marijuana as many will make more money, not less, as a result of the initiative. True, many will be mowed down, too, particularly those who entered the program in the last four years when the era of regulation increased the costs of doing business.

There’s 4.7 million in the legalization initiative. These dollars do not come from the pockets of people whose primary concern is keeping people from going to jail for cannabis. Yet, this is the cause the initiative’s mouthpieces like to spit out whenever a concern about market structure and impact on the medical program is brought up. 

We live in the era of gaslighting.  

The MTCIA does not have a position on the initiative, but does have concerns about it. There’s millions in dark money in the initiative. The initiative is crafted in such a way that “newcomers” have a year to get licensed to sell medical and then the doors close for a year and only those licensed to sell medical can get licensed to sell in the recreational market for the first year of licensing. This has been misrepresented as giving Montana providers “a head start” when, in fact, it provides a window for others to get in and a secure a head start for themselves. 

Maybe we’ll learn soon who the dark money is. When NBC Montana tried to contact the dark money group, the North Fund, which has 2.9 million in the initiative by calling the office listed on their financial forms, the person answering the phone basically said, “never heard of ’em.” 

NBCMontana story on the dark money here. 

Implementation Timeline II: Personal use and cultivation

September 1, 2020

The legalization initiative in Montana requires the Department of Revenue to have applications available for licenses to sell cannabis to the adult use/recreational market as of October 2021. Licensing is called for by January 2022. In other words, legal recreational sales would begin in January 2022 if implementation goes as laid out in the initiative.

The implementation date for the personal use provision occurs sooner, shortly after the initiative passes, in January 2021.

As of January 2021, any adult in possession of an ounce or less of cannabis, even without a medical card, is okay under the law. This makes sense in that it would be wrong to prosecute people for something the citizens have determined should not be a crime. Further, under an adult use law, the right to grow for oneself should absolutely be protected. That said, it nonetheless creates impacts on the cannabis market. “Cannabis market” here meant in the broadest terms, not just the licensed, regulated market.

In terms of supply and demand, if the legalization initiative passes, as of January 2021:

Demand, which includes any adult in Montana who wishes to obtain and consume cannabis, is acting within the law as long as the possessed, purchased, or obtained cannabis does not exceed an ounce.

Supply, in the section of the law covering personal use (Sec. 8), does not refer to a licensed cannabis business (medical or otherwise). If refers to private citizens and their ability to “transfer” or “distribute” cannabis and cannabis products without threat of prosecution. (Cannabis “products” are included as processing and manufacturing is allowable.)

Some bullets on this:

• Adults are no longer at risk of bringing an ounce or less of cannabis into the state. Thus, cannabis can legally enter the state at the level of personal possession. For example, an individual from Washington can legally bring cannabis purchased in Washington into Montana. Also, a Montanan who has visited another state can bring up to an ounce back into the state. Of course, if a person crosses a zero-tolerance state, such as Idaho, that person is taking a risk while in that state.
• Adults purchasing on the black market in Montana are no longer at risk of prosecution. The supply in this case is a black market distributor exchanging cannabis for cash. So, the supply side in this example would be breaking the law, but not the demand side of the transaction.
• Adults without medical cards cultivating their own cannabis within allowable limits are no longer at risk of prosecution for cultivating, possessing, or transferring, manufacturing, processing or distributing that cannabis to others. These “transfer” or “distributions” would not be the “black market,” so much as the “unregulated market.” Cannabis grown for “personal use” cannot legally be “sold.” However, money in exchange for something else or some other service that comes with a “gift” of cannabis is not prohibited and based on the past behavior of the Montana cannabis market, is predictable.

If the above activities are carried out but the amount of cannabis involved is over the allowable one ounce, but less than two ounces, there are graduated penalties with the 3^rd offense topping out with a penalty of $500 or 8 hours of community service.

A dynamic this provides for is that a provider licensed in the medical marijuana program cannot sell to an adult without a medical card. However, as an individual, that provider can provide a free ounce to any adult with the purchase of, say, cannabis consulting; or perhaps a person can become a member of a club of some sort and with that membership comes, as an example, an ounce per month. Or, perhaps there are different levels of membership providing for different perks. Thus, the cannabis is being distributed but not, strictly speaking, “sold.”

Of course, technically, that cannabis cannot come from cannabis grown or manufactured in the medical program. Theoretically, the cannabis in the medical program is tracked. It would have to come from a private garden of no more than 4 plants per person or 8 per household. So, if a household has 8 plants producing 2.5 oz/ plant every 3 mos, that amounts to 20 oz every 3 months, or 100 oz/yr. If each of those individuals is consuming 2 oz/mos, that’s 14 oz available to distribute every three months or 56 oz/yr (3.5 lbs). Of course, that cannabis may also be processed or used to manufacture other cannabis goods.

The law does not include any allowance or prohibitions on processing or manufacturing by one person for another. However, the “check” on this, statutorily, might be that any cannabis produced by a home grower in excess of 1 oz must be kept in a locked space in or on the grounds of one private residence.

However, a person can give “the manufacturer” the cannabis (“transfer”).

It is unclear that “the manufacturer” can then be in possession of that cannabis in order to process it.

“The manufacturer” may then return the processed cannabis to the party from which it originated.

Once providers are licensed to sell to the adult use market, straight forward purchases from dispensaries become available. However, these other allowances do continue.

As said, it makes sense that the criminalization of marijuana should be discontinued if the citizens decide to legalize and penalties should not continue until formal licensing is instituted. The above is provided not as an argument for or against anything but as an analysis and a focus on some of the market dynamics.

Takeaway:

• There will likely be small unregulated networks of adult use distribution (different from black market) and these exchanges would constitute a portion of the adult use market that would not be taxed and thus not factor into revenue estimates.
• It may be a consideration to limit home processing or manufacturing to solvent-free methods in the interest of public health and safety.  

NEW SECTION. Section 8. Personal use and cultivation of marijuana — penalties. (1) Subject to the limitations in [section 16], the following acts are lawful and shall not be an offense under state law or the laws of any local government within the state or be a basis to impose a civil fine, penalty, or sanction, or be a basis to detain, search, or arrest, or otherwise deny any right or privilege, or to seize or forfeit assets under state law or the laws of any local government for a person who is 21 years of age or older:

(a) possessing, purchasing, obtaining, using, ingesting, inhaling, or transporting 1 ounce or less of marijuana, except that not more than 8 grams may be in a concentrated form;

(b) transferring, delivering, or distributing without consideration, to a person who is 21 years of age or older, 1 ounce or less of marijuana, except that not more than 8 grams may be in a concentrated form;

(c) in or on the grounds of a private residence, possessing, planting, or cultivating up to four mature marijuana plants and four seedlings and possessing, harvesting, drying, processing, or manufacturing the marijuana

What We Want for Our Customers

August 31, 2020

The MTCIA has members that support the legalization initiative in Montana. We have members tentative about its impact on the medical program. We have members concerned it’s not the right law at the right time.

There is nobody in Montana’s cannabis marketplace who wants to see people jailed for cannabis use. That doesn’t mean there’s not other provisions worth discussing. Not taking a position on the initiative allows the MTCIA to examine it the way those involved in the market need to, whether business owner or customer. What we aim at when we discuss the initiative is nuts and bolts analysis.

For Montana’s cannabis customers we want:

• Quality
• Safety
• Accessibility
• Options
• Affordability

Therefore, when we look at the law we ask those questions. Does it promote these qualities in the market?

As we may now and then post or comment on the initiative, we wanted you to know where we were coming from.

Legalization on the Ballot: I-190 Timeline
August 17, 2020

Timeline for implementation of I-190

The entire recreational law will go into effect Oct. 1, 2021. Department rules must be completed at that time and the department may begin to receive license applications. For the first 12 months, only those currently holding licenses to provide medical cannabis will be considered. The department must accept applications for licensure and endorsement on or before January 1, 2022.

Several sections go into effect in January of 2021. These are:

• Section 16 creating limitations on rec use, such as possession on school grounds, operating a vehicle
• Sction: 8 Personal use and cultivation permitted. 
• Section 23 Confiscated cannabis and paraphernalia must be returned if a person is in compliance with the law (in other words, no forfeiture)
• Section 40 – 49 change MCA consequences (current law) for possession

Untethering

May 28, 2020

Cardholders Will Be Untethered June 2, 2020.

Since the beginning of the medical marijuana program in 2004, medical marijuana cardholders have been required to identify on their paperwork with the state who they would purchase their medical cannabis from.

In SB 265 during the 2019 legislative session, a provision was passed to allow cardholders to purchase from any licensed medical marijuana provider in Montana. This provision will go into effect June 2, 2020. The MTCIA supported this provision and recognizes the need for cardholders to be able to freely sort the market for quality and service and products that meet their individual needs.

Many cardholders who have had only one or two providers over any significant amount of time will learn the range of quality that is available and discover the combination of products from different sources that best serve them. Members of the MTCIA actively advocated for and successfully forwarded policy to create a competitive market, driven by safety, quality and service. Untethering is the critical step in making the customer the leader in determining the make-up of the medical cannabis market in Montana.

The ability of the customer to “find” providers is seriously curtailed by the state’s advertising ban. Visibility and word of mouth will become significant determinants of a providers’ ability to compete. Learn more about untethering by visiting one of our members.

See coverage in the Missoulian on the upcoming untethering here.