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Economic Affairs draft cleans up marijuana licensing, tax language; committee hears broad industry support
Summary
Senate Bill 74 would make targeted changes to marijuana licensing and tax rules first established under 2021 law, including switching to "net" taxation for certain discounted retail sales and moving manufacturing license fees to a single production-tier model.
Senator Kasmier opened Senate Bill 74 to the Senate Business and Labor Committee as a set of technical and operational changes to Montana's cannabis regulatory framework that grew out of the 2021 implementation of House Bill 701.
"We're actually and, we're gonna tax the net sales instead of retail sales," Senator Kasmier said, describing three principal changes: (1) landlord approval rules for license renewal; (2) moving manufacturing license fees from a per-premises model to production-tier licensing across a licensee's sites; and (3) taxing the "net" price rather than retail gross when discounts are given.
Industry witnesses and the Cannabis Control Division largely supported the bill as problem-solving cleanup rather than a policy overhaul. Kate Holeowa of the Montana Cannabis Industry Association and Jeff Erickson of 1 Step Software Solutions described why the "tax the net" change matters: the current statute can force retailers to calculate taxes on gross retail price even when a discount is given to veterans or seniors; that creates confusing receipts for consumers and technical problems for the state's traceability system.
Jeff Erickson said Montana is an outlier on the net-tax issue and that the change would both simplify compliance and help low-income consumers who receive discounts. "When we report a sale to the state's traceability program, it's what we sold it for. There's no facility within that program to say this was a discount given to a vet," he said.
Joanna Barney, a general manager for a Montana cannabis business, and Jennifer Hensley, representing Fidelity Diagnostics Laboratory, supported a set of targeted changes to licensing and testing rules. Hensley flagged a technical statutory provision on provisional testing-lab licensing that she said is now obsolete and recommended removing it to align statute and current regulatory practice.
Cindy Backaberg of the Department of Revenue and Kristen Barber and Erin McCarthy of the Cannabis Control Division answered committee questions on the fiscal note. Barber said a shift in the manufacturing licensing fee structure could reduce licensing collections by about $225,000 annually; the Department of Revenue had estimated a small (about 1 percent) reduction in tax collections from the net-tax change but could provide more detail on request.
Committee members and proponents repeatedly described the bill as a product of lengthy interim work by the Economic Affairs interim committee and the Cannabis Control Division, and they characterized today's proposal as modest, targeted implementation fixes rather than new policy.
Why it matters: SB 74 would change how some cannabis license fees are assessed and clarify tax and landlord-license procedures. The most immediately measurable effect is the Department of Revenue's fiscal estimate of reduced license-fee receipts and a small reduction in state tax receipts for some years after enactment.
