Montana has one of the fastest-growing cannabis industries in the United States. After adults 21 and over were allowed to purchase and consume marijuana for recreational use beginning in January 2022, the industry saw a significant spike in revenue.
In the first year, $54 million was generated from taxes on adult-use cannabis. Most of this revenue came from adult-use sales, with less than one-tenth of the total coming from medical marijuana taxes.
Senate Bill 546
On March 24th, Sen. Keith Regier (R-Kalispell MT) introduced Senate Bill 546 to the legislature in Montana. Unfortunately, SB 546 contains several offerings that would severely change Montana’s adult-use cannabis market as well as the medical market in place since 2004.
Its main focus is on “eliminating adult-use dispensaries.” First off, it raises the state tax on medical marijuana from 4% to 20% and puts significant limits on THC potency and allowable amounts of possession for both medical patients and recreational users.
If passed into law, this bill would reduce consumer bases and revenue generated by existing businesses in the cannabis industry.
Impact on Dispensaries and Revenue Generation:
If Sen. Keith Regier is successful and SB 546 is passed into law, it could be devastating for existing cannabis businesses by reducing the number of potential consumers and eliminating a significant source of revenue for state taxes. Since adult-use sales began in January 2022, Montana has generated $54 million in tax revenue from the industry.
Less than 10% of that revenue came from medical marijuana taxes. Currently, recreational customers pay about a 20% tax to the state, with some counties adding an additional 3% local tax. If this bill is passed, those figures are certain to decrease drastically due to the elimination of dispensaries and reduced demand for cannabis products. This could majorly impact small business owners in the cannabis industry and state and local governments that rely on the tax revenue generated from marijuana sales.
New Limits on Home Growing and THC Potency:
SB 546 also places limits on homegrown cannabis plants by cutting down from the allowed two mature cannabis plants down to just one.
Also, SB 546 intends to cap the potency of marijuana flowers sold under the medical program. As the law currently stands, it prohibits the sale of cannabis flower containing more than 35% THC, and SB 546 would offer to lower that percentage to 10%.
The proposed bill would also cut in half the amount of THC that would be allowed in cannabis edibles, from 10mg to 5mg. Concentrated extracts such as vapes or hash cannot contain more than 10% THC, which would effectively ban them. This could have a major impact on consumers accustomed to products with higher levels of potency or those who prefer to grow their own medicine at home.
Limiting Possession Amounts for Medical Patients:
Lastly, SB 546 puts limits on the amount of marijuana that medical patients can possess. Currently, a medical patient is allowed to possess up to one ounce of usable marijuana and eight ounces of a concentrated extract.
If this bill passes, it will reduce those figures to four ounces and two ounces. This could have a major impact on medical patients who are used to having access to larger quantities of cannabis for therapeutic purposes.
Implications for the Future of Montana Cannabis:
Ultimately, SB 546 has the potential to completely disrupt the adult-use cannabis industry in Montana and drastically reduce state revenue from marijuana sales.
If passed into law, it would be a significant setback for businesses operating in the cannabis industry and could lead to decreased access and higher consumer prices. As this bill works its way through the legislative process, Montanans need to keep an eye on these developments as they have significant implications for the future of cannabis in Montana.
Update
The news from Helena is in, and it’s a victory for cannabis advocates: Senate Bill 546 has been tabled!
On Thursday, the Senate Business, Labor, and Economic Affairs Committee voted 6-4 to table Sen. Keith Regier’s bill that contained provisions to dismantle Montana’s adult-use cannabis industry. The vote was split along party lines with three Republican committee members — Senate President Jason Ellsworth, Committee Chair Jason Small, and Sen. Walt Sales — joining the Democrats in opposing the bill.
This decision marks a significant milestone for advocates of recreational marijuana access in Montana. While SB 546 would have eliminated adult-use dispensaries and dramatically increased state taxes on medical marijuana, this tabling of the bill protects these important components of the industry.
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