District Judge Strikes Down State’s New Dispensary Licensing Fees

A Lewis and Clark County district court judge has struck down a new state law that dramatically increased the licensing fees for marijuana dispensaries with multiple locations.

Under House Bill 903, a dispensary would have had to pay $5,000 to renew a license for its first shop, and then a cumulatively additional $5,000 for each additional location. Under the new law, it would have cost marijuana retailers $10,000 to renew a license for a second store, $15,000 to renew a license for a third store and so on. Previously, the Montana Marijuana Regulation and Taxation Act required dispensaries to pay a flat $5,000 renewal fee for each location. State law requires that dispensary licenses be renewed annually.

After the bill was signed into law last year, three marijuana businesses, Granite Peak Holdings Inc., TSB Montana and MariMint LLC, sued the state, arguing that the new law was unconstitutional and that licensing fees gathered by the Montana Department of Revenue were more than enough to cover the state’s costs of administering its adult-use marijuana program.

According to court documents, under the new fee structure, TSB would be assessed a $600,000 dispensary renewal fee, as opposed to the $75,000 fee it paid in previous years. Other dispensary chains would have paid in excess of $1 million.

The law was slated to go into effect on Jan. 1. Late last year, the state agreed to a 60day implementation delay due to the legal challenge.

On Jan. 5, Judge Mike Menahan struck the law completely, ruling that the state will return to the flat $5,000-per-dispensary licensing fee. The judge also ordered that any dispensary owner that has already renewed its licenses under the new fee structure should be refunded by the state.

Menahan’s order concluded that the new fee structure was excessive and that it “generates more fees than is necessary to cover the costs to the Department for implementing and enforcing the provisions of the Montana Marijuana Regulation and Taxation Act.”

Had the law stayed in place, it would have generated an estimated $6,370,000 annually for the state — nearly triple what it would have generated under the original, and now current, fee structure.