Increased fees for Montana marijuana dispensaries on hold

Lewis and Clark County Courthouse
Posted at 5:22 PM, Nov 10, 2023
and last updated 2023-11-10 19:22:06-05

HELENA — During this year’s state legislative session, Montana lawmakers approved an increase in licensing fees for marijuana businesses that operate multiple dispensaries. However, that increase is on hold for now, as a part of an ongoing court case filed by business owners.

This week, attorneys for three marijuana licensees and the state of Montana submitted a joint agreement in Lewis and Clark County District Court to allow a 60-day preliminary injunction, preventing the state from collecting the increased fees from any providers. That injunction could be extended while the two sides work toward a negotiated settlement.

House Bill 903, passed just before the end of the 2023 legislative session, made a number of changes to Montana’s marijuana laws. One of those changes was to the structure of dispensary license fees. Before, licensees paid a flat fee of $5,000 for each additional dispensary. Under the new law, they would pay $5,000 for the first, $10,000 for the second and another $5,000 added to the fee for each additional one.

For Granite Peak Holdings, which first challenged the law in August, the change in fees would have a significant impact. According to a legal filing in October, the company – under the name Elevated – operated ten dispensaries last year and has since opened another four, with three more in the approval process. Under the old system, 14 active dispensaries would require $70,000 in fees – compared with $525,000 under the new system.

Two other licensees – TSB, which operates 15 dispensaries as Top Shelf Botanicals, and MariMint, which operates five – joined the lawsuit, expressing the same concerns. They said the new fee structure would be an unjustified “taking” of their property.

“If the State is not enjoined from implementing its newly enacted fee structure, Plaintiffs will have to shut down many of their dispensary locations resulting in employee job losses, harm to the public who utilize the Plaintiffs’ dispensary locations, loss of value in their owned and leased locations, and liability arising from probable breaches of their lease obligations,” the businesses’ attorneys said in a filing.

The plaintiffs argued Montana hadn’t done enough to justify why companies operating multiple dispensaries should be treated so differently to those with one or two. They pointed to a section of state law that says fees in the marijuana system should only be high enough to cover the state’s costs for regulating it – and they said there’s no reason enforcing the rules on licensees with more dispensaries would be that much more expensive.

Attorneys with the Montana Department of Justice defended the law. In a filing last month, they argued the state does have legitimate regulatory costs when licensees decide to open additional dispensaries. They said the plaintiffs couldn’t establish that there is a taking of property simply because they don’t have the opportunity for more locations.

“The burden on Plaintiffs is minimal,” the state’s filing said. “There exists one reason and one reason only that Plaintiffs seek to open different marijuana industry locations under the same license – they want to make money.”

The case was set to receive a hearing in district court this week, but that was canceled when the two sides submitted their agreement on the injunction.

A spokesperson for the Montana Department of Justice confirmed to MTN that they are beginning negotiations with the plaintiffs in this case, but declined to comment further at this time.