A Snapshot Of America's Medical Marijuana Markets: Montana

Montana's medical cannabis market has had its share of ups and downs since its inception in 2004. 

Several efforts have been made to stymie the medical cannabis market, including a 2011 legislative repeal of the market that was halted by then-Gov. Brian Schweitzer's veto.

In recent years, the state has seen changes to the program that have set the market on a new growth path. The most notable of the legislative changes might be ballot initiative I-182, which does away with the number of pateints a dispensary can register, was approved by voters in 2017.

Previous legislation placing caps on the market were blamed for decimating the state's previous growth.

Recent Legislation Brings Growth

With laws evolving, the Big Sky Country's market is expected to see modest growth in the years to come.

Medical spending is expected to jump from $95 million in 2018 to $144 million in 2024, according to data from BDS Analytics and Arcview Market Research.

The growth of the market will likely be backed by a rapidly growing medical patient enrollment, which has seen a 342% increase since October 2016. The increase brought January 2020 enrollment totals to just over 34,400 patients.

Substantial figures can be seen in the state's amount of registered dispensaries as well. In a state of 1.06 million people, 372 dispensaries have been licensed as of January 2020.

Montana has such a substantial amount of dispensaries that the city of Missoula has the most per capita in the United States.

Jay Bostrom, co-owner of Dancing Goat Gardens dispensary in the city, told Benzinga that while the city has a large number of providers, not all resemble traditional medical dispensaries like his business. In some cases, they are home-based storefronts catering to a small market.

Providers are on the decline since Dancing Goat Gardens entered the market two years ago, attributing the decline to small patient providers.

"A big percentage of those people were single-patient to 10 patient providers," he said.

Pain Points, Regulatory Changes In A Maturing Market

While Montana's medical cannabis market appears headed in a promising direction, concerns remain. For Bostrom, his prime anxiety is not the number of providers. Instead, it is the rules stipulating that each provider be vertically integrated.

The dispensary co-owner cited startup costs as a worry.

"It's almost an impossible task as a startup because you got to go buy the equipment." Another safety-related expense is a concern to Bostrom, though he supports the ruling.

In this case, extractors are now, depending on their municipality, required to use an explosion-proof room or closed-loop system when processing products using solvents.

"I'm not opposed to [the rules], but it is an expense that we don't currently have," Bostrom said.

Others contend that due to laws in parts of the state, like Missoula, residential extraction can still occur.

Extraction and startup costs are just two of the growing pains in Montana's market. Several recent proposed rule changes have piqued the interest of the marketplace as well.

In February, Montana proposed a restructuring of its fee system and checks for patient eligibility and purchase limits.  

However, advertising rules restricting what can be placed on ads had some believing the regulations would prevent patients from making informed purchases.

Max Savage Levenson of Leafly called the proposed rules "absurd restrictions to its erratic medical program." In March, Levenson highlighted the passage of SB 265 in May 2019, which ended patient tethering, as a step forward. It takes effect July 1, 2020.

However, the February proposals, which also aim to ban hemp flower and out-of-state CBD at dispensaries, create significant concerns.

In his article, Levenson wrote: "It's not merely the fate of the state's burgeoning cannabis industry that hangs in the balance, but the lives and wellbeing of the state's roughly 35,000 patients."

The U.S. Department of Agriculture approved the state's hemp production plan in March 2020.

Adult Use On The Horizon In Montana?

Adult use cannabis efforts are occurring at a rapid pace in Montana.

Two ballot initiatives have made progress to date. One initiative, backed by the group MontanaCan, proposes an 18-and-older age cap with no more than a 5% sales tax. The other effort, supported by New Approach Montana, strives for a 21-and-up age cap with a 20% excise tax.

A March 2019 poll from the University of Montana found that 51% of registered voters support adult use laws.

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