Three visions for recreational marijuana emerge from Montana House

Montana’s medical marijuana program had a rocky beginning — a ballooning number of dispensaries and patients following legalization in 2004 led to raids by the feds, lawsuits and regular intervention from Republican lawmakers that kneecapped the program after nearly killing it altogether.

All that is no secret to Rep. Mike Hopkins.

The Missoula Republican often mentions that “Wild West era” in legislative debates and conversations with the press and public. But he doesn’t do it to scare people away from legal pot. Rather, he uses that time in the state’s recent past as a reference point and a lesson in how the state can take next steps into uncharted (at least for Montana) territory: A policy regime providing for legalized, taxed and strictly regulated recreational marijuana for adults 21 and older.

That’s the objective of House Bill 701, an expansive bill standing up an adult-use marijuana system that a somewhat reluctant GOP majority in the state House approved 59-41 Tuesday evening following lengthy floor debate in which lawmakers dispatched dozens of amendments. In doing so, they moved what Hopkins believes to be one of the most comprehensive marijuana implementation plans anywhere in the country a step closer to becoming law.

As the bill stands currently, licensing for dispensaries — a process that current medical marijuana businesses have an 18-month head start on — would begin in January, with retail likely beginning in March. The bill would move almost all of the state’s marijuana program from the Department of Health and Human Services to the Department of Revenue, as well as set up a complicated regulatory system for both halves of the industry.

It would also create a process for the re-sentencing and expungement of previous convictions for marijuana possession, though not quite to the degree as Initiative 190, which set in motion the process of legalization when voters resoundingly approved the measure in November.

“HB701 seeks to learn from those days and start out with a controlled, safe, responsible implementation for the growing, transporting, testing, manufacturing, selling, taxing of adult-use marijuana in the state of Montana,” Hopkins said on the House floor Tuesday.

More than two dozen amendments from both parties sought to address some of the bill’s most controversial components, like taxation and the allocation of state revenues. But most of the bill emerged intact, including a provision reviled by the pot industry allowing county governments the ability to opt-in to recreational marijuana, which some opponents warned could even outlaw existing medical marijuana businesses in some counties.

“At the very least, we need grandfathering in,” said Adam Arnold, a Bozeman dispensary owner, when the bill was heard in committee last week. “Conceptually, this is anti-business in general to license and regulate us as medical over the course of the decade — and then threaten to take away millions of dollars.”

In addition to opposition from the existing industry, many in the legislative majority have been hesitant to embrace the bill, either because of certain provisions or an overall distaste for recreational marijuana.

That reluctance has manifested in two other Republican proposals to implement recreational marijuana in the state, HB670 from Rep. Derek Skees, R-Kalispell, and HB707 from Rep. Brad Tschida, R-Missoula, both of which also passed a House vote on party lines Tuesday. Lawmakers on a House panel last week surprised Helena by killing HB701 — only for it to be revived after frenzied negotiations — when one of those bills, HB707, seemed like it wouldn’t make it out of committee.

HB701 implements parts of a proposal that voters approved last year with 57% of the vote in the form of I-190, an initiative that legalized adult-use marijuana with a distinct vision that itself built on a 2016 initiative, I-187, that repealed the three-patient limit for medical marijuana dispensaries. In all likelihood, the other two bills in the Senate will be wrapped into HB701, Skees said, as many House Republicans felt that the flagship proposal appeared too late in the session to be reconciled with the competing desires for legalized marijuana within the party.

“With I-190, it seems to me that there is a majority in the state of Montana that says two things: The first being that they do not see the reason why the state of Montana allows marijuana to be illegal given what we do with alcohol and all the rest, and second that they’re not interested in seeing a repeat of our process with medical marijuana,” Hopkins said.

The federal government, Hopkins said, has treated marijuana as a Schedule I drug — the same classification as heroin — since before he was born. And though not every Montanan voted to change that locally, and though certainly not every legislator supported I-190, the majority of voters have signaled that they’re ready for something new.

Lawmakers in the House passed all three bills as a means of ensuring as much input as possible throughout the process. Many Republicans aren’t happy with HB701, and, along with Democrats who oppose the bill for its lack of adherence to the funding provisions of I-190, could well have killed the plan entirely. In a GOP caucus meeting ahead of debate, a series of hand counts revealed that HB670 and HB707 had far more consistent support among Republicans than HB701.

But House leadership urged their members to move all three bills to the Senate for further changes. I-190, they said, is already in statute, and doing nothing meant that recreational marijuana would be implemented as the initiative stated.

“If we do not pass anything during this legislative session, I-190 is what we get,” House Majority Leader Sue Vinton, R-Billings, told her caucus. “If we pass all three of these bills, they keep moving. Your leadership wants all three of these bills to progress.”

HB701 has taken a long journey to this point. For months, lawmakers, state agencies and stakeholders from the marijuana industry have been working the bill, which clocks in at more than 140 pages. It finally debuted last week, but not without competition from Tschida and especially Skees, an opponent of legalization who resisted one of the primary contentions of both the bill and the underlying initiative: Future tax revenues from the sale of recreational marijuana, which by some estimates could reach $50 million by 2025, should be used to fund certain government programs.

“I don’t want to grow government in any way,” Skees said, pointing to programs like the HEART Fund.

What to do with revenues from pot sales — and how much to tax the product — is one of the key sticking points of this debate. I-190, as approved by the voters, taxes recreational marijuana at 20% and allocates the bulk of weed tax revenue to conservation, wildlife and public access programs in the Department of Fish, Wildlife and Parks such as Habitat Montana, under which the department can acquire private lands for wildlife protection. Other revenues would have gone to veterans’ health services and a small percentage to the state general fund.

One issue: The Constitution gives the Legislature the sole authority to appropriate funds. Language in I-190 directing those monies — which proponents have defended as mere suggestions that the Legislature should follow — gave rise to a lawsuit that some opponents of legal weed hope might knock out the program before it can get off the ground. As a result, all three of the Legislature’s attempts at implementing the initiative also significantly depart from the I-190 language, which has earned them opposition from Democrats, conservationists and I-190’s primary drafter, Montana Cannabis Guild president J.D. “Pepper” Petersen, who said Tuesday that the Legislature has shown a consistent “disregard for the will of the voters.”

“This legislative shell game comes as state data shows surging pressure on Montana’s natural resources. These bills all ignore the unmet needs of Montana’s landowners, hunters, anglers and outdoor recreationists — and the will of 341,037 Montana voters,” said Montana Wildlife Federation director Frank Szollosi in a committee hearing before floor action.

Hopkins’ bill also taxes recreational marijuana at 20% and would send $6 million to the HEART Fund, a substance abuse treatment program proposed by Republican Gov. Greg Gianforte, add $500,000 to tribal addiction prevention services, make small investments in outdoor recreation and preservation, and stash the majority of revenues in the state general fund. Initially, it also would allow a local entity to impose an optional excise tax, a provision that Republicans removed through an amendment Tuesday despite Hopkins’ protest.

Skees’ HB670 would impose a 15% tax, use the bulk of the revenues to pay for public employee pensions, and place the remainder in an interest-accruing trust fund to mitigate whatever negative effects from legalization might come. Tschida’s bill would only tax marijuana at the wholesale level, significantly reducing projected revenue from legalization. However, Tschida and others have said, keeping the tax rate low could be important to prevent the growth of a black market post-legalization.

Some of those desires were reflected in other amendments Tuesday, such as one proposal — which ultimately failed — to bring the tax rate in HB701 down to 15%.

“Taxing of marijuana should in no way be viewed as a revenue source,” said Rep. Rhonda Knudsen, R-Culbertson, who brought that amendment. “We should not be making money on marijuana.”

Democrats also brought several amendments, including one to reverse the opt-in language to opt-out language — as is in I-190 — and another to restore the funding for wildlife and conservation programs that was in the initiative, though these ultimately failed. As with everything that happened Tuesday, these concepts can reappear in the Senate, where the bills will move after a hearing in the House Appropriations Committee on Wednesday and a final floor vote in the lower chamber.

“Just because we have the power to ignore the will of the voters doesn’t mean we should use it,” said House Minority Leader Kim Abbott, D-Helena. “57 percent of voters were clear that they wanted recreational marijuana revenues to go in a certain direction.”