Three Montana counties pass recreational marijuana taxes

In Tuesday’s municipal elections, three Montana counties passed measures enacting local taxes on marijuana sales by large margins, while Billings rejected a measure to permit recreational cannabis sales within city limits.

Voters in Missoula County approved a 3% tax on recreational cannabis, but rejected an identical tax on medical marijuana. Park and Yellowstone counties both passed measures that put a 3% local tax on both recreational and medical marijuana sales.

Those local taxes will be added to a baseline 20% state tax on recreational cannabis sales and a 4% state tax on medical marijuana sales.

The ramifications of the tax in Yellowstone County are complicated by the city of Billings’ concurrent vote to prohibit recreational cannabis sales within city limits. (Other kinds of cannabis licenses, such as testing labs, cultivation and transportation, will still be permitted.

It’s unclear whether that vote will impact Billings City Council’s planned ordinance to allow four medical dispensaries in the city, and whether those businesses will be allowed to expand into recreational sales next year. The issue is on the agenda for the council’s Nov. 8 meeting.

Karen Tracy, assistant city attorney for Billings, did not immediately respond to a request for clarification.

Some proponents of cannabis legalization, while disappointed in the Billings prohibition, nonetheless argue that municipal choice — enshrined in House Bill 701, the state’s legalization framework bill — is more important than the vote result.

“That’s a wonderful part of 701. I think that’s important in Montana,” said Dave Lewis, a former Republican state lawmaker and longtime proponent of cannabis reform who now serves as strategic adviser to the Montana Cannabis Guild. 

“I may not always agree, like with Billings’ [decision], but still, it’s important to allow local governments and local people to make decisions about what we do,” Lewis said.

The taxes are expected to generate substantial revenue for the respective counties. HB 701 specifies that revenue generated from the statewide tax will be distributed to several sources, primarily the state’s General Fund. None of that revenue is allocated directly to counties.

Missoula County estimated it would generate about $716,000 annually from a tax on both recreational and medical marijuana. It remains to be seen how much revenue the recreation sales tax alone will generate. 

Park County Commissioner Steve Caldwell estimates that the county will bring in $50,000 to $60,000 annually from the recreational tax, and an additional $8,000 to $10,000 from the medical tax. 

Caldwell also noted that a million tourists visit the county each year, often to visit Yellowstone National Park. Those visitors’ interest in purchasing cannabis could have an enormous impact on the county’s revenue.

“That’s the root of the mystery,” Caldwell said.

All three tax approving counties will allocate 50% of the revenue to the county government; 45% to specific municipalities, and 5% to the Montana Department of Revenue. 

Missoula County intends to put its share toward housing and property tax relief.

Park County will split its revenue between its general fund and county law enforcement.

“I think [these votes] reinforce the fact that the public is more and more comfortable with the cannabis industry,” Lewis said. “I think we’re moving past the Reefer Madness world.”