A Montana judge struck down a state law imposing higher fees on cannabis dispensaries, ruling in favor of a group of dispensary owners who argued that the increased costs threatened their businesses.
Lewis and Clark County District Court Judge Mike Menahan issued the order last week, effectively halting the enforcement and collection of the new fee structure passed by the state legislature, according to the Daily Montanan.
The ruling is a significant blow to the state’s efforts to raise regulatory revenue from the industry.
Under the law, dispensaries faced a cumulative fee increase for each additional location they operated. The second location would incur a $10,000 fee, a third $15,000, and so on. That marked a departure from the previous flat fee of $5,000 per dispensary, regardless of the number of locations owned.
Granite Peak Holdings, TSB Montana, and MariMint, all Montana-based cannabis businesses, argued that the heightened costs were not just burdensome but also illegal, as they exceeded what was necessary for the state’s regulation of the industry. They added that such high fees could lead to the closure of multiple dispensary locations and layoffs.
The state defended the fee increase, arguing that the vast expanse of Montana necessitated more funds to effectively regulate the marijuana market, the outlet reported. However, the judge declared that the cumulative fee structure was excessive and not justifiably linked to the actual costs of regulation.
For instance, Granite Peak Holdings would have faced a renewal fee of $280,000 for its 10 existing locations, a dramatic surge from the $50,000 fee under the old system. Additionally, Granite Peak was to be charged an extra $245,000 for four new locations. Similarly, TSB Montana’s fees would have skyrocketed from $75,000 to a staggering $600,000, while MariMint’s fees would have jumped to $75,000 from the previous $25,000.
Menahan ordered a permanent halt to the new fee structure and reinstated the previous $5,000 per dispensary fee. He also directed the department to refund any excess fees collected under the new law.