Montana collects $1.8M in first year of medical marijuana taxes

Posted at 7:22 PM, Aug 30, 2018
and last updated 2018-08-30 22:27:04-04

HELENA – The state of Montana collected about $1.8 million dollars in medical marijuana taxes over the first year the tax was charged.

Starting in July 2017, the Montana Department of Revenue started administering a quarterly 4 percent tax on medical marijuana providers. The initial revenue indicates the industry generated about $45 million in annual sales.

State lawmakers approved the tax last year as part of Senate Bill 333, a major reform of the medical marijuana system. The money raised will be used to implement additional regulatory programs, like a seed-to-sale tracking system and regular testing and inspections.

The tax was set at 4 percent of marijuana providers’ sales for the first year, to provide the foundation for the new programs. As of July 1, it was reduced to 2 percent.

So far, the revenue is substantially higher than what state analysts initially predicted. In an fiscal analysis of Senate Bill 333, they projected the 4 percent tax could raise about $750,000. The number of medical marijuana patients in Montana today is more than double the expected number used in the state’s estimate.

According to registry information from the Montana Department of Public Health and Human Services, Montana had 26,549 enrolled medical marijuana patients in July, and 420 providers serving those patients.

State revenue director Gene Walborn said he was pleased with how smoothly the collection of the tax had gone.

“We were pleasantly surprised on how well it went,” he said. “It being a new tax, we were concerned what challenges you receive with a new tax.”

Walborn said more providers paid their taxes electronically than they had anticipated, meaning the department had to handle less cash than they thought they might. He said the providers were very cooperative with the department.