Deep Dive: Montana Legalizes Adult-Use Cannabis

This Deep Dive serves as an overview of adult-use cannabis legalization in Montana. This article is a living document that is updated regularly based on the release of new research on this topic.

On January 1, 2022, Montana joined the more than 20 U.S. states that have, in some form, legalized adult-use cannabis for their citizens. The fourth largest state in terms of land mass, Montana is also one of the most sparsely populated, featuring only 1.1 million inhabitants. Logistically, it is surrounded by five conservative states, all of which currently prohibit adult-use cannabis.

In November 2020, the state's voters passed a ballot initiative (Initiative 190) by a 57 percent margin (similar to adult-use cannabis voter approval rates in other states, including California). Although its actions remain controversial, the state's legislative body in late April 2021 passed House Bill 701 (HB 701), a law that alters several of the original limits and other elements set forth by Initiative 190 (as explained below).

Under the new law, adults 21 and older in Montana are permitted to purchase, possess, and consume up to one ounce of loose-leaf cannabis flower and eight grams of concentrate. According to the 2021 MJBizFactbook, Montana's first year of sales could generate up to $90 million in sales, a figure predicted to increase to $325 million by 2026.

Significantly, the state is giving an 18-month head start to existing medical cannabis licensees. Businesses not already licensed under the medical program must wait until July 1, 2023 to apply for a license under the adult-use law.

Silverleaf Cannabis Co. in Bozeman, Montana

While Montana's Department of Public Health and Human Services was originally slated to regulate its adult-use program (and has thus far managed the state's medical program), HB 701 changed this administrative body to the Department of Revenue, which will also manage the state's medical marijuana program beginning on January 1.

Montana's new adult-use legalization aptly demonstrates the sometimes huge disparities between states that have decided to end marijuana prohibition. Its personal cultivation limit under the law allows only two plants to be grown per person*. Compare this to Oregon, which allows four plants, the many states that allow the pseudo-industry standard of six plants, and renegade Michigan at 12 plants. (Montana's medical program participants are allowed four mature plants and 12 seedlings.)

Connecticut's progressive new adult-use cannabis law, like New York, allows public consumption. Anywhere that tobacco is permitted to be smoked in Connecticut, cannabis smoking and vaping is also permitted. But unlike New York, Connecticut requires municipalities of greater than 50,000 residents to designate public consumption areas (the actual manifestation of this policy and such facilities will be interesting to track; stay tuned).

"Montana appears at the conservative end of this scale due to its complete ban of public consumption of cannabis. Under its new law, cannabis consumption will also remain prohibited in hospitals and health care facilities."

Montana appears at the conservative end of this scale due to its complete ban of public consumption of cannabis. Under its new law, marijuana consumption remains prohibited in hospitals and health care facilities.

Top Shelf Botanicals in Helena, Montana

Compared to many states, Montana's business license fees are not extraordinary—but they are expensive compared to states such as Oklahoma, which charges an initial and one-time fee of only $2,500 for any license type.

Montana's adult-use cannabis business license fee structure is complex and ranges between $1,000 and $37,000, as listed in brief below.

In addition, the state charges a non-refundable processing fee of 20 percent of the license fee at both application submission and renewal. Businesses wishing to relocate must pay a $2,500 relocation fee.

The state's medical program required business licensees to be vertically integrated, something that won't apply to adult-use license holders. Thus, companies will have the flexibility of operating horizontally or specializing in only one segment of the market, such as cultivation or retail sales.

Flower dispensary in Kalispell, Montana

Montana is one of the few states to limit the THC potency of adult-use products. Loose-leaf flower is limited to 35 percent delta-9 THC. This is similar to the 30 percent loose-leaf and 60 percent concentrate caps, respectively, in Vermont—the only other U.S. state that currently dictates maximum THC potency in an adult-use law. Unlike Vermont, however, Montana's conservative legislature, surprisingly, has imposed no THC cap on concentrates.

Other potency caps include 10 milligrams delta-9 THC per serving and 100 milligrams per package for edibles. Topicals may be no more than six percent THC and 800 milligrams per package. Capsules, transdermal patches, and suppositories may contain no more than 100 mg of THC, with packages limited to 800 mg. It should be noted that these potency caps do not affect participants in the state's medical marijuana program.

Some critics of Montana's timetable predict product shortages and other supply chain issues (not related to pandemic). In May 2021, Misty Carey, a medical marijuana entrepreneur in Bozeman, told MJBizDaily's John Schroyer that, in January when the new law goes into effect, "demand is going to skyrocket and how are we, in such a short amount of time, going to build enough grow facilities?"

Bloom dispensary in Billings, Montana

Buried within Montana's new adult-use law is a small catch. Like newly adult-use legal New York (in which more than 400 jurisdictions have banned cannabis businesses) and New Jersey (where more than 70 percent of jurisdictions have imposed similar bans), Montana's program will prevent some of its citizens from having easy access to the herb through legal retail outlets.

"In counties where the majority of voters supported Initiative 190 in November 2020, adult-use sales may occur starting in January 2022. In counties where the majority of voters opposed Initiative 190, adult-use marijuana sales will remain prohibited."

According to an official communication from the state's Department of Public Health and Human Services: "In counties where the majority of voters supported Initiative 190 in November 2020, adult-use sales may occur starting in January 2022. In counties where the majority of voters opposed Initiative 190, adult-use marijuana sales will remain prohibited."

Apparently, in Big Sky Country, the legislature is somewhat selective in how it respects the will of its voters, seeming to favor an anti-cannabis stance over the desires of marijuana legalization proponents.

Cannabis legalization advocates, while frustrated by the pushback from the state's legislature in the form of HB 701—including reduced personal cultivation limits, THC potency caps, and no public consumption—remain optimistic that updates to the law's regulatory provisions will be won in the future.

Pepper Petersen, president of the Montana Cannabis Guild, expressed the sentiments of many when she told MJBizDaily in May 2021, "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."

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*Technically, the Montana adult-use cannabis law permits "two mature marijuana plants and two seedlings for private use in a private residence." The personal cultivation limit was originally four plants, but was changed by the state's legislature to two via HB 701.