Three competing bills seek to determine Montana's marijuana system

Posted at 4:13 PM, Mar 30, 2021

HELENA — Marijuana is taking center stage at the Montana Legislature this week, as lawmakers hold hearings on a number of bills that would overhaul the state’s recreational marijuana system ahead of its scheduled launch later this year.

It was widely expected the implementation of legal marijuana sales would be one of the main issues debated in the second half of the legislative session. Now, committees will have to start reconciling some very different plans for that implementation.

When Montana voters approved Initiative 190 in November, that measure’s language was added to state code. If the Legislature and Gov. Greg Gianforte don’t approve reforms this session, legal marijuana sales will begin under the framework I-190 set up:

· Recreational, or “adult-use,” marijuana providers would be licensed separately from medical providers, though the same person could hold both licenses.
· The Montana Department of Revenue would begin accepting applications for adult-use provider licenses by Oct. 1.
· For the first year, only existing medical marijuana providers in the state would be able to request a recreational marijuana license.
· Cities or counties could “opt-out” of adult-use marijuana businesses, if residents successfully petitioned for a local election on the issue and a majority voted to reject those businesses.
· Recreational marijuana would be taxed at 20%
· Tax revenues would be directed to a variety of programs – including wildlife habitat and other conservation programs, veterans’ services and health care worker salaries.
· People could grow up to four marijuana plants at home, if they owned the property or had written permission from their landlord.

Three bills currently under consideration would significantly reshape that framework.

The most talked-about bill has been House Bill 701, sponsored by Representative Mike Hopkins, a Republican from Missoula. That bill will be heard in the House Business and Labor Committee on Wednesday morning.

HB 701 would make a number of changes:

· It would maintain separate licenses for adult-use and medical dispensaries, and also license growers separately from sellers
· Revenue would start accepting applications for adult-use dispensary licenses on Jan. 1, 2022.
· Existing medical marijuana providers would be the only ones able to request licenses for 18 months.
· The “opt-out” provision would be changed to an “opt-in,” meaning adult-use businesses could only operate if county leaders or voters took specific action to allow them.
· The recreational marijuana tax would remain 20%, but counties could add a local option tax of up to 5% if voters approved.
· Tax revenues would be redirected, with up to $6 million a year going to the “HEART Fund,” an account proposed by Gov. Gianforte that would pay for mental health and substance abuse treatment. Most of the rest would go to the state general fund, with a small percentage going toward conservation programs.
· It would also institute maximum limits on THC content and restrict people from participating in marijuana businesses if they have had drug-related convictions, including violations of other states’ marijuana laws.

“It is exactly what I sought out to bring forward to the Legislature and the people of Montana, which is a fully functioning, comprehensive program for the implementation of a safe, controlled, responsible program,” Hopkins told MTN.

In the earliest stages of HB 701’s drafting, the proposed text would have banned home cultivation, except for medical marijuana cardholders. That provision was not included in the final bill.

On Tuesday, more than 50 lawmakers signed on to Hopkins’ bill as co-sponsors, including House Speaker Rep. Wylie Galt of Martinsdale and Senate President Sen. Mark Blasdel of Kalispell.

Some marijuana advocates have raised concerns about HB 701 – particularly the Montana Cannabis Guild, an organization led by the people who headed the campaign for I-190. President and CEO Pepper Petersen said they are concerned about the restrictions on who can get a marijuana license, and that they see the change to an opt-in system as a particular stumbling block.

“Essentially what they’re doing is they’re saying, ‘We want 56 sets of regulations,’ when they ask for these types of changes,” Petersen said.

Hopkins said it was appropriate to have an opt-out system for medical marijuana, but that it’s appropriate to treat recreational marijuana differently.

“I will certainly make the case to counties that these folks are good neighbors; they contribute to their local communities,” he said. “I think the counties that decide not to opt-in to this will regret doing so.”

Two other bills had hearings in House Business and Labor on Tuesday. The first was House Bill 670, backed by Republican Reps. Derek Skees and Matt Regier of Kalispell. That bill would set up a far different system:

· A single license would let producers sell both medical and recreational marijuana.
· Recreational sales would be delayed until March 2022.
· The tax on recreational marijuana would be reduced to 15%, while the tax on medical marijuana would be raised from the current 4% to 5%.
· One-third of tax revenues would go into a trust fund, with the interest on that fund eventually being used to address negative impacts from marijuana legalization. The rest of the money would go toward the state’s pension liability.

Skees, who opposed I-190 and requested a bill to repeal the initiative before seeing the wide support it received in November’s election, said he was concerned about what effects legal marijuana would have on the state. He said he wanted to make sure they set money aside to be ready to deal with those effects going forward.

“This is not a race to get recreational marijuana up and going, but a timeline for a thoughtful and quality rollout of a major industry that’ll have huge impacts on Montana’s future,” he said.

Skees said the lower tax rate was aimed at keeping Montanans away from the black market.

During Tuesday’s hearing, several medical marijuana providers spoke in favor of HB 670, saying it was a less disruptive option for them than HB 701.

“It brings into implementation a lot of the things that we’re already doing – and they’re working,” said Antonette Lininger, CEO of Sacred Sun Farms, which operates dispensaries in Bozeman, Glendive and Wolf Point. “It seems silly to start from scratch, and frankly very difficult.”

Finally, Rep. Brad Tschida, a Republican from Missoula, presented House Bill 707. That bill would set up recreational marijuana wholesalers, which he said would make the system more similar to how Montana handles alcohol:

· In a "three-tiered” system, marijuana dispensaries would be required to purchase their product from wholesalers, who would purchase it from growers.
· The tax would remain at 20%, but would be charged on the wholesale price.
· Revenue would be redirected to the state general fund.
· The bill would also require a person to get a license, called a “purple card,” to grow their own marijuana for personal use.

Tschida argued a wholesale system would be easier for the Department of Revenue to manage, and that it would give the state better oversight of marijuana.

“If we can utilize the tax at the wholesale level, perhaps we will limit some of the black-market activities,” he said.

However, marijuana advocates criticized HB 707, saying switching to a wholesale model could encourage overproduction and make it difficult for small operators to survive.

“The one thing that we heard from every single person, whether they opposed this or they supported this, was ‘Don’t let “Walmart of weed” come in and take this thing over; don’t set this thing up so that it’s easy for corporations to come in and take over,’” said Petersen.

Tschida only introduced HB 707 on Monday. He said, if lawmakers were interested in his proposal, he was open to having the provisions added to another bill.

Petersen told MTN his organization would propose amendments to whichever marijuana bills move forward, but he said none of these three large bills were respecting what the voters of Montana wanted.

“What these representatives and senators are suggesting are radical departures from that implementation,” he said. “They’re rewrites and repeals – that’s what they are, and there’s no other way to put it.”

Rep. Mark Noland, a Republican from Bigfork, chairs the Business and Labor Committee. He said the committee could take action on HB 701, 670 and 707 as soon as Thursday – and he said it’s possible aspects from multiple bills could be combined into one.

All three of the bills will also have hearings in the House Taxation Committee on Thursday.

While these are the bills that would make the biggest change in the structure of the recreational marijuana system, they are not the only marijuana bills being discussed. Rep. Bill Mercer, a Republican from Billings, sponsored House Bill 683, which would redirect all of the tax revenue on recreational sales to the pension liability.

Meanwhile, Republican Sen. David Howard of Park City has proposed Senate Bill 401 to put a referendum before Montana voters to repeal I-190 completely, arguing the state shouldn’t encourage the use of any substance that’s illegal on the federal level.

EDITOR'S NOTE: This story has been updated.