Montana marijuana ownership residency requirement latest to be challenged

Did you miss the webinar “Women Leaders in Cannabis: Shattering the Grass Ceiling?” Head to MJBiz YouTube to watch it now!

Two out-of-state investors are suing to overturn a Montana law that requires owners of marijuana businesses to be residents.

The suit is the latest in a string of challenges to cannabis industry residency requirements across the country.

In two lawsuits filed in federal and state court in July, father-and-son plaintiffs Tom and Jerry Reed claim Montana’s marijuana business ownership residency requirements violate the U.S. and Montana constitutions, the Helena Independent Record reported.

The law amounts to “economic protectionism,” they claim.

Other would-be marijuana entrepreneurs have deployed similar arguments in other states after a federal judge’s ruling last year nullified a residency requirement in Maine.

A challenge to New York’s residency requirement, filed by a Michigan man, disrupted the issuance of adult-use retail licenses in that state for months.

The U.S. Supreme Court has ruled that residency requirements in other industries violate the U.S. Constitution.

In their filings, the Reeds claim to have invested $2.2 million in a Montana-based marijuana business called MBM Management and Consulting.

MBM, which operated another company’s state-licensed business, failed to disclose the state’s residency requirement to the Reeds before they invested, according to filings.

The Reeds claim that the business was failing, and, when they went to the state, regulators discovered the investors weren’t state residents and moved to revoke the license, the Independent Record reported.

Montana has limited participation in its marijuana industry to state residents for almost 20 years – first under the state’s 2004 medical marijuana law and again in 2020 when voters approved adult-use legalization.

The state’s response to the challenge in U.S. District Court is due Aug. 22, according to court filings.