Montana's cannabis industry is scrambling to finalize details before recreational sales begin

Recreational cannabis sales begin in less than two months in half of Montana’s counties. Regulators and retailers alike are scrambling to finalize last minute details before that January 1st deadline.

It’s another busy morning at Missoula’s Greenhouse Farmacy. The dispensary’s staff is picking dried bulk marijuana flower out of a large plastic storage container, pre-weighing and packing it for sale in small aluminum containers.

“I feel like I’m in a hamster wheel. It’s constant," Greenhouse Farmacy co-owner Brian Monahan says.

He says the cannabis industry is intense under the best of circumstances, but especially now with recreational sales on the horizon. Monahan is preparing his medical marijuana dispensary to join the new marketplace for the first legal sale of recreational cannabis to adults 21 and over. Monahan estimates his sales could triple next year. To prepare, he’s ramping-up production, updating floor plans, installing new sales kiosks and improving parking accommodations.

"It’s almost just like a marathon runner at the end of a marathon. It’s like, just a couple more miles and it’s there.”

This means marijuana sales can look different county by county.

“I think what we’re hearing from local governments is a real interest in making sure that they control their particular area with what their citizens want to see," says Kristan Barbour, head of the state revenue Department’s Cannabis Control Division.

“As we’re seeing from different areas right now — Billings, Missoula — they're contemplating how they want to manage those businesses or how many storefronts they even want to allow. So we will always take into play that local governments trump what the state would allow,” Barbour says.

During recent municipal elections, counties had the option to enact local sales taxes on marijuana and regulations covering where shops would be allowed. Three counties chose to do so.

Voters in Missoula, Park and Yellowstone counties will have a 3 percent local tax on recreational marijuana on top of a state-mandated 20 percent tax. Park and Yellowstone counties also approved a tax increase on medical marijuana.

Montana’s soon-to-be patchwork approach to marijuana sales isn’t uncommon, according to National Cannabis Industry Association’s Aaron Smith. He says disagreements between policymakers, regulators and the industry are to be expected as this new system is established.

“It’s not unique at all. There are certainly a lot of complex issues to sort out. Mistakes will be made along the way, as have been in other states. What’s important is making sure that the will of the voters is advanced, and I think Montana’s on track for that.”

Lawmakers recently requested the Revenue Department reconsider a proposed regulation on who can work at cannabis shops.

Another rule, embedded within the legislation establishing adult-use cannabis sales, would ban license holders from also selling CBD products on premises. That rule is also undergoing new scrutiny.

Despite his frustrations with the state’s early regulatory efforts, Peterson expects the new industry to be a lucrative one — one that will translate to business opportunities and millions in tax revenue windfalls in those so-called ‘green counties’ where recreational pot sales will soon be legal.

“I think we’re going to see the opt-out counties come to the Legislature in 2023 saying, ‘we want some of that damn money’. We’re going to fight that. If you don’t participate, if your county does not have sales, you shouldn’t get any of the money.”

The National Cannabis Industry Association’s Aaron Smith:

“What we’re seeing over time is that as those localities are seeing the tax revenue going next door, then they decide they want a piece of that tax-revenue pie and start changing their local ordinances. I would expect to see the same thing happening over time in Montana.”

Trade groups project the nation’s recreational marijuana industry will soon top $20 billion.

A University of Montana Bureau of Business and Economic Research study says Montana’s fledgling recreational cannabis industry could rack up over $200 million in sales next year.