Montana lawmakers water down adult-use marijuana law, but industry says result ‘workable’

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Although no one in the Montana marijuana industry is joyous over a watered-down implementation bill that became law Wednesday, most businesses are thankful they can now proceed with adult-use plans instead of having to fight lawmakers over whether the state should even have a recreational market.

Some of the biggest changes include a three-month delay in the start of recreational marijuana sales, a new 35% THC potency cap for adult-use flower and an 18-month head start for existing medical marijuana companies over market newcomers.

The changes made to the voter-approved initiative mirror efforts in other states by cannabis opponents – often with the help of Republican elected officials – to weaken or overturn marijuana legalization ballot measures written by activists, such as in Mississippi and South Dakota.

The reaction from several Montana marijuana industry insiders was mostly relief after Republican Gov. Greg Gianforte signed House Bill 701.

The governor’s action ended a reportedly bruising legislative battle to get an implementation bill for Initiative 190 – the ballot measure approved by voters last year – across the finish line.

“I would use the word ‘workable,’” said Misty Carey, a longtime Bozeman medical marijuana businesswoman. “It’s not sexy, it’s not easy, but it’s workable. And that’s about the nicest word you can use.”

Legalization highlights

Paul Armentano, the deputy director of Washington DC-based NORML, likened the situation to winning $100 on a $10 bet at a racetrack, only to have officials tell the winner the bet would pay out only $30.

“Would you call that a win, or did you lose $70 when you actually won $100?” Armentano asked hypothetically.

“The bottom line is the voters voted for one thing, and they got another, and what they got was a lot less than what they voted for.”

For instance, Montana is only the second state in the nation whose law includes potency caps for adult-use flower: HB 701 caps flower potency at 35%. (Vermont was the first state to do so for its pending rec marijuana industry, capping flower at 30% and concentrates at 60%.)

According to an analysis by NORML, the Montana legislation:

  • Moves back the timeline for the launch of adult-use sales from Oct. 1, 2021, to Jan. 1, 2022.
  • Caps edibles potency per package at 100 milligrams and topicals at 800 milligrams per package.
  • Gives existing MMJ businesses an 18-month head start to sell adult-use cannabis before newcomers can qualify for business permits.
  • Shifts industry oversight from the Department of Public Health and Human Services to the Department of Revenue.
  • Reduces home-grow allowances from four plants per individual to two.

“We were able to negotiate a decent package. Is it ideal? No. But we brought it back to as close as we could get to I-190,” said Pepper Petersen, CEO and president of the Montana Cannabis Guild, one of the primary proponents of the ballot measure.

Petersen said the passage and signing of HB 701 is arguably “one of the biggest victories in the history of marijuana prohibition” considering much of the Republican-controlled Legislature had no interest in supporting an implementation bill as well as the state’s lengthy history of trying to regulate MJ companies out of business.

Things appeared rocky early this year when state lawmakers rejected a $1.35 million budget request to fund the state’s recreational cannabis program.

Which means the fact that adult-use marijuana sales are being implemented at all is a major win.

“These were hard negotiations,” Petersen said. “Down to the last day of the Legislature, they were trying to (stop) us. There were coordinated efforts between law enforcement and prohibition advocates … and we came out on top.”

A major shift for existing companies will be the switch from state-mandated vertical integration to the option of horizontal operations, which means more businesses will be able to specialize in only a couple of areas such as cultivation and wholesaling.

Industry still has concerns

Despite the law’s passage, question marks remain.

The rulemaking process overseen by the state Department of Revenue is particularly uncertain, said Kate Cholewa, who ran point for the Montana Cannabis Industry Association during HB 701 negotiations.

“Overall, our members, they feel OK about this,” Cholewa said of the final result. “And we know the rulemaking process could do anything.”

The Department of Revenue’s adult-use rulemaking process is underway and expected to be completed by Oct. 1, Petersen said.

One of the issues facing much of the Montana marijuana industry, said Carey, is whether there will be enough product to satisfy customer demand when rec sales begin New Year’s Day.

“Now, demand is going to skyrocket, and how are we, in such a short amount of time, going to build enough grow facilities?” Carey asked.

“Most people are in a panic about supply, anticipating a huge demand, and we’ll all run out of weed.”

Billings-based operator Rich Abromeit, another veteran of the Montana medical marijuana industry, said he’s been prepping for a year and a half for just such an eventuality. So he’s not worried.

Abromeit isn’t happy about the 35% flower potency cap, but he noted at least there isn’t a similar potency cap for concentrates, which the Legislature and the governor could have insisted on.

Of bigger concern, Abromeit said, will be what comes of the current rulemaking process.

“The big thing that really stands out is the rulemaking process. That’s the next challenge,” he said.

Like Carey, Abromeit said he’s thankful his company – and the rest of the adult-use industry – now has a solid platform from which to build on.

“Is (HB 701) a slam dunk as far as success? No,” Abromeit said. “Is it workable for businesses like mine? Yes. And sometimes that’s what we have to take away… that it’s workable and we’re able to continue.”

John Schroyer can be reached at john.schroyer@mjbizdaily.com.