Banking & Finance

Big Debut For Montana's New Cannabis Market

Big Debut For Montana's New Cannabis Market

Originally built on gold and silver mining, Montana’s fortunes are being made by mining “green.” On the first day that adult-use marijuana became available, thousands of customers lined up in below-zero temperatures to take advantage of the new law.

When Montana voters passed Initiative 190 in November 2020, possession and consumption of recreational cannabis in Montana became legal. Retail sales, the final step in launching the program, couldn’t begin until this year. 

First-day excitement and enthusiasm aside, Montana operators are waiting to see if they should expect the same ongoing boom other states have seen. A Montana budget office projected adult-use marijuana would rake in $130 million in sales during the program’s first year. Then, after a 12-month moratorium on new cannabis licenses is removed in 2023, it should jump to $195.5 million.

The Department of Revenue’s Cannabis Control Division tallied a total of nearly $2 million for recreational and medical sales over the weekend. The 4% tax on the $432,617 in medical sales provided the state with $17,305 in tax revenue. Montana’s 20 percent sales tax on recreational cannabis means the $1.5 million in sales added $313,396 in tax revenue for the state. Missoula, Yellowstone, Dawson, and Park counties have implemented an additional 3% local sales tax in recent elections. Those taxes don’t go into effect until 90 days after the election.

“The rollout of the adult-use program went off without any issues from the department’s supported IT systems,” Cannabis Control Division Administrator Kristan Barbour said Tuesday in an email. “We were able to successfully verify with (the) industry that our licensing and seed to sales systems were working on Friday to ensure a successful launch on Saturday, Jan. 1, 2022. The successful launch was a result of staff’s hard work and planning over the past six months to meet the challenges of implementing HB 701.”

Twenty-eight, primarily rural, Montana counties turned down Initiative 90. These “red counties” are banning adult-use dispensaries. But the law permits red county residents to venture out to other counties to purchase cannabis for their bongs, glass pipes, or rolling papers and bring it home for consumption.

Half of Montana’s 56 counties hold more than 80 percent of the state’s 1 million residents. Thousands of customers flocked to dispensaries in those counties to spend their money on cannabis products. Because Montana’s Department of Revenue doesn’t track consumer data on recreational cannabis sales, sales figures by out-of-state residents are unknown. 

Montana is dedicating a portion of tax revenue to social causes. The first $6 million in tax revenue will go to a new substance use disorder treatment and addiction recovery program, the Healing and Ending Addiction through Recovery and Treatment Fund. Gov. Greg Gianforte first proposed the fund. Gianforte praised it as one of his proudest first-year accomplishments at a press conference.

“We took steps to combat the drug epidemic, created the Heart Fund and Angel Initiative, to help folks struggling with addiction to get the treatment they need,” Gianforte said. Of that initial $6 million, $500,000 will go to Indian Health Services in Montana. 

“This is a great start to what will prove to be a significant tax contribution from Montana’s cannabis industry,” said Pepper Petersen, president, and CEO of the Montana Cannabis Guild and the face of the legalization campaign in 2020.

The Montana Department of Revenue, which oversees the adult-use and medical marijuana programs, announced rule proposals for marijuana advertisements. The advertising regulations prohibit TV, radio, newspaper, or social media advertisements. Marijuana websites would have to take “appropriate measures” to ensure those younger than 21 can’t visit the site. And, businesses couldn’t offer promotional items or sponsor charitable events or sports.

The law also allows Montana residents to have two mature plants and two seedlings in their homes.

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