Proposal Notice: MAR No. 2026-902.1

Notice Of Proposed Rulemaking

MAR Notice No. 2026-902.1

Summary

Marijuana Licensee Required Disclosure of Third-Party Contractual Relationships

Hearing Date and Time 

Monday, August 31, 2026, at 12:00 p.m.

Hearing Information

Third Floor Reception Area Conference Room of the Sam W. Mitchell Building, located at 125 North Roberts, Helena, Montana

Comments

Comments may be submitted using the contact information below. Comments must be received by Tuesday, September 8, 2026, at 5:00 p.m. 

Accommodations

The agency will make reasonable accommodations for persons with disabilities who wish to participate in this rulemaking process or need an alternative accessible format of this notice. Requests must be made by Friday, August 14, 2026, at 5:00 p.m.

Contact

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

(406) 444-7905

todd.olson@mt.gov

Rulemaking Actions

Adopt

The rules proposed to be adopted are as follows:

New Rule 1 THIRD-PARTY Contractual Relationships - Disclosure - Required Submissions

1. A marijuana licensee entering a third-party contractual relationship for the “performance of work on behalf of any aspect of a marijuana business,” as defined in ARM 42.39.102, must disclose the relationship to the department before any work or services under the relationship begin.
2. For purposes of this rule, “third-party contractual relationship” means any agreement, written or oral, between a marijuana licensee and a third-party for any of the following:
   1. management of the marijuana business;
   2. consulting services;
   3. financing;
   4. staffing;
   5. revenue distribution;
   6. intellectual property;
   7. operation of the marijuana business;
   8. operating lease for equipment; or
   9. any other arrangement in which a third party who is not a licensee directly or indirectly:
      1. performs work for the marijuana business;
      2. receives compensation tied to the marijuana business;
      3. exercises or shares operational authority over the marijuana business;
      4. obtains access to the licensed premises, inventory, books and records, or the seed-to-sale tracking system; or
      5. otherwise acquires actual or potential control of, or a financial interest in, the license or the marijuana business.
3. To be considered complete, a third-party contractual relationship disclosure must include:
   1. a department-prescribed disclosure form, which is available at revenue.mt.gov;
   2. complete copies of all third-party contractual relationship agreements, including all exhibits and other documents referenced in or incorporated by the agreements;
   3. the full legal name, business address, and mailing address for each person to the third-party contractual relationship;
   4. identification of all persons that will perform, supervise, direct, or materially benefit from the third-party contractual relationship;
   5. a description of the work or services to be provided under the third-party contractual relationship, including where the work or services will be performed;
   6. the effective date, term, renewal provisions, and termination provisions of the third-party contractual relationship;
   7. a statement describing whether the third party has authority to make or direct decisions concerning cultivation, manufacturing, testing, inventory, transportation, storage, sales, purchasing, pricing, staffing, compliance, security, financial management, or access to the seed-to-sale tracking system;
   8. a statement describing whether the third party or any related person has authority to hire, terminate employment, discipline, supervise, schedule, or direct workers or managers of the marijuana licensee;
   9. a statement describing whether the third party or any related person has authority to enter contracts on behalf of the marijuana licensee, approve expenditures, control bank accounts, receive sales proceeds, reconcile receipts, pay vendors, or otherwise control or direct the finances of the marijuana business;
   10. a detailed description of all compensation to be paid or received by any party, including fees of any kind, royalties, commissions, revenue-sharing, reimbursements, loan payments, convertible debt, options, and any other direct or indirect transfer of consideration;
   11. identification of any rights under the third-party contractual relationship that could allow any person to obtain an ownership interest, a controlling beneficial ownership interest, or a financial interest in the marijuana business;
   12. an organizational chart sufficient to show the relationship between the marijuana licensee and all natural persons or business entities in the third-party contractual relationship, including all natural persons identified under (c) and (d); and
   13. a statement whether the third party or any related person has a financial interest in any Montana marijuana license or applicant, and if so, identification of each license or applicant.
4. The disclosure form in (3) must be signed by an authorized representative of the marijuana licensee who is attesting that:
   1. the submission is true, correct, and complete;
   2. the licensee has disclosed all agreements and related documents concerning the third-party relationship;
   3. no undisclosed agreement exists that affects control of, or compensation from, the marijuana business; and
   4. the licensee understands that failure to provide complete and accurate information may result in denial, sanction, suspension, or revocation of the license.
5. The department may require additional records or information from any person related to the third-party contractual relationship that is reasonably necessary for the department to render a decision regarding the third-party contractual relationship. 
6. A third party may not begin work or services under a third-party contractual relationship until the marijuana licensee receives written notice from the department that a disclosure is complete.
7. A marijuana licensee must submit any material modification of a third-party contractual relationship to the department before the modification becomes effective.  For purposes of this rule, examples of material modifications include changes in the parties to the third-party contractual relationship, compensation changes, changes in ownership or control of a party; changes in the scope of services; changes in authority over employees, operations, inventory, or finances; and changes creating or affecting a right to acquire an ownership interest or financial interest.
8. A third-party contractual relationship disclosure does not constitute department approval of the relationship and does not create a presumption that the relationship does not result in controlling beneficial ownership or a financial interest.  The department may determine, based on the substance of the relationship rather than the terms used by the parties, whether the relationship creates a controlling beneficial ownership interest, a financial interest, or another undisclosed ownership or control interest.
9. The marijuana licensee remains responsible for its compliance with the marijuana laws as well as for any other party involved in a third-party contractual relationship.

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

Implementing statute(s): 16-12-203, MCA

Reasonable Necessity Statement

The department proposes to adopt NEW RULE 1 to implement a part of Senate Bill 74 (2025) (SB 74) which amended 16-12-203, MCA, and requires licensee disclosure of a third-party contractual relationship before the third party begins performing work for any aspect of a marijuana business.  The law change also makes the licensee responsible for the third party’s compliance.

Section 16-12-203, MCA, was amended to require department oversight of third-party contractual relationships because these arrangements may transfer operational authority, create revenue-sharing or other compensation rights, or otherwise give a third party potential or actual control over the marijuana business.  NEW RULE 1 is consistent with what statute requires: disclosure and submission of all agreements and related transaction documents to determine whether the relationship results in a controlling beneficial ownership interest or a financial interest requiring further disclosure or review.

NEW RULE 1 is modeled, in part, on 16-4-418, MCA, which governs alcohol concession agreements and requires submission and review of the agreement and later modifications with the focus on whether the licensee retains ultimate control over the licensed operation.  The department determined that a similar framework, as proposed in (1) through (9), is equally appropriate in the department’s administration of the Montana Marijuana Regulation and Taxation Act (MMRTA) because the legal effect of a third-party arrangement depends on the substance of the relationship, including compensation terms, authority over operations, staffing, finances, and any rights to acquire ownership or other beneficial interests.

Section (1) is necessary to specify the requirement under 16-12-203(7)(b), MCA. Section (2) proposes a definition with subsections that describe the various types of third-party contractual relationships contemplated under the law and rule.  Section (3) is necessary to describe the components of a complete disclosure and (4) provides the necessary level of formality of the submission, which includes the licensee’s attestation.  Section (5) describes that the department may request additional reasonably necessary information to review regarding the third-party contractual relationship while (6) reiterates the statutory requirement that work or services under the third-party contractual relationship may not begin until the marijuana licensee receives written notice from the department that the disclosure submitted under this rule is complete.  Sections (7) and (8) describe the licensee’s ongoing obligation to supplement third-party contractual relationship disclosures and that no third-party contractual relationship is presumed to be approved by the department by the act of disclosure.  And (9) is proposed, similar to other rules, where it is necessary to reiterate that it is the marijuana licensee who remains responsible for its compliance with the marijuana laws.

Small Business Impact

With regard to the small business impact analysis requirements of 2-4-111, MCA, as amended by HB 592 (2025), the department has analyzed the proposed rule amendments and the group or class of businesses directly affected by this rulemaking, and concludes those impacted small businesses are the testing laboratories, cultivators, dispensaries, or manufacturers of marijuana and marijuana products if they meet the definition of a small business under 2-4-102(13), MCA. As of July 1, 2026, there are 211 cultivators, 142 manufacturers, and three testing laboratory licensees active within Montana.

The department contends that any directly related small business impact does not arise from the proposed rulemaking but the public policy goals articulated by the Legislature under the MMRTA. The department also contends that NEW RULE 1 proposes improved guidance for operating compliant cannabis businesses, and the Legislature’s directive to the department to close operational or legal loopholes that are contrary to the MMRTA.

Bill Sponsor Notification

The primary bill sponsor of SB 74 was contacted by electronic mail on July 21, 2026, and by telephone on July 22, 2026. The department did not receive comments from the bill sponsor to incorporate into the proposal notice.

Interested Persons

The Department of Revenue maintains a list of interested persons who wish to receive notices of rulemaking actions proposed by this agency. Persons who wish to have their name added to the list shall make a written request, which includes the name and e-mail or mailing address of the person to receive notices and specifies that the person wishes to receive notice regarding particular subject matter or matters. Notices will be sent by e-mail unless a mailing preference is noted in the request. A written request may be mailed or delivered to the contact person in this notice or may be made by completing a request form at any rules hearing held by the Department of Revenue.

Rule Reviewer

Todd Olson

Approval

Brendan Beatty, Director of Revenue