By TONY LANGE
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A district court judge in Montana granted a 60-day preliminary injunction Nov. 8 that blocks state cannabis regulators from collecting increased fees from dispensary owners who own multiple facilities.
Under House Bill 903, which Gov. Greg Gianforte signed in May, cannabis retail owners are to pay a fee that “increases cumulatively by $5,000 for each additional location under the same license.”
For instance, owners of two dispensaries would have to pay a $5,000 fee for the first store and $10,000 for the second store for a total annual fee of $15,000. A third store would be another $15,000, a fourth store would tack on $20,000 more, and so forth. So, each additional dispensary would be more expensive than the previous dispensary to license, instead of the flat $5,000 rate that preceded this new law.
Montana Department of Revenue
To the right is a reference table the state provided for the new licensing fee structure:
But attorneys for the plaintiffs—Granite Peak Holdings Inc. (d/b/a Elevated), TSB Montana LLC and MariMint LLC—are challenging the new fee structure via a lawsuit they filed in August, the Daily Montanan reported.
Currently, Granite Peak has two adult-use dispensaries, TSB Montana has four, and MariMint has five, according to the state’s Cannabis Control Division’s licensed dispensary list
Last week, Lewis and Clark County District Court Judge Mike Menahan issued the preliminary injunction blocking the state from accessing and collecting the additional fees beyond the flat $5,000 structure.
In addition, Menahan ordered that fees already paid by licensees that exceed the flat $5,000 structure must be earmarked by the state’s Department of Revenue and returned if the additional fees are “permanently enjoined, or if the provision is stricken” from state law by court order.
Under Montana’s voter-approved adult-use initiative that passed with a 56.9% majority in the November 2020 election, the state’s Department of Revenue cannot impose fees that “exceed the costs of required background checks and associated administrative costs of processing the license.”
In other words, cannabis licensing fees may not exceed the amount necessary to cover the state’s costs for implementation and enforcement of the industry.
The three plaintiffs in the case argue that the increased fees under H.B. 903 go beyond the costs of regulation and that what they owe for their licensing renewals under the new fee structure would cause them to close dispensaries and/or lay off workers, the Montanan Daily reported.
Before Menahan issued the preliminary injunction, the Attorney General’s Office argued on behalf of the state in October that since Montana has the fourth-largest land mass in the nation, the financial burden of regulating an adult-use industry is greater than in smaller states.
“Dispensaries have opened everywhere across this state and in unique areas, all of which must be regulated,” the state argued. “All of this takes time and resources for which the taxpayers of Montana should not be on the hook.”
Since launching adult-use sales on Jan. 1, 2022, Montana’s licensed cannabis dispensaries have reported more than $500,000 million in adult-use and medical cannabis sales, averaging roughly $26.6 million per month this year, according to the state’s Department of Revenue.
These sales have generated nearly $90 million in tax revenue.