Montana State Legislature

Cannabis Control Division Rules

Cannabis Control Division Rules

As part of the SJ31 study, the committee chose to have significant involvement in administrative rule review for the new rules for recreational marijuana.

August 2022

The committee voted at the August 2022 meeting to informally object to MAR Notices No. 42-1058 and 42-1059. These notices relate to the proposed rules relating to marijuana canopy tiers and marijuana dispensary customer loyalty programs.

The committee received a letter from the Director of the DOR stating that due to the limited time available for executive branch agencies to meet the rules adoption deadline of October 1 2022, the department does not believe there is enough time to resolve the committee's concern and allow for additional public comment as required by the Montana Administrative Procedures Act. Therefore, the department intends to withdraw both rule packages effective August 30, 2022.

June/July 2022

The committee voted at the June 2022 meeting to formally object to MAR Notice No. 42-1048amd. This notice relates to the adopted rule relating to marijuana packaging and labeling. 

The committee heard from the Director of the DOR at the July 2022 meeting, and after the hearing and the written response, moved to withdraw the formal objection to MAR Notice No. 42-1048amd.

April 2022

As part of the Committee's standard administrative rule review, the Department of Revenue provided copies of the following rule notices. There was no public comment and the Committee had no discussion or objection to the rules.

  • 42-1049: amends ARM 42.31.1101 pertaining to department processing and remittance of local-option marijuana excise tax collections to localities.
  • 42-1051: regarding the adoption of New Rule I pertaining to licensed premises proximity requirements to places of worship or schools.
  • 42-1048amd: regarding the adoption of New Rule I pertaining to marijuana and marijuana products packaging and labeling application and approval process.

February 2022

The Committee received a draft rule for New Rule I: Packaging and Labeling Application and Approval Process; Initial Requirements Applicable to All Licensees for review and comment. No comments were made by the Committee.

December 2021

The committee held a videoconference meeting on December 9 to discuss the following Department of Revenue memo and proposed amendments to the marijuana administrative rules:

The committee had a multitude of questions and concerns with the rule revisions and heard public comment that conferred with the committees concerns. Based on the hearing, the committee voted to recommend to the Revenue Interim Committee to informally object to all three MAR notices until the Department of Revenue and the committee can come to an agreement on rule revisions. The committee also voted to suspend its committee rules on public notice requirements in order to reconvene on December 13 jointly with the Revenue Interim Committee to review changes to the rules, with the intent of completing amendments to the rules in time for department to submit the rules to the Secretary of State in time for adoption by December 31. 

On December 13, the committee met again to discuss the results of the negotiations with the Department of Revenue. After further discussions with the department, the committee agreed to withdraw its recommendation to the Revenue Interim Committee to informally object to the rule notices, and DOR agreed to submit the following revised rule packages for adoption with the Secretary of State:

Below is a summary of the rules in which committee members had the most concerns, including an original description of the rule, the concerns from the committee, and the final outcome of the rule.

MAR Notice No. 1033

New Rule I - License, Application and Renewal Fees

The tentative rule calls for manufacturer licensing fees in a tiered structure based on production level. Section 16-12-204, MCA allows the Department to create additional fee levels as necessary for marijuana manufacturers. The committee expressed concern the proposed rule did not create enough licensing fee tiers.

  • The updated rule revision creates additional fees for production in excess of 15 pounds of concentrate per month.

New Rule III: Marijuana Cultivator Licenses

The tentative rule revisions strikes subsection (5) which states "a former medical marijuana licensee who engaged in outdoor cultivation before November 3, 2020, may continue to engage in outdoor cultivation but may not expand their existing outdoor cultivation space." After hearing public testimony, the department did not feel this section was necessary. Committee members disagreed, and felt the removal of this section would encourage outdoor cultivation. Additionally, committee members felt this rule opened the doors for cultivators to become brokers of marijuana.

  • The updated rule revision reinstates the provisions in subsection (5); and 
  • adds the following to subsection (1): A marijuana cultivator licensee allows a marijuana cultivator to plant, cultivate, grow, dry, package and label marijuana and sell marijuana to licensed marijuana manufacturers, licensed dispensaries, and to other licensed dispensaries, and to sell marijuana products to licensed dispensaries. Marijuana cultivator licensees may not sell marijuana flower to other marijuana cultivator licensees.

New Rule VI: Combined Use Licenses

This rule provides procedural requirements for the regulatory authority of combined use licenses, which allow for one license per tribe in Montana that consists of a cultivator license and dispensary license. The rule does not provide for a tier allocation on the cultivator license; however the statute that governs the rule, 16-12-225, MCA appears to limit the combined-use license to a tier 1 canopy. Questions were raised at the November 2021 meeting regarding the intent of the legislature on the limiting language in the statute, but no changes were made to this rule. A legal analysis done by the Department of Revenue concluded that the combined use license is limited to a tier one license. A preliminary legal analysis done by Legislative Services concluded that subsections (4) and (5) in the statute could be construed to allow for a combined use license holder to increase its tier level above a tier one. The committee asked for additional discussion on the matter.

  • The updated rule revision adds the following to subsection (3): A combined use licensee is subject to the marijuana laws, including 16-12-223, MCA.

New Rule VII: Marijuana Testing Laboratory Licenses

This rule states in subsection (2) that "the department shall begin accepting applications for marijuana testing laboratories on January 1, 2022." Opposition was raised at the November 2021 meeting to the lack of moratorium on testing labs when all the other license types will receive the benefit of a moratorium until July 1, 2023. The tentative rule revisions add the word "new" to subsection (2) but otherwise do not impose a moratorium for marijuana testing laboratories. A legal analysis done by the Department of Revenue concluded that the plain language of the statute prohibits the Department from refusing new laboratory licenses. The committee asked for additional discussion on the matter.

  • No changes were made to this rule.

New Rule X: General Labeling Requirements, New Rule XII: Labeling of Ingestible Marijuana-Infused Products, New Rule XIII: Labeling of Non-Ingestible Marijuana-Infused Products, & New Rule XIV: Labeling Requirements for Marijuana Concentrates and Extracts

The tentative rule revisions allow labels to use either the term "marijuana" or "cannabis" whereas in the original rule only the term "marijuana" was allowed. The Department stated this was in response to public testimony regarding medical terms and the scientific name of the plant and negative and offensive perception of the term "marijuana." Committee members felt the allowance of the term "cannabis" to packaging would confuse children and other individuals into thinking these were not marijuana products and asked the Department to remove the allowance of the term "cannabis" from all labeling and packaging requirements.

  • The updated rule revisions remove all references to allowing the use of "cannabis." 

MAR Notice No. 42-1040

New Rule II: Licensed Premises - Security Requirements

The tentative rule revisions added language to allow for a licensed premise to have a video monitoring system with a motion sensor system and struck language in subsection (5)(a) requiring the video monitoring system include a storage device secured on the premises in a lockbox, cabinet, closed, or other secured manner. Committee members expressed concern that the motion sensor system would be inadequate security for the premises, and stated the desire to keep subsection (5)(a) intact.

  • No changes were made to this rule.

New Rule XI: General Licensee Requirements

The tentative rule revisions add subsection (6)(h) to state that "A licensee must maintain and make available for department inspection . . . for marijuana dispensary licensees, a written standard operating procedure for the destruction of returned marijuana or marijuana products." Committee members expressed concern that the additional language was not detailed enough according to statute to indicate how the returned product is to be destroyed and how the Department will know about the destruction of the product. 

  • No changes were made to this rule.

MAR Notice No. 42-1042

42.39.117: Denial of Registry Identification Card Application or Revocation of Registry Identification Card

The tentative rule revisions struck the provision under subsection (1)(j) that stated "the cardholder violates the daily possession or purchase limitations contained in 16-12-515, MCA" in response to public comment and because of the difficulty in enforcing the provision once adult use marijuana is available. The committee expressed concerns with removing the language.

  • The Department has reinstated the provision and added "monthly" to the purchase limitation language.

42-39.310: Waste Management

The committee expressed general concerns at the December 9 meeting regarding this rule governing the disposal of marijuana waste. Based on subsequent conversations, the department agreed to revise the rule to state the following:

  • (8) A licensee must maintain accurate an comprehensive records regarding waste material in the seed-to-sale tracking system that accounts for, reconciles, and evidences all waste activity related to the disposal of marijuana to include: 
    (a) what was disposed:
    (b) quantity by weight or volume;
    (c) date disposed
    (d) video evidence of disposal to be retained for 30 days; and
    (e) reason for the disposal;

42.39.311: Reporting Requirements

The tentative rule revisions replace the provision in subsection (5) for prior department approval to notification only of material or substantial changes to a licensed premises. The Department explained the reasoning for the change to notification only is the material or substantial changes listed in the original rule are changes that a local government has authority to approve, not the Department of Revenue, so notification to the department was sufficient. Committee members disagreed and requested the language revert back to its original form.

  • The updated rule revisions revert back to its original form.

November 2021

During the November 2021 meeting, the committee held an extended rule review to discuss three rule notices:

Based on feedback received by constituents to both the Department of Revenue and the committee, the public hearing for MAR Notice No. 42-1033, the public comment received at the November meeting, and committee discussion, the Department agreed to propose amendments to several new rules. The following rules will be discussed in greater detail during a Zoom meeting in December 2021.

MAR Notice No. 42-1033

New Rule IV: Marijuana Dispensary Licenses

This rule states in subsection (13) that "the prohibition in , MCA, on marijuana dispensaries selling help also includes the prohibition of selling cannabidiol products." Questions were raised regarding the interpretation of the definition of hemp, and the whether the legislature intended cannabidiol (CBD) products to truly be excluded from sales at dispensaries. 

New Rule VI: Combined Use Licenses

This rule provides procedural requirements for the regulatory authority of combined use licenses, which allow for one license per tribe in Montana that consists of a cultivator license and dispensary license. The rule does not provide for a tier allocation on the cultivator license; however the statute that governs the rule, 16-12-225, MCA appears to limit the combined-use license to a tier 1 canopy. Questions were raised regarding the intent of the legislature on the limiting language in the statute.

New Rule VII: Marijuana Testing Laboratory Licenses

This rule states in subsection (2) that "the department shall begin accepting applications for marijuana testing laboratories on January 1, 2022." Opposition was raised to the lack of moratorium on testing labs when all the other license types will receive the benefit of a moratorium until July 1, 2023.

MAR Notice No. 42-1040

New Rule VII: Suspension and Revocation of a License

Subsection (2) of this rule lists several instances of grounds for suspension or revocation of a worker permit. Questions were raised regarding the interpretation of the governing statute, , MCA, and whether the legislature intended action by the department or simply notice.

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