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Montana lawmakers get updates on marijuana regulations

Posted at 7:34 PM, Sep 26, 2023
and last updated 2023-09-27 13:56:26-04

HELENA — At both the state and U.S. Capitols, Montana lawmakers are in discussions this week about marijuana policy.

During a meeting of the Montana Legislature’s Economic Affairs Interim Committee on Tuesday, state legislators got an update from the Montana Department of Revenue, which regulates the marijuana industry through its Cannabis Control Division.

Director Brendan Beatty told the committee he’s proud of the work his department has done in standing up the legal adult-use marijuana system, but he warned the CCD is still underfunded to accomplish the regulatory aims the Legislature has set out.

“We didn't know how many licenses there were going to be, we didn't know how much volume was going to be purchased. we didn't know how much was going to be tested – you go down the list,” Beatty said. “It was all brand new to everyone in this room, including yours truly.”

Beatty particularly said the department is “buried in litigation,” citing dozens of active challenges going through its Office of Dispute Resolution. In addition, they’re defending against lawsuits challenging the state law that requires owners of marijuana businesses to be Montana residents.

Beatty said the intent is for the Cannabis Control Division to be funded entirely through state marijuana revenue, but that marijuana-related legal actions have fully occupied two attorneys assigned to that program, so they’ve had to bring in help from other department attorneys – funded through the state general fund.

“As we're going forward and we're coming to you with, ‘Hey, we need some more people to either inspect, test, enforce, defend,’ that it's not a joke, I mean it,” said Beatty.

Also during Tuesday’s meeting, lawmakers heard a presentation on the rules around public consumption of marijuana – including the possibility of “consumption lounges” or “cannabis cafés,” businesses where marijuana use could be allowed. However, the discussion indicated there wasn’t much interest in bringing that model to Montana.

“We're not talking about consumption lounges because we're not going to make money with consumption lounges,” said Pepper Petersen, president and CEO of the Montana Cannabis Guild. “They're not viable businesses for the most part.”

Rep. Josh Kassmier, R-Fort Benton, chairs the Economic Affairs Interim Committee. He told MTN Tuesday that there was discussion during this year’s legislative session about gray areas around public marijuana consumption, and the committee’s discussion came about in an attempt to clarify some of those gray areas.

Karen O’Keefe, director of state policies for the Marijuana Policy Project, gave lawmakers a presentation on the current laws in other states – including 12 that allow some kind of on-site marijuana consumption, either in lounges or at special events.

Most of the representatives of Montana marijuana businesses who spoke Tuesday said either they weren’t interested in consumption lounges or it wasn’t a top priority for them. Several said they had more concerns about what they saw as onerous enforcement actions by the CCD that were making it hard for their businesses to thrive.

During a work session at the end of the meeting, Kassmier said he wanted the committee to look next year at producing a simple draft bill clarifying that consumption lounges would not be allowed in the state.

Kate Cholewa, with the Montana Cannabis Industry Association, told lawmakers she hoped, regardless of what the Legislature does going forward, that they would allow marijuana businesses a chance to experience some regulatory stability.

“People’s business structures sometimes have had to change every two years,” she said. “So, I guess we would ask you to consider that as you move forward too – that maybe what this industry and marketplace needs is stability.”

Meanwhile, at the congressional level, leaders are discussing the latest version of a bill that could expand marijuana businesses’ access to banking services. On Wednesday, a U.S. Senate committee is set to take up the SAFER Banking Act – a possible first step to moving it through the chamber.

This bill makes several changes to what was previously known as the SAFE Banking Act, which has been proposed and fallen short several times in recent years. It would still prevent federal banking regulators from taking action against banks or credit unions that work with marijuana businesses, if those businesses are licensed and following the laws in their own states. In addition, it includes new language saying financial institutions shouldn’t deny banking services based on personal beliefs or political motivations.

For the last two sessions, Montana Sen. Steve Daines has been the lead Republican sponsor of the SAFE Banking Act.

“The SAFER Banking Act is about keeping our Montana communities safe and reducing the risk of crime, but it's also about protecting legal businesses and their access to financial institutions,” Daines said in a statement to MTN. “Whether it's a legal cannabis business, a legal gun manufacturer, or a legal energy company, no Montana business should be shut out of banks and credit unions because of ideological differences.”

Democratic Sen. Jon Tester has been a co-sponsor of the SAFE Banking Act for years, and his office told MTN he’s going to co-sponsor this version as well.

“As a third-generation Montana farmer, I know how important it is for small businesses in rural America to have access to banking services,” Tester said in a statement. “I’ve supported this effort since 2019, and I’m proud to support the bipartisan SAFER Banking Act because it’s a commonsense fix that will allow legally operated Montana small businesses to access the financial services they need to thrive, while also making our communities safer by cutting down on cash-motivated crimes.”

Montana has recorded more than $516 million in marijuana sales since the start of 2022, with roughly three-quarters of that in adult-use sales and the remainder in medical sales. August 2023 saw the highest sales of any month so far: about $28.7 million.