MJBiz - March/April 2024 - 22

INDUSTRY DEVELOPMENTS State by State
Montana
A state judge restricted regulators from collecting escalating fees from adult-use cannabis
operators based on the number of stores they own. The order effectively overturns a key
element of House Bill 903, which required entrepreneurs with multiple retail licenses to pay
higher fees.
The law, signed by Montana Gov. Greg Gianforte in May, levied an initial licensing fee of
$5,000, with each subsequent permit costing an additional $5,000. So, a second location
would cost $10,000, a third $15,000 and so on. In some instances, the fee structure would cost
marijuana retailers more than $250,000 annually.
Helena Judge Mike Menahan issued the order Jan. 5 in response to a lawsuit filed by
state-licensed marijuana retailers Granite Peak Holdings, MaraMint and TSB Montana, the
Helena-based newspaper Independent Record reported.
In his ruling, Menahan wrote that the original fee structure " generated sufficient fees " to
cover operational costs of the state's Department of Revenue for regulating the Montana
Marijuana Regulation and Taxation Act, according to the news outlet.
Menahan also ordered that any fees paid under the new law should be returned to operators.
Adult-use sales in Montana began Jan. 1, 2022.
New Mexico
State regulators revoked the licenses of two cannabis facilities in Torrance County and issued
$1 million fines to each for violations such as growing too many plants and not complying
with the mandated track-and-trace system.
One of the companies, Native American Agricultural Development Co. (NAADC), is linked
to Navajo businessperson Dineh Benally, whose operations in another part of the state was
raided by federal authorities in 2020, according to the Associated Press.
Operations at that facility came to an end after the Navajo Department of Justice sued
Benally. Separately, Chinese immigrant workers also sued Benally, alleging they were required
to do illegal work trimming flower on the Navajo Nation.
The NAADC's license was revoked for eight alleged violations, including growing too many
plants, not complying with security and chain of custody procedures and poor pest and refuse
management, according to the Los Alamos Daily Post.
Authorities cited nearby Bliss Farm, which is not connected to NAADC, for 17 violations that
included not using the state's mandated track-and-trace system, growing too many plants
and erecting unlicensed structures.
An attorney representing Bliss Farm's investors told the Associated Press that he wished
regulators had worked with the company before revoking the license and issuing the fine.
New York
Gov. Kathy Hochul is proposing the elimination of the state's potency tax on marijuana products,
a potential win for the industry.
Under the state's 2021 legalization law-the Marihuana Regulation and Taxation Act-distributors
must pay half a cent per milligram of total THC for flower, eight-tenths of 1 cent per
milligram for concentrates and 3 cents per milligram for edibles. That's in addition to the 9%
sales tax and municipal taxes of 4% for retail sales.
Hochul proposed in her recently released executive budget the replacement of the potency
taxes with a wholesale tax of 9%. The change will simplify the tax structure and save operators
money, industry experts told MJBizDaily.
" Taxes are one of the biggest impediments to accomplishing a true legacy-to-legal transition
and pose the greatest disadvantage for legal operators in their ongoing efforts to compete
with the illicit market, " Lauren Rudick, founder and managing principal at Rudick Law Group in
New York City, told MJBizDaily.
22 March-April 2024 | MJBizMagazine

MJBiz - March/April 2024

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