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In a substantial blow to cannabis prohibitionists, residents of Yellowstone County soundly rejected a referendum on Tuesday’s primary ballot that would have banned not just recreational marijuana sales, but all related recreational cannabis industry licenses — testing, manufacturing, growing and more — within county lines.

Yellowstone County, which has the largest population of any county in the state, has also generated the most revenue month-over-month since the recreational market launched in January, even though sales are not permitted within Billings city limits.

Elsewhere across the state, Montanans showed strong interest in generating local revenue from the burgeoning marijuana industry. Twelve counties voted to add a 3% local tax to both adult-use and medical marijuana sales. Ravalli County additionally voted to tax adult-use, but not medical marijuana. 

In the only exception to the pro-business trend, Granite County narrowly voted to overturn adult-use sales. In response, the manager of the county’s sole adult-use store has already begun planning to gather signatures to get a new vote on a subsequent ballot.

“I think we as citizens are sick and tired of Reefer Madness,” said Pepper Petersen, president of the Montana Cannabis Guild. “You’re seeing it at the polls.”

CANNABIS WINS IN YELLOWSTONE COUNTY 

Cannabis industry proponents got their biggest win on Tuesday in Yellowstone County, where residents rejected a ban by a margin of 58 to 42.

Zach Schopp, president of Better Montana and owner of Seed of Life Labs dispensary, expressed surprise that the margin was so large. 

“I had a sense we’d pass by one percentage point, or two at best,” he said. “I’m floored.”

Schopp said he was concerned that many county residents were burned out on voting for weed. In November 2021, Billings voted to overturn marijuana sales within city limits.

“The entire goal was to activate voters. We know that the majority of people here want to keep recreational sales in Yellowstone County. We just needed them to get out and vote and make their voice heard again,” he said.

 “The entire goal was to activate voters. We know that the majority of people here want to keep recreational sales in Yellowstone County. We just needed them to get out and vote and make their voice heard again.”

Zach Schopp, President of Better Montana

Petersen said he suspects marijuana businesses may interpret Tuesday’s vote as a green light to set up and expand existing operations within the county. “There’s probably going to be an entrepreneurial rush,” he said.

Meanwhile, Safe Montana founder Steve Zabawa intends to continue the fight for prohibition, both in Yellowstone County and statewide. 

“We’re continuing to work hard with the legislators and the governor to repeal marijuana out of the whole state,” he told KTVQ Wednesday.

Reached for comment, Gianforte press secretary Brooke Strokye said, “I can confirm Mr. Zabawa has contacted the governor’s office, and the administration will continue to safely, responsibly enact the will of Montana voters.”

GRANITE COUNTY FLIPS RED

Industry proponents had less luck in Granite County, where a campaign led by Safe Montana (the same organization that led the charge for prohibition in Yellowstone County) succeeded in flipping the county from “green” to “red.”

Just one dispensary, Top Shelf Botanicals, currently operates in the county. The repeal will force it to halt recreational sales, but it will continue to sell medical marijuana to registered patients.

The store’s manager, Kendrick Richmond, said he believes many residents were unaware of the vote. He hopes to get a reversal measure on the ballot, potentially as soon as this November. 

“I want to take the momentum from everyone being surprised [that the repeal measure passed] and let them know that their vote really matters and get it right the second time,” he said.

“At the end of the day we’re a business that’s trying to provide a service like anything else. [Buying cannabis] shouldn’t be different than buying clothes, or buying a meal,” he said.

In the June 7 elections, the following counties passed a 3% local tax on both adult-use and medical marijuana (either via a single measure or separate measures): Big Horn, Blaine, Carbon, Deer Lodge, Gallatin, Lake, Lewis and Clark, Powell, Rosebud, Silver Bow, Richland and Roosevelt. 

Ravalli County passed a tax on adult-use marijuana only. A vote there to raise taxes on medical marijuana narrowly failed.

Taxation votes did not fail in a single county.

The taxation vote in Gallatin County, however, may be nullified due to a technicality. Eric Semerad, the county’s election administrator, acknowledged that some specific requirements for how his office must provide public notice about the ballot measures were not met.

Update: On June 20, Gallatin County Commissioners voted unanimously to nullify the taxation vote. Residents will likely have another opportunity to vote on the measures in November.

“I neglected to do that,” he told Montana Free Press Thursday. “It’s completely on me to get that notice published.”

On June 20, the county canvassing board will meet to decide whether to nullify the taxation measures.

The taxes will go into effect at various dates this fall.

The counties join four others — Missoula, Yellowstone, Park, and Dawson — that have already passed local-option marijuana taxes.

Since Montana’s recreational cannabis program began Jan. 1, sales have outpaced expectations. While the state budget office anticipated $130 million in marijuana sales this year, businesses had already sold more than $76 million in adult-use marijuana and marijuana products by the end of May, prior to the start of the summer tourism season. 

The state taxes all adult-use cannabis sales at a flat rate of 20%.

Sales so far have generated more than $15 million for the state (in addition to nearly $2 million from medical marijuana sales, which are taxed at a flat 4% rate). Since the state largely absorbs that revenue, counties must add their own tax to get a piece of the pie. 

While cannabis businesses tend to not object to adult-use taxes, many remain opposed to the local taxes on medical marijuana passed by 12 counties on Tuesday..

“A 7% rate almost doubles the medical marijuana tax. It’s a huge burden on medical marijuana patients,” said Alec Johnson, co-owner of Big Sky Buds in Bozeman. “We have plenty of patients with cancer and other ailments. They rely on cannabis, and truly need access to their medicine.”

Recreational taxes, on the other hand, can give businesses confidence that their home counties will be less likely to attempt to overturn legal sales. 

“Each county where they pass a tax, operators have more faith they will operate into the future, because the county’s getting their piece now,” Petersen said.

This story was updated June 21, 2022, to reflect the Gallatin County Commissioners’ nullification of the county’s taxation vote.

This story is published by Montana Free Press as part of the Long Streets Project, which explores Montana’s economy with in-depth reporting. This work is supported in part by a grant from the Greater Montana Foundation, which encourages communication on issues, trends, and values of importance to Montanans. Discuss MTFP’s Long Streets work with Lead Reporter Eric Dietrich at edietrich@montanafreepress.org.

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Max Savage Levenson

Max Savage Levenson is a Missoula-based reporter on the cannabis beat. He is the founder of Montana Cannabis Weekly, a newsletter covering the state industry. His writing on cannabis and pop culture has appeared in outlets including Pitchfork, NPR's All Songs Considered, Leafly, the San Francisco Chronicle, and Reason.