Local dispensaries see success in first year of recreational marijuana sales

Local dispensary owners saw strong recreational marijuana sales during its first year of legalization in Montana and Flathead County despite challenges.

Through November, retail cannabis sales countywide made almost $30 million, with two-thirds of those sales coming from recreational marijuana and the remainder from medicinal products, according to data from the Montana Department of Revenue. Big Mountain Botanicals owner Jesse Miller deemed the year rewarding but difficult.

“I’ve been waiting to do this since I was a teenager,” Miller said. “It’s been an exciting whirlwind so far.”

But high financial-compliance barriers making access to the banking system difficult and expensive pose challenges for homegrown dispensary owners, according to Pepper Petersen, president of the Montana Cannabis Guild, the industry’s lobbyist in Helena.

According to Petersen, while statewide sales were above predictions, dispensary owners are paying a “green tax” in the form of high banking and insurance fees that other retailers avoid. Petersen also hears from business owners that claim that law enforcement and regulators are squeezing them with massive fines levied for what he calls “innocuous” infractions.

Even though sales figures cited by Petersen show $300 in sales per adult Montana resident last year, he says that high costs and compliance requirements are “flaming hoops” that business owners must jump through.

Petersen fears that the growing market will soon be captured by larger, out-of-state businesses that can more easily afford armies of lawyers and accountants.

Cannabis Counter at Haskill Creek Farms, a boutique dispensary outside Whitefish, opened last summer. Marketing manager Colette Stroia said that so far sales have met their high expectations and the business plans on opening a dispensary in downtown Whitefish this summer.

Stroia agrees, though, that the high state taxes and fees are a barrier other industries don’t face.

According to Stroia, Cannabis Counter has hired specialized accountants to make sure they are fully compliant and able to access the banking system.

Supported by both of Montana’s senators, Republican Steve Daines and Democrat Jon Tester, the SAFE Banking Act would have removed restrictions cannabis businesses face in filing their income in the banking system. Due to federal restrictions, many licensed dispensaries still operate entirely using cash.

In a statement, Daines expressed disappointment that the bill did not become law during Congress’ last session. The bill has passed the House of Representatives seven times, most recently in July, but has failed to reach a vote in the Senate.

“Communities in Montana and across our country will remain vulnerable to crime where legal businesses are forced to operate in all-cash,” Daines said.

Jesse Miller says his company is in talks with local banks, but still does all transactions and pays its employees in cash. He said passage of legislation like the SAFE Banking Act would be a boon.

“It would allow small businesses to operate more safely and efficiently,” Miller said.

Stroia thinks passage of the bill would help out small businesses trying to get into the market. “It would break down barriers to entry for people,” she said.

Closer to home, Petersen worries about state legislators’ views on marijuana, pointing to what he describes an “anti-cannabis agenda” among Republican lawmakers. He thinks their moves to regulate the industry fly in the face of their stated goals of cutting red-tape for Montana’s small businesses.

“The hypocrisy smacks,” Petersen said. “If you’re concerned about your communities as a state legislator, why aren’t you working with these businesses?”

“They're not going to get rid of marijuana, they’re going to remove their neighbors and welcome the Walmarts of Weed,” he warned.

Miller also thinks the saturation of the cannabis market will prove to be a challenge in the next few years. It’s a situation he’s seen in other states with legal markets. Miller worries competition will continue to drive prices down, in what he describes as a “race to the bottom.”

IN MARCH, a 3% local option tax will go into effect on recreational sales in Flathead County, though medicinal use will still be exempt.

Voters in the county overwhelmingly supported the measure in November, with 72% agreeing that the county should collect a tax on top of the 20% state tax.

A small portion of those funds go to the state, but the rest will be split between Flathead County and Kalispell, Whitefish and Columbia Falls.

Had retail cannabis been taxed in 2022, it would have generated about $700,000 for county and municipal allocations.

County Administrator Pete Melnick said commissioners have not yet decided where the funds will go, but said that their preliminary discussions have prioritized law enforcement, drug remediation and mental health care.

Kalispell City Manager Doug Russell said the municipality is expecting about $250,000 from the new tax, and said it will go into the general fund to be appropriated in May.

Reporter Adrian Knowler can be reached at 758-4407 or aknowler@dailyinterlake.com.