Another upcoming market shake-up is the decoupling of patients from providers, a consequence of Senate Bill 265, which will take effect no earlier than July 1, 2020. Instead of being restricted to buying medical marijuana exclusively from a single provider, patients will soon be allowed to buy from any provider. New Approach’s proposed initiative would give a leg up to established dispensaries over out-of-state speculators by preventing the health department from licensing adult-use providers if they or their investors “before July 1, 2021, [have] resided in Montana for fewer than three years except if the provider or marijuana-infused products provider was named by a registered cardholder by June 30, 2017.” The residency requirement switches to one year after July 1, 2021. Other lucrative sectors of the marijuana business are baked into Montana’s current regulatory scheme, such as private testing labs. State law mandates that providers submit their products for safety compliance, which can cost from $300 to $700 per five pounds. Confusion over rules regarding testing labs and independent THC extraction labs that are external to a provider’s business led to multiple lawsuits against the health department from large providers like Lionheart Caregiving over the past few years. After a flurry of debate in the 2019 Legislature, lawmakers passed SB 265 to further clarify the state’s medical marijuana regulations. While much of Montana’s medical marijuana industry supported the bill, Lionheart opposed it, with its attorney, former Montana federal drug prosecutor Josh Van de Wetering, saying at an April legislative hearing that new restrictions limiting how many providers independent extraction labs are allowed to work with would hurt Lionheart’s business.
"We should be able to grow on our own lands," Nez Perce matriarch Alice "Jeanie" Johnson says in the inaugural issue of Tribal Hemp & Cannabis, a new magazine founded by her granddaughter. #Hemp #Cannabis #Sovereignty #THC https://t.co/qgsXF6KyFt— indianz.com (@indianz) February 15, 2020
Lobbying records also show that Lionheart paid $20,000 to political consultant C.B. Pearson and his firm, M+R Strategic Services, to oppose SB 265 for the same reason. The lobbying report was certified by another Lionheart attorney, former Democratic state Rep. Ellie Hill Smith (now running to represent a Missoula district in the Montana Senate). In November 2018, investors in an independent extraction lab registered to Hill encouraged Lionheart to sue the health department after the state rejected the provider’s permit to work with the lab, according to an affidavit filed by Hill’s husband, who was an investor in both the extraction lab and a separate marijuana testing lab, the latter of which he has since divested from. Pearson said last August that his firm, which successfully organized Montana’s 2016 medical marijuana initiative, is working with undisclosed clients on an additional adult-use marijuana ballot initiative. Reached Feb. 12, Pearson said M+R now hopes to work with New Approach, but that they are “still in discussions.” A third faction trying to legalize adult-use marijuana on the 2020 ballot is grassroots group MontanaCan, whose proposed legislation differs from New Approach’s in many details. One of the major distinctions is each group’s proposed sales tax, with MontanaCan proposing 5%, and New Approach 20%. MontanaCan’s proposal stipulates tax revenue going to “various state programs and local government entities,” while New Approach’s specifies taxes going to “conservation, substance abuse treatment, veterans services, health care, local governments, and general revenue for the state.” An initial analysis by New Approach last year calculated that its tax scheme would generate $35 million in tax revenue annually by 2025, which frontman Pepper Petersen said in an email to MTFP was arrived at by comparing adult-use marijuana sales figures from other states and adjusting for population.
Hunter Pauli is a Seattle-born, Missoula-based freelance investigative reporter and graduate of the University of Montana School of Journalism. You can follow him on Twitter @paulimeth.
This story originally appeared on Montana Free Press on February 26, 2020. It is published under a Creative Commons license.