The Montana regulator is restricting licenses for growing tribal cannabis

Native American tribes in Montana have been reluctant to apply for cannabis licenses reserved for them by the state’s Marijuana Regulation Act after a state regulator restricted the size of grow operations allowed by the permits.

In 2020, Montana voters passed Initiative 90, a measure to legalize adult-use marijuana and allow for the production and sale of cannabis. The following year, state legislators passed House Bill 701 to create a regulatory framework for commercial cannabis production and retail sales. HB 701 provided cannabis licenses to the state’s Native American tribes, with each tribe automatically assigned a single combined use license to grow and sell cannabis. Under the terms of the measure, facilities authorized by the licenses may not be located on tribal lands, and cultivation and retail must be co-located.

After the 2021 legislature, the Interim Committee on Economic Affairs sought to confirm with the Treasury Department that although the licenses are defined in state law as Tier 1 licenses limited to 1,000 square feet, the licenses could eventually be upgraded to a license allowing for larger cultivation enables operation. But in a reply letter sent to the committee on June 2, Treasury Director Brendan Beatty wrote that tribes are not allowed to expand beyond the cultivation area permitted by the Tier 1 license.

Montana Legislative Dispute Limitation

But lawmakers, including state Senator Jason Small, a member of the Northern Cheyenne tribe, say the restriction to Tier 1 grows, the state’s smallest legal facilities, limits the strains’ success and acts as a barrier to entry into the regulated cannabis industry of Montana will serve.

“During the last legislative session, many tribes and legislators finally saw this as an opportunity for tribes to step into the marijuana industry on an equal footing and generate additional revenue for themselves. ‘ the lawmaker told the Montana Free Press.

Small was a supporter of the inclusion of automatic combined-use licenses in House Bill 701. Since the bill’s passage, he has advised other members of the Northern Cheyenne community considering a foray into the legal cannabis industry. To date, none of the Montana tribes have applied for the licenses reserved for them by House Bill 701. Small believes the limitation to Tier 1 licenses is at least partly responsible for the reluctance of tribes.

“Unfortunately, the Treasury Department seems to have tried to hamper our efforts,” he said. “I’ve had conversations with a few different tribes who said, ‘Why bother if they’re hindering us here?'”

In his letter, Beatty cites language from HB 701, which states that “a marijuana license for combined use consists of a Tier 1 canopy license and a dispensary license permitting the operation of a dispensary.” He added that the restriction limits licenses provided for strains to a grow operation no larger than 1,000 square feet.

“Notwithstanding this committee’s stated desire to allow co-use licensees to advance beyond a Tier 1 license, the law is clear and unambiguous and limits a co-use licensee to a single Canopy Tier 1 license,” writes he.

State Senator Shane Morigeau, a member of the Interim Committee on Economic Affairs, also supports the licenses for tribes and worked with the Treasury Department to clarify the HB 701 bill.

“Obviously, Tier 1 is the entry point, not the cap,” Morigeau said. “Among Democrats and Republicans alike on committee, we agree that this is not what the law language says, and [the restriction to tier 1] is not what we wanted.”

Morigeau believes an administrative regulation approved after the passage of HB 701 clarifies the intent of the legislature, noting that the licenses reserved for Native American tribes are “subject to the marijuana laws,” which govern all of the state’s cannabis licenses.

“The rule anticipated what the legislature wanted,” Morigeau said. “The Interim Committee on Economic Affairs has made that very clear.”

Views of the supervisory authorities contradictory

During a meeting of the Interim Committee on Economic Affairs in April, Kristan Barbour, the administrator of the Treasury Department’s Cannabis Control Division, confirmed the legislature’s desire to be able to expand licenses in the future.

“We have received direction from this entity that you wish to treat this license like any other license,” Barbour said.

But Beatty argues that Barbour’s position is not consistent with HB 701.

“MS. Barbour’s testimony sought to direct what she believes this committee would like to see with combined-use licensees, as opposed to what is codified in the law,” Beatty wrote. “During her testimony, Ms. Barbour may have erroneously stated this [committee] to believe that combined use licensees function like any other license.”

Although the restrictions imposed by the Treasury Department affect the licenses granted to tribes by the legislature, they do not permanently prevent Native American communities from participating in Montana’s regulated cannabis industry. When the state moratorium on new cannabis licenses expires on July 1, 2023, members of tribal communities will be able to apply for licenses that do not include Treasury Department restrictions.