As Montana prepares for recreational use, cannabis supply worries loom As Montanans prepare for the opening of retail cannabis stores next month, worries have surfaced about the state’s likely limited supply of cannabis and whether it will be enough to meet demand.
As Montana prepares for recreational use, cannabis supply worries loom
When the state’s legislative session begins, the question of what type of distribution system should be established will be among the earliest to be decided. That’s because the first recreational marijuana shops won’t open for another six months. But, as the state prepares for a green rush, lawmakers and officials have begun to discuss what sorts of distribution systems and regulations they want to establish.. Read more about are there recreational dispensaries in montana and let us know what you think.
Several times a day, a stranger walks into one of Paulson Palmer’s three dispensaries in northwest Montana and asks if he can buy marijuana. The answer is almost always no.
While Palmer’s Fruit Factory will be allowed to sell cannabis to Montana residents with a medical marijuana card, the sale of non-medical cannabis to adults will not be allowed until Jan. 1, 2022 – news that could be confusing to foreign tourists who may have heard that weed has been legalized in Big Sky Country but have not followed the new law.
Proponents of adult-use marijuana, the fact that customers are already trying to buy it is a sign that their prediction that legalized cannabis will become a multi-billion-dollar industry in the state has proven correct. But this catch-up question gives rise to another problem: Will dispensaries in Montana be able to meet this demand in January?
I think the weed will run out in less than a week, said Pepper Petersen, president and CEO of the Montana Cannabis Guild. The same thing happened everywhere when the market for leisure services opened up. Today we can barely keep up with the demand [for medical marijuana].
According to a 2020 study by the University of Montana’s Bureau of Business and Economic Research, adult Montanans consume between 30 and 33 tons of cannabis per year for medical and recreational purposes (although recreational use remains illegal). In fiscal year 2020, approximately 12 tons of cannabis were consumed by medical marijuana users. Petersen and others in the industry estimate that the adult-use cannabis market will be three to five times larger than the current medical market when it opens next year.
According to the UM study, legal cannabis will also attract tourists to Montana, just as it has in other states. According to a 2019 survey by the Colorado Office of Tourism, 6 percent of tourists reported that legal marijuana was a primary reason for their visit, and 15 percent of all tourists visited at least one dispensary. According to the UM study, Montana will see similar percentages.
But cannabis can’t be grown overnight, and there are limits to how much a dispensary can produce. Under the Montana Annotated Code, growers are only allowed to grow a certain amount of cannabis at a time, according to a tiered system. A Level 1 producer can grow up to 1,000 square feet and a Level 9 producer can grow up to 20,000 square feet in six locations. Petersen says there are only a handful of growers in the state growing at this level.
In addition to legal restrictions, there are also financial ones. Growing this much cannabis requires a significant investment and not everyone has the resources to increase production to the legal maximum. Because cannabis is still federally prohibited, it is nearly impossible for growers to obtain traditional financing, as banks are reluctant to work with dispensaries due to the federal ban. The federal ban also prohibits dispensaries from bringing cannabis across state lines, even in states where marijuana is legal.
Michaela Schager, owner of Montana Medicinals in Missoula, said she did her best to increase the harvest in the months before the adult market opened. According to her, it takes at least seven to nine weeks for the cannabis plant to fully bloom, and she fears that this will not be enough.
I think we will see some market disruption in January and February, and it will probably take a few months for things to settle down, she said.
Schager says the recreational market will create a very different landscape for her and other established healthcare providers. Perhaps the most significant change will be the shift from a vertical market where distributors all had to grow, produce and sell their own products, to a horizontal market where companies can wholesale and target specific market niches. The Department of Finance, which manages the adult market and has been in charge of the medical system since the 2nd quarter of July, will issue five different types of licenses to growers, including cultivation, production (of edible and other marijuana products), sales, laboratory testing and transportation. A company can have different types of licenses.
Montana Medicinals will initially apply for several licenses, but Schager hopes her company can focus on one or two different products and source other types of marijuana from other dispensaries. She stated that Montana Medicinals specializes in nutritional products and wants to continue to do so.
Palmer, who manages Fruit Factory stores in Columbia Falls, Evergreen and Libby, said he hopes the pharmacies will work together more.
I think pharmacies will really focus on the products they are best at, he said.
The supply shortage could be just one of many problems facing the cannabis industry in the state. The Department of Finance will draft administrative rules in the coming months, and Schager said many details still need to be worked out. For example, Schager says it’s still unclear what is allowed on the packaging of recreational marijuana (Bill 701 requires the packaging to have a white label with the logo, product name and THC content, while Bill 249 requires the packaging not to be attractive to children). Until the Treasury provides more detailed guidance, it will refrain from developing and purchasing packaging materials.
Kristan Barbour, administrator of the Treasury Department’s cannabis control division, said the agency plans to begin the rule-making process in the coming weeks and hold administrative hearings on advertising and other issues in August and October. Barbour encouraged the public to visit MTRevenue.gov/Cannabis to sign up for updates on the trial.
Shagher and other vendors will be following this case closely.
It’s going to be a whole different ball game, she says. There is an uptick in activity in the community right now, but I would say most sellers are under a lot of stress.For most of the past decade, the Montana legislature has passed and the Governor has signed laws—and the Drug Enforcement Administration has rejected—that would have allowed for the cultivation and consumption of cannabis (marijuana). Debate on the issue was revived this legislative session, with some lawmakers pushing for a special legislative session to address the issue again.. Read more about montana legislature 2021 and let us know what you think.
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