Voting Matters

When Blaine County voters exercise their right to vote in the primary election on June 7, they will do more than determine which candidates will advance to the General Election ballot in November. They will play a role in deciding how the marijuana business gets regulated.

The ballot issue—Blaine County Local-Option Marijuana Excise Tax—is a result of House Bill 701 which made some modifications to the voter approved Initiative 190 (I-190), a law to legalize the sale and use of marijuana. One of those modifications would give local governments authority to regulate marijuana businesses through taxation.

The ballot text for this measure is as follows: “Shall Blaine County impose a three percent (3%) local-option marijuana excise tax on the retail value of all non-medical marijuana and all non-medical marijuana products sold and medical marijuana and medical marijuana products sold within Blaine County Montana.

[ ] FOR a three percent (3%) Marijuana Local-Option Excise Tax

[ ] AGAINST a three percent (3%) Marijuana Local-Option Excise Tax”

Excise taxes are often applied to products or services in order to curb consumer consumption for health or even environmental reasons. For example, products like tobacco, alcohol, and gasoline carry excise taxes.

According to Montana law, “the revenue from a local-option marijuana excise tax may be used for any activity, undertaking, or administrative service that the County is authorized by law to perform, including costs resulting from the imposition of the tax or due to administrative burdens imposed on the County as a result of licensing or regulatory requirements.”

The tax would be 3% at the county level for both recreational (non-medical) and medical marijuana options. The total tax on medical marijuana, when added to the state’s 4% tax, would be 7%. The total tax for recreational marijuana, when added with the state’s 20%, would be 23%.

Of the three percent collected, 50% of the local-option tax is retained by the county, 45% is apportioned to the municipalities, and 5% goes to the Department of Revenue to cover administrative costs.

On the surface, this approach sounds straight forward. After all, who doesn’t want more money for the county’s operation—especially since I-190 may increase a need for more law enforcement and other protective services, all of which come at a cost.

One might conversely ask, “Why shouldn’t marijuana—just like alcohol and tobacco—carry an excise tax? That’s only fair.” Furthermore, one of the arguments in favor of legalizing marijuana was that sales could generate tax revenue.

However, other aspects require consideration—how a voter feels about

the issue of marijuana as medicine, for example, and how any unintended consequences may play out.

Well-intended government policies created for one set of purposes almost always generate additional results that were not part of the original plan. For instance, although the cannabis business can potentially create jobs and provide safe, regulated products to a customer base, an added excise tax may make purchasing legal cannabis more expensive than illegal supplies. Under those circumstances, the illegal market might flourish by undercutting the prices of legal businesses. This might happen even though some people were swayed into voting for the legalization of marijuana by the argument that regulating cannabis would replace criminal sales with a tightly regulated system.

According to the Montana Department of Revenue Cannabis Control Division (CCD), there is only one Licensed Dispensary location currently operating in Blaine County. That business located at Harlem is Native Grown, an Adult Dispensary. All products carried here would be subject to the tax.

Chinook is also listed as having one licensee holding a manufacturer license. Big Sky Extracts, a CBD extraction and packaging company that produces CBD and CBG concentrates, salves, and tinctures is licensed as a Marijuana Infused Product Provider (MIPP). This business, however, would not fall under a local option tax for a couple of reasons, according to Kristan Barbour, an administrator with the CCD.

“Hemp products (CBD) are not licensed under the cannabis program, so they fall outside the Cannabis Control Division’s purview of regulatory oversight, as they are not considered a marijuana product. Second, the local option tax would only be applied at the dispensary level where a marijuana product is actually sold to a customer,” Barbour explained.

She added: “If the hemp products are mixed with a marijuana product, that would then fall under the CCD regulatory framework and we would indeed require laboratory testing for safety and the appropriate package and labeling required of all marijuana products sold at a licensed dispensary.”

All of this information suggests that voters should invest some time and research in order to make an informed decision on the current ballot measure. Paying close attention to the growing body of evidence emerging from states like Washington and Colorado—states that were involved in the beginning stages of regulating and taxing marijuana—will add to a voter’s information base.

Every vote matters. The power of the vote can be seen in a Blaine County Abstract of Votes on I-190 from the Montana General Election as reported on November 3, 2020:

Regardless of the vote on this ballot measure, all local governments may, by ordinance or otherwise, regulate a marijuana business that operates in its jurisdiction, including inspections to ensure compliance with any public health, safety, and welfare requirements established by the Department of Revenue or the county.

Additionally, according to a circular published by the Montana Association of Counties, “In counties where a majority of voters voted for I-190 or that have approved marijuana business categories through referendum, a vote may be taken to disallow the previous approved or allowed operations within the jurisdiction.”

That leaves voters with another option for a future ballot measure.