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State lawmakers and industry trade groups on Tuesday threw their support behind a new proposal to extend Montana’s moratorium on new recreational cannabis businesses into 2025.

The move could protect legacy marijuana providers in Montana from an oversaturated market and simultaneously meet conservative legislators’ concerns of dispensaries overtaking main streets across the state. The changes are proposed by an interim legislative committee; they would need to pass through the 2023 Legislature and the Governor’s Office to become law. 

The current 18-month moratorium on new recreational cannabis providers, put in place by the 2021 Legislature, is set to expire in June 2023. That was an extension from the 2020 ballot measure Montana voters passed to usher in recreational marijuana legalization, which contained a one-year ban on new licenses. The intention is to allow Montana’s existing marijuana providers time to stake out the market and new regulations before “Big Weed” starts flooding the state. 

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Sen. Jason Ellsworth, a Hamilton Republican who took a leading role in shaping the state’s regulatory framework in 2021, was the one to suggest the extension as the Economic Affairs Interim Committee reviewed its draft bill suggesting changes to Montana’s cannabis laws. 

“We’re a year and a half into this program,” Ellsworth told the committee Tuesday. “This allows us more time to see how these changes take effect.”

Ellsworth added he doesn’t think Montana needs to issue any more cannabis licenses than it already has.

“That’s just my opinion,” he said.

Sarah Thomas of The Higher Standard

Sarah Thomas of The Higher Standard in Missoula stocks marijuana products in December as the store prepared for the beginning of recreational sales in Montana.

The state’s two most prominent industry groups, the Montana Cannabis Industry Association and the Montana Cannabis Guild, both voiced support for the measure. 

Montana Cannabis Guild CEO JD “Pepper” Petersen, who was an architect of the 2020 ballot initiative, told the committee that cities and counties are still navigating the industry’s place in their communities with local measures of their own. Additionally, the Department of Revenue’s Cannabis Control Division, which oversees the industry, is still making administrative changes, a process that’s essentially on hold until the 2023 Legislature concludes. 

Sunsetting the moratorium too soon could allow “large, powerful interests with teams of lawyers” to steer the state’s regulatory reforms, rather than local stakeholders, Petersen said.

Some lawmakers expressed a hesitant support for the extension, primarily uneasy with Ellsworth’s proposal coming so late in the interim that it likely left many providers without a chance to weigh in. Tuesday was the committee’s last hearing before the 2023 session. 

“I wish we would have had this conversation a couple months ago so we could have got more input on this,” said Rep. Derek Harvey, a Butte Democrat, who ultimately voted for the proposals.

Glendive provider’s pleas answered

The committee also approved a provision moving the start date of the moratorium from Nov. 3, 2020 — the legalization election date — to April 27, 2021, the date the Legislature passed its marijuana regulation bill. A handful of providers have been caught in a limbo since the Legislature changed the initial Dec. 31, 2020 start date to Nov. 3, a move meant to clamp down on the out-of-state weed interests who attempted to slip into Montana’s industry before the moratorium began.

But the shift also caught several small-scale Montana providers, such as lifelong Glendive resident Kaari Fulton, off guard. Fulton and her husband invested “everything,” including his retirement fund, to get Armadillo Buds off the ground on Nov. 30, 2020, a month before the moratorium began. 

Armadillo Buds

Kaari Fulton and her son, grower Lance Haugen, are shown at Armadillo Buds in Glendive.

Fulton was a driving force for the industry in Dawson County last year, gathering enough signatures to force a special election and ultimately flipping the county “green” so providers could sell recreational cannabis. But the new moratorium date meant she was locked in as a “medical-only” provider until the moratorium ended in 2023. As a result, customers went where they could buy recreational, and Fulton’s investment was returning so little in medical sales that she worried Armadillo Buds may not survive the length of the moratorium.

Fulton has lobbied legislators for months to create an exemption in the moratorium for providers like her, having spoken with other providers caught in the same window who couldn’t keep the lights on in a medical-only arrangement. 

On Tuesday, she grew emotional in thanking the committee for its support of the change. 

“My heart is just exploding right now, so thank you,” she said. 

Additional changes

Beyond the moratorium changes, the committee’s bill cleans up many disputes that arose over the last year when the Department of Revenue and legislators had different interpretations of the 2021 bill’s language.

The committee’s bill would clarify that tribes can obtain manufacturing and dispensary licenses that can be scaled up to larger and larger grow capacities, as is the case with any other license. The Department of Revenue ultimately won out in a dispute over the 2021 bill’s language, which appeared to restrict tribal marijuana licenses to a tier 1 capacity, the smallest available under the Department of Revenue. The committee bill advanced Tuesday with language clarifying that tribal licenses will be able to increase capacity along with private license holders.

The committee bill, if passed by the 2023 Legislature, would also clarify that dispensaries could sell cannabidiol, widely known as CBD, products. The Legislature’s regulatory bill prohibited marijuana producers from growing hemp, in an effort to protect the hemp industry. By the revenue department’s reading, that ban extended to CBD, a derivative of hemp. The department has since permitted dispensaries to sell CBD products, and the committee bill would codify that permission. 

Opening day of recreational marijuana sales

Travis Brown puts together an order of bud at Hometree during the opening day of legal recreational marijuana sales in Montana on Saturday outside Billings.

The 2021 bill also included a provision that prohibited anyone from possessing cannabis products in a hotel room, despite a separate 2020 ballot measure that enshrined weed possession in the state Constitution. The committee’s bill clarifies that smoking in a non-smoking hotel room remains prohibited. 

Testing laboratories would also move under the purview of the revenue department if the committee bill passes in 2023. Although the medical marijuana industry moved from the Department of Public Health and Human Services to the revenue department with the new recreational industry, testing labs remained under the state health department’s oversight. Lawmakers on Tuesday said the change would put all components of the cannabis industry under one department for a more seamless engagement with the state. 

Rep. Josh Kassmeier, a Republican from Fort Benton, agreed to carry the bill in the upcoming legislative session. 

Montana State News Bureau

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