Adoption Notice: MAR No. 2026-155.2

Notice Of Adoption

MAR Notice No. 2026-155.2

Summary

Amendments to ARM 42.39.102 and 42.39.105 to Clarify Day-to-Day Operational Control Requirements of Marijuana Businesses

Previous Notice(s) and Hearing Information

On August 7, 2026, the Department of Revenue (department) published MAR Notice No. 2026-155.1 pertaining to the public hearing on the proposed rulemaking in the 2026 Montana Administrative Register, Issue Number 15.

On August 31, 2026, the department held a public hearing to consider the proposals.  Pepper Petersen of The Coldwater Group appeared, was the only attendee, and provided verbal testimony. The department did not receive any written comments.

Final Rulemaking Action – Effective September 26, 2026

Amend As Proposed

The agency has amended the following rules as proposed:

42.39.102 Definitions

Amend With Changes

The agency has amended the following rules with the following changes from the original proposal, stricken matter interlined, new matter underlined:

42.39.105 General Licensee Requirements

1. A licensee must ensure that all employees wear a department-issued worker permit in a clearly visible manner on the outermost layer of clothing while working on behalf of the licensee.  A licensee is responsible for the security of all marijuana and marijuana products on a licensed premises, during transit, and under the supervision of the licensee or its employee until the marijuana or marijuana product is sold.   
2. A licensee is responsible for ensuring the department has a current and working email address and a current and valid mailing address on file to receive department correspondence.
3. A licensee is responsible for providing the department with its hours of operation for each licensed premises.  A licensee or its employee must be on-site during hours of operation and must make the licensed premises available to department inspectors during those hours.
4. A licensee must use a weighing device pursuant to 30-12-203, MCA, and ARM 24.351.101 whenever marijuana is:
   1. packaged for sale by weight;
   2. bought and sold by weight; and
   3. weighed for entry into the seed-to-sale tracking system.
5. A licensee must establish and maintain and make available for department inspection at all licensed premises written emergency procedures to be followed in case of a fire, chemical spill, or other emergency.
6. A licensee must maintain and make available for department inspection at all licensed premises the following documentation or information in a single binder, file, or other organized and readily accessible format:
   1. proof that any signage at the licensed premises complies with local jurisdiction sign ordinances and regulations;
   2. proof that licensees and employees of licensees are current on the required trainings;
   3. the emergency procedures required by (5);
   4. the written security plan required by ARM 42.39.121(1);
   5. for marijuana manufacturer licensees, the written standard operating procedures required by ARM 42.39.401(16);
   6. for marijuana cultivator licensees, the written standard operating procedures required by ARM 42.39.405(8); and
   7. for marijuana dispensary licensees, a written standard operating procedure for the destruction of returned marijuana or marijuana products. 
7. A licensee must submit to the department, on a form provided by the department, the name of each natural person who has day-to-day operational control over the business, as defined in ARM 42.39.102, and documentation demonstrating that each person is a Montana resident. A licensee must submit this information with an initial application, with each renewal application, and withindeleted:  ten, end deleted inserted: 30 , end inserteddays of any change in a natural person having day-to-day operational control over the business.

Authorizing statute(s): 16-12-112, MCA

Implementing statute(s): 16-12-112, MCA

Statement of Reasons

The agency has considered the comments and testimony received. A summary of the comments received, and the agency’s responses are as follows:

inserted: Comment 1, end inserted: Mr. Petersen provided extensive commentary objecting to the department’s implementation of 16-12-203(1)(a)(ii), MCA, which requires a marijuana licensee to submit to the department proof that the natural person having day-to-day operational control over the business is a Montana resident. That objection extends to the department’s proposed definition of what constitutes “day-to-day operational control” and the criteria that the department analyzes to determine whether a person involved in a marijuana license or business has day-to-day operational control.

Mr. Petersen strenuously objected to 16-12-203(1)(a)(ii), MCA, on the grounds that requiring Montana residency is a violation of the United States Constitution’s Interstate Commerce Clause.

inserted: Response 1, end inserted: The Legislature delegated the duty to the department to establish residency requirements that comply with 16-12-112(1)(b), and 16-12-203(1)(a)(ii), MCA. So, the appropriate response to that legislative delegation is the adoption of the definition on the justification provided in the proposal notice.

The department also responds that the Montana Marijuana Regulation and Taxation Act (MMRTA), whether in the 2020 Ballot Initiative 190 (I-190) or as amended by subsequent legislation, has always contained a residency requirement (see, e.g. Sect. 26(1)(b), I-190; 16-12-112(1)(b), MCA). So Mr. Petersen’s comments are contradictory to his knowledge of the MMRTA. The department further directs Mr. Petersen to Peridot Tree WA, Inc. V. Wash. State Liquor & Cannabis Control Bd., 162 F.4th 1179 (9th Cir. 2026), a decision from the Ninth Circuit holding that the dormant commerce clause does not apply to state cannabis dispensary licensing regimes with residency requirements.

As for the status of the MMRTA’s residency requirement, the department also responds that the department’s responsibility is to implement the law as it exists, not what it might become; and should the MMRTA change–whether by lawsuit or legislation–the department will implement any changes as directed by the legislature and/or a court.

inserted: Comment 2, end inserted: Mr. Petersen also provided extensive commentary regarding what he perceives as extreme and constant burdens on small marijuana businesses as they attempt to keep up with existing requirements before disclosing who has day-to-day operational control of a marijuana business.

Mr. Petersen’s suggestion was for the department not to require constant manager/day-to-day operational control updates by licensees, but to include the updates at periodic inspections or during license renewal. He also stated if the department was going to be forced by the legislature to create a definition, it needed to be narrow; as proposed it is too broad.

inserted: RESPONSE 2, end inserted: Mr. Petersen misunderstands the plain language of the rule because the definition at ARM 42.39.102(12) plainly states that “Day-to-day operational control” means the authority or ability of one or more natural persons inserted: to direct or materially influence the routine management, operations, or policies of a marijuana business, end inserted . . . .” (emphasis added). The definition could not functionally be narrower.

Further, approved workers who help an owner of a marijuana business with occasional oversight or a business who has employees that switch work assignments for a short term even if they involve cash handling and closing the business at the end of the day do not rise to the level of day-to-day operational control.

As to the administrative burdens Mr. Petersen alleges, ARM 42.39.105(7) equally and plainly states that inserted: “A licensee must submit this information with an initial application, with each renewal application, and within ten days of any change in a natural person having day-to-day operational control over the business.”, end inserted (emphasis added). The first two instances are exactly what Mr. Petersen seeks in infrequent licensee updates; and if a licensee has employee turnover issues such that disclosure of the person with day-to-day operational control becomes an administrative burden, the issue is not with the requirement of the rule but with a licensee’s hiring practices or the lack of qualified employees to handle day-to-day operational control of the business. 

Notwithstanding, the department is amenable to extending the period for required notification to the department between individuals having day-to-day operational control over the business from ten days to 30 days.

Based on these responses and for the reasons stated, the department declines to make any further changes than as described above from the original proposal.

Contact

Todd Olson, Rule Reviewer - Department of Revenue, Legal Services Office

(406) 444-7905

todd.olson@mt.gov

Rule Reviewer

Todd Olson

Approval

Brendan Beatty, Director of Revenue