June 23, 2021 08:00 am ETEstimated Read Time: 4 Minutes
Montana’s House Bill 701 has been signed into law by Governor Greg Gianforte, making Big Sky Country the 16th state to legalize cannabis for recreational adult consumption. Like most recreational states preceding Montana in the move towards legalization, the state has had an existing medical marijuana (MMJ) program in place since 2004.
The legislation as signed has been amended from the original Initiative 190 approved by voters in November 2020 with recreational retail sales now expected to start January 1, 2021 — three months later than the original proposal of October. Additional hurdles including an 18-month moratorium on new cannabis business licenses have been received to mixed fanfare while other requirements for the program such as lowering the maximum allowed number of plants grown by individuals from four to two and a county-by-county opt-in raise questions about whether supply can meet demand in the market.
Growers and manufacturers of cannabis will also have to navigate a 35% THC potency cap on flower and new caps on packaged products include 100mg total package THC content for edibles and 800mg for topical products. Expected to be a net positive for the industry is the legislation allowing licensed cannabis operators to move away from their existing vertical integration to a new horizontal approach. This move allows businesses to finally specialize in one facet of the industry whether growing, wholesaling, manufacturing, or operating a dispensary. Until House Bill 701 license holders were required to do each of these activities all under the same business license. Specialization can be expected to increase efficiencies in the market that could eventually mean cheaper and more abundance of products for users in the state.
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Lows Have Come With Every High in Montana
Cannabis legislation has been contentious in Montana long preceding Initiative 190. The existing medical market suffered a devastating blow in 2016 when the state Supreme Court ruled in favor of the conservative State legislature, enacting rules and regulations that effectively gutted the market as it existed. Businesses that continued operating were only allowed to serve an unsustainable maximum of three patients each and the new laws included provisions that banned businesses from extracting profit from medical sales. Voters rescued the industry with Initiative 182 enacted in early 2017, by which time the number of registered MMJ patients had dropped as low as 7,500 from a high of 30,000 in 2011. That number has steadily rebounded since.
Montana’s medical marijuana program will continue in tandem with the adult-use recreational cannabis in 2022. Adults wishing to use cannabis prior to the January 1, 2022 go-live for recreational retail will have the option to either grow their own two plants or pursue a MMJ license certification from a doctor and register as a patient with an existing dispensary. Licensed medical users will get to enjoy advantages over the recreational market beyond just the immediate access — the current gross sales tax rate for MMJ in Montana is 4%, considerably lower than the 20-23% gross sales tax expected on recreational sales in 2022 and onwards.
Advantage: MMJ for the Immediate Future
In other states where medical and recreational markets have coexisted within the cannabis industry such as Colorado, many users have opted to register or renew a MMJ license for the plentiful benefits. Medical users are subject to lesser taxes but also have access to medical-exclusive locations, hours, products, and price specials. Medical access can also allow for the lawful use by minors when recommended by a doctor and allows for adults with deliberating conditions or guardianship to authorize a caregiver to purchase or cultivate on their behalf. With some Montana operators and activists warning of supply shortages as the retail market opens in early 2022, existing MMJ cardholders may find themselves in an advantaged position over retail purchasers.
While the hard-fought initiatives and legislation leading up to adult-use legalization of cannabis in Montana have finally been signed into law by Governor Gianforte, Montana’s history in the industry warns of unpredictability. Initiative 190 enjoyed support from 58% of voters but faced relentless challenge from a Republican-dominated legislature, not unlike the challenges seen by the medical market that preceded it. With the medical industry once again strongly positioned, individuals needing more immediate access to compassionate care in Montana may be wise to seek MMJ certification from a qualified doctor in calendar year 2021.
Anthony is the Marketing Director of Veriheal with a keen sense for sustainable branding techniques and creative marketing solutions meant for the cannabis space. He is inspired by art and human culture and occasionally gives us a sneak peek into what is happening behind the scenes at Veriheal.
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