The Montana legislature passed several measures in the final hours of this year’s legislative session that, if Governor Greg Gianforte signs into law, will significantly impact the state’s recreational marijuana market. A few new regulations, including one that is more lenient when it comes to edible THC testing and another that extends the moratorium on authorizing new operations until 2025, could benefit the industry. However, some, including a considerable increase in license renewal prices, may make it more difficult for businesses to operate.
The legislature also blocked measures that would significantly impact the industry during the session, such as SB 546 from Senator Keith Regier, which would have outlawed recreational marijuana dispensaries in the state entirely.
The Economic Affairs Committee prepared a list of proposed amendments to HB 701, the basic cannabis business framework measure approved in 2021. The current session’s HB 128 by Representative Josh Kassmier implements several of those improvements.
Notably, the bill extends the existing 18-month restriction on awarding new marijuana company licenses by an additional two years. New businesses will be prohibited from establishing themselves in Montana until after June 30, 2025. HB 128 further answers issues raised by HB 701 regarding the automatic issuance of retail and cultivation permits for Montanan tribes engaged in combined-use activities. Tribes are now permitted to establish facilities with the potential for growth under HB 128. Another bill, HB 903, clarifies the start date of the license ban.
By extending the moratorium’s commencement date to April 27, HB 903 permits 16 businesses — those that had made the license application before that date and have subsequently been caught in limbo — to start selling recreational cannabis. The remaining 29 who submitted license applications after that date are limited to selling exclusively medicinal marijuana.
Some provisions in the pending measure, however, are a bit harsh on the sector. For instance, HB 903 adds a cumulative $5,000 fee for each additional location, implying that a business must pay double the amount — $10,000 — to obtain a new license for a second location. Moreover, any doctor who issues more than 39 medical cannabis certifications per year will have their license evaluated by the state’s medical examiner’s board.
Another bill, HB 948, makes it illegal to distribute or produce synthetic cannabis products such as HHC and Delta-8 tetrahydrocannabinol in the state. Under current legislation, delicacies containing synthetic marijuana, vape cartridges or other products are not subject to the same tests and regulations as cannabis.
All of these measures are currently pending the governor’s approval.
As more enabling regulatory changes are enacted and take effect, the state could see an uptick in the cultivation of marijuana as companies move to leverage the improved regulatory regime. Such an uptick in cultivation activity could create opportunities for entities such as Advanced Container Technologies Inc. (OTC: ACTX) that specialize in manufacturing indoor cultivation equipment, including “microgardens.”
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