Montana revenue officials brief lawmakers on cannabis regulation, enforcement gaps and hemp loophole

Kristen Barber, administrator of the Montana Department of Revenue's Cannabis Control Division, told the Senate Business, Labor and Economic Affairs Committee that the division was created to implement the Montana Marijuana Regulation and Taxation Act following Initiative 190 and House Bill 701.

Barber said the act set adult‑use tax at 20 percent and medical at 4 percent, with a local option sales tax up to 3 percent. "Sales from January 2022 through November 2024 were estimated to be over $920,000,000," she said, adding estimated tax collections for that period were about $152,000,000.

The division licenses cultivators, manufacturers, transporters, laboratories, dispensaries and more; Barber said the agency currently manages about 900 business licenses, more than 5,000 worker permits and a little over 14,000 registered medical cardholders. The program has 35 full‑time equivalent staff and a roughly $10.9 million program budget funded from state special revenue.

Barber described enforcement tools and the inspection program: Montana is divided into five regions with 12 inspectors, the division performed about 1,200 inspections in 2023 (data through July) and uses annual, midyear unannounced and complaint‑driven inspections tied to its seed‑to‑sale monitoring. "We audit third party testing laboratories to ensure product safety and consumer protection," she said, noting the testing lab program recently transferred from the Department of Health and Human Services.

She flagged a rapidly evolving challenge: hemp‑derived products that are engineered to be intoxicating. "The 2018 Farm Bill created a loophole...the industry became very creative," Barber said, explaining that naturally derived intoxicating hemp products are federally legal in many cases but lack state standards for testing, dosing, labeling and age gating.

Committee members pressed the division on tribal consultation and inspection resources. Senator Weber asked whether the department consults tribes before licensing dispensaries on reservations; Barber said the statutory framework did not require tribal consultation and that, in some cases, the division stepped back because the law as enacted did not contemplate a tribal role. Director Bridal Beatty acknowledged earlier missteps when he tried to consult Fort Peck and said the department now follows county rules while remaining willing to meet with tribes.

On staffing, senators from multiple regions described high dispensary density and urged more inspectors. Beatty noted limits: "We are a civil agency. We are not law enforcement," he said, adding that enforcement against unlicensed sellers depends on local law enforcement and county attorneys and that additional staff and court resources would be needed for more aggressive enforcement.

Courtney Cosgrove, the division's senior cannabis legal counsel, reported active litigation: the division is "about to initiate a lawsuit against another synthetic marijuana provider" and is litigating earlier matters related to unlicensed retailers; she said there are also roughly 20 pending Office of Dispute Resolution matters and a small number of petitions for judicial review.

The committee heard technical details about tracking and audits. Inspector supervisor Devin Keller said every licensee is required to use Metrc to track product movement and sales; the division audits Metrc records against physical inventory during inspections to identify discrepancies.

Committee members and agency officials agreed there are policy choices ahead for the legislature — from moratoriums and residency requirements to potential THC limits and new enforcement resources. Barber and Beatty said they stand ready to implement policy changes passed by the Legislature and to consult with members on targeted solutions.

The committee is expected to receive additional information the agencies offered to provide, including maps of hemp growers, updated inspection statistics and links to materials referenced at the hearing.