Medical marijuana providers and patients voiced opposition to proposed rules that would regulate how the industry functions, saying in a public hearing Thursday the changes would put an incredible financial and time burden on their businesses.

Earlier this month the state Department of Public Health and Human Services released proposed rules that would regulate the industry. The rules govern how the department will implement a law passed by the Legislature earlier this year that includes a 4 percent tax on the gross sales of providers and the implementation of a seed-to-sale tracking system, among other changes.

Montanans first voted to legalize medical marijuana through a ballot initiative in 2004. In 2011, the state Legislature attempted to repeal the initiative, but the effort was vetoed by then-Gov. Brian Schweitzer. After that, the Legislature moved to enact regulations on the industry that severely reduced the number of patients.

In the 2016 election, voters passed another initiative to expand medical marijuana in the state. That led to the law passed by the Legislature last session, Senate Bill 333.

More than 100 people filled a basement hearing room at the health department Thursday, with more than 30 speaking against the rules while just three spoke in support.

Tawnya LaFond, a store manager at The Patch dispensary since 2009, said she worried about whether her dispensary could afford the testing and new licensing fees.

Under the proposed rules, dispensers would have to test products for heavy metals, levels of THC, pesticides and other items. New licensing fees would be $1,000 for providers with 10 or fewer patients and $5,000 for providers with more than 10.

“I do know if our store has to pay those exorbitant fees that will be put in place with this testing, we will go out of business,” LaFond said. The dispensary has 45 patients.

“Please consider working these rules in a way that doesn’t shut down all the small providers.”

While many of the providers who spoke said they supported testing, they were worried about the cost.

Siobhan Barrett, who operates Evergreen Medical in Butte, said she bakes a dozen cookies with medical marijuana at a time and that testing a batch that small would end up costing 40 percent of their retail value.

“(That would be) impossible to sustain,” she said.

Danielle Muggli, a provider and representative of Patients Right Network, said one of the rules that would prohibit her from hiring anyone with a drug conviction on their record would hinder her business.

“What about everybody from the 2011 raids?” she asked, referencing federal raids on providers in the state that year. “Many of them are actually law-abiding citizens. It’s just that our law was such a gray area.”

Evan Barrett, who lives in Butte and spent 25 years working in economic development, said he was concerned the rules would hurt small businesses.

“If we have rules that are punitive to small businesses, we are actually cutting off our nose to spite our face,” Barrett said. “If you have rules that penalize the small businesses, you’re going to end up hurting the patients, not just the small businesses in Montana.”

Barrett questioned if the department had created a report examining the impacts of the rules on dispensaries and said if a study had not been done, one should be. A person who testified later also specifically requested the department provide an economic impact report.

Kate Cholewa, a spokeswoman for the Montana Cannabis Industry Association, called for the department to proceed with the rules in sections and not try to implement regulations across the whole industry at once.

“One thing we do know from other states is trying to do everything at once creates a mess, it creates a disaster.”

She suggested the department start with prioritizing licenses and inspections.

“I would hope those rules could be done relatively easily, and then we can take a little more time to look at the testing system, the tracking of the canopy. … It’s better late and functional than hurried and dysfunctional.”

On June 30, the 4 percent tax on provider gross sales took effect, as well as some forms of testing and inspection of facilities by the health department, along with other rules about how much medical marijuana patients and providers can have in their possession.

By April 2018, the department must implement rules for fully testing products, lab licensing, the tracking system, canopy rules that limit provider possession based on square footage and other changes.

Anyone who wants to weigh in on the rules must submit comments to the health department by Dec. 7. Comments can be sent to Kenneth Mordan, Department of Public Health and Human Services, Office of Legal Affairs, P.O. Box 4210, Helena, Montana, 59604-4210; fax 444- 9744; or email dphhslegal@mt.gov.

Billings Gazette reporter Matt Hudson contributed to this story.

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State Bureau reporter for The Independent Record.

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