Medical marijuana business owner has concerns about what legalization will do to businesses like his

(Editor's note: This is the third in a series about the recent legalization of marijuana in Montana.)

Medical marijuana has been legal in Montana since 2004, giving anyone with a doctor's prescription access to the federally banned substance since then. There were 41,638 medical marijuana cardholders in the state as of December 2020, according to information from the Montana Department of Health and Human Services. With the passage of I-190 in November's election, recreational marijuana was legalized, expanding access to the substance even further for Montana's adults.

New Approach Montana, the group that advocated in support of legalizing recreational marijuana leading up to the election, has held the initiative as a positive for the state, citing a report from the University of Montana's Bureau of Business and Economic Research that estimates the sale and taxation of legal marijuana will generate between $43 million and $53 million in additional revenue to the state annually. However, representatives of some of the state's existing medical marijuana dispensaries don't believe legal recreational marijuana will work as expected and may even end up damaging smaller operations.

"I basically think the recreational will push the medical out. It has in most states and I think it's a very bad thing for Montana," said Around the Clock Cannabis owner Rick Whatman.

Among the concerns Whatman has with recreational dispensaries moving into the state, he noted that the relationship between banks and marijuana-related businesses was one of the bigger ones. Since marijuana, whether it's medical or recreational, is still a federally outlawed drug, many banks don't deal with marijuana businesses since they are federally regulated. This means dispensaries have to limit themselves to cash-only transactions, as they don't have the ability to accept cards.

Whatman did note there is one bank, which he chose not to name, which does deal with marijuana businesses, therefore letting its customers use cards at dispensaries. The process of getting setup with the bank, however, is a bit complicated.

"Basically there's only one bank that allows medical marijuana and you have to do a certain amount of money for them to be able to accept you. Then they charge you a high monthly fee, plus they charge you a percentage of your deposits. So once you're willing to go through all that, then you have a bank account, then you can run different types of - there's different programs out there that you can run different credit card companies, but it's really not a credit card in a way, it's a debit card, then that is able to be used," he said.

With banks being federally controlled, Whatman doesn't see the current relationship between banks and dispensaries changing anytime soon, even with the new law. He noted that this could be troublesome and disadvantage smaller businesses.

"Basically, it puts everyone at risk still. Now what (the change in the law) does is allow big corporations and big money people to come in and push out your ma-and-pa stores because nobody can go to the bank and get a loan. It all has to be cash," he said.

However, the installation of larger, out-of-state businesses won't come right away. Licensing of new recreational marijuana businesses will be the responsibility of the Department of Revenue, which will be required to start accepting applications for licenses no later than Oct. 1, 2021. However, under Section 5 of I-190, the department will only be able to accept applications from and issue licenses to entities that are already licensed for medical marijuana in the state for the first 12 months. According to New Approach Montana policy advisor Dave Lewis, this was put into the legislation as a way of giving Montana's existing dispensaries a head start in the recreational market.

"This is going to be a very, very big business, and we wanted to give the folks who basically started it, the pioneers if you will, the opportunity to take advantage and grow, literally," Lewis said in an election night interview with the Bozeman Daily Chronicle.

Whatman noted that he will be one of the people taking advantage of that time frame, as his business will be doing both medical and recreational sales. The law does prohibit Whatman from holding both a medical dispensary and recreational dispensary license, so he'll need to have a business partner carry the recreational license.

Other than what is stated in the law, it will be difficult to gauge just how much will change in respect to medical marijuana. There are currently about 50 bills, both introduced and un-introduced, in the state senate's Alcohol and Drugs Committee that touch on marijuana in some way. One of the more significant ones proposes dropping the 4% tax on the sale of medical marijuana and instead using a portion of the 20% tax on the sale of recreational marijuana to support the state's medical marijuana program.

With so many bills for the committee to consider, it's likely that a large majority of them won't pass, but a handful might, meaning what other changes may come are uncertain at this time.

Reach Hunter Herbaugh at [email protected].