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2022 laws for cbd oil owners

The Future Of The CBD Industry In 2022 And Beyond

Expertise from Forbes Councils members, operated under license. Opinions expressed are those of the author.

Mike Sill is the CEO & Co-Founder of Sunday Scaries, a CBD company with stress relief products.

Every industry has its challenges and opportunities, but I believe the CBD industry is in a unique — and pivotal — position. As a substance that was federally illegal before the passage of the 2018 Farm Bill, hemp-derived cannabinoids with no more than 0.3% THC still face a regulatory grey area. This ambiguity creates a host of novel challenges in financing, marketing and producing products. But simultaneously, the industry and market are growing incredibly fast.

CBD companies are tasked with seizing this opportunity while navigating the significant hurdles. As a founder and owner, here is my take on the crucial developing issues in my industry, along with predictions about what will happen.

1. CBD has become big business, and it’s set to get much bigger and more diverse.

CBD sales in the U.S. hit $4.6 billion in 2020, a massive number just two years after hemp-derived cannabinoids were federally legalized. This growth is only expected to accelerate, with two notable forecasts projecting a U.S. market of $15 billion to more than $20 billion by 2025 and 2024, respectively.

CBD companies currently offer a pretty wide range of products. Nevertheless, this diversity will increase as more companies introduce products that hyper-concentrate on each of the over 100 minor cannabinoids found in the hemp plant. Formulations focusing on cannabinol (CBN), cannabigerol (CBG) and other compounds and mixes will be developed for specific use cases.

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2. Regulatory challenges remain, and it will take Congress to clarify things.

Despite being federally legal, I’ve observed that CBD companies still have problems obtaining capital and standard services from banks and other financial services institutions. And the ability to market CBD as a safe and effective substance is limited by how the FDA classifies it.

Ultimately, the U.S. Congress has the authority to address these issues, and there is current legislation aiming to do just that, such as the Safe Banking Act of 2021, the Hemp and Hemp-Derived CBD Consumer Protection and Market Stabilization Act of 2021 and the Hemp Access and Consumer Safety Act. Crucially, those last two pieces of legislation would pave the way for the FDA to authorize marketing CBD as a dietary supplement. This development will open up many forbidden or restricted marketing and distribution channels, leading to greater sales and brand exposure.

In addition, more precise federal regulation of product quality will be a rising tide that lifts most boats, as bad players drop off in survival-of-the-fittest fashion.

3. Big-box retail access will spur sales while stabilizing and improving supply chains.

Once companies can market CBD as a dietary supplement, it’s my opinion that it will hit the mainstream of brick-and-mortar retail. In particular, big-box chains will offer a range of topicals and ingestibles in various product categories and applications.

This new distribution could vastly grow the market while benefiting various supply chain components, including hemp farmers and labs that conduct the extraction, distillation, crystallization and isolation of CBD from plants. A particular benefit will be incentivizing more quality labs to get in the CBD game, as many facilities now hesitate to stray from their core competencies. The price of raw materials will also drastically increase as retail demand grows.

4. More big names will get into the game through acquisitions.

Huge companies have been hesitant to embrace CBD as its initially “Wild West” market goes through growing pains. But once the regulatory landscape clears and stabilizes, I believe many corporate giants will look to diversify their product lines with CBD and add brand-new products that open avenues of growth. Companies like Procter & Gamble, Johnson & Johnson, Coca-Cola, Unilever and more may get into the game, and they’ll do it through acquisitions of existing CBD market leaders.

5. Education, quality assurance and safety will skyrocket.

An all-time high in public education about cannabinoids will accompany the mainstreaming of CBD. Through this, consumers will be able to feel more confident and safer while purchasing products that are smartly regulated.

Many CBD companies, which now mainly self-regulate, will be forced to improve their quality assurance and compliance efforts to survive. And the providers who already sell high-caliber products will finally reap the rewards of their investments in R&D and production that have necessarily reduced ROI.

The future of CBD is bright, but it still hinges on crucial developments.

In some ways, the CBD industry is an unstoppable juggernaut. It’s already a multi-billion-dollar sector that will only get bigger, as millions of consumers have made their preferences clear. But CBD companies still have to navigate many unique hurdles, from obtaining capital to using standard payment processing to being able to market on regular channels.

The crucial developments that will remove these barriers are the FDA classifying CBD as a dietary supplement, the industry’s unrestricted access to financial services and an intelligent regulatory framework that increases product quality and safety across the board.

As the owner of a CBD company, I am in wait-and-see mode like many of my colleagues. We simply steer through these challenges to grow our companies. But I believe that lawmakers will solidify the status of CBD soon, removing barriers to innovation, safety and, ultimately, the normalization of the industry. When that happens, even more growth — exponential growth — is on the horizon.

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Cannabis Control Division Frequently Asked Questions

No, except that providers licensed under the Montana Medical Marijuana Program may sell marijuana and marijuana products to registered cardholders in the program.

An individual cardholder may possess up to 1 ounce of marijuana (or the equivalent in concentrates or edibles), and may purchase up to 5 ounces per month, but may not distribute it to other people.

Is adult-use marijuana possession and use legal in Montana?

As of January 1, 2021, adults 21 and over may possess and use up to one ounce of marijuana with no criminal penalties.

However, marijuana consumption and possession (including medical marijuana) remains prohibited in public and certain other locations. It is also prohibited under federal law on all federal lands and waters.

Marijuana (except medical marijuana) is prohibited in hospitals and other health care facilities.

Operating a motor vehicle under the influence of marijuana remains illegal.

Contact your local law enforcement agency for more information.

When will adult-use sales begin in Montana?

Certain medical marijuana licensees will be allowed to also sell adult-use marijuana starting on January 1, 2022.

Is it legal for individuals in Montana to grow their own marijuana?

Adults may cultivate up to two mature marijuana plants and two seedlings for private use in a private residence, subject to certain restrictions. (Medical marijuana cardholders may cultivate up to four mature plants and four seedlings). The plants may not be visible to the public.

Is growing hemp permitted in Montana?

Yes. Hemp growers are licensed by the Montana Department of Agriculture.

Cannabis Sales and Licensing FAQ

Will adult-use marijuana be available for sale in all Montana counties on January 1, 2022?

No. In counties where the majority of voters supported Initiative 190 in November 2020, adult-use sales may occur starting in January 2022. In counties where the majority of voters opposed Initiative 190, adult-use marijuana sales will remain prohibited.

What types of adult-use marijuana licenses will be available?

In addition to continuing the Montana Medical Marijuana Program, the Department of Revenue will issue separate licenses for marijuana cultivators, manufacturers, dispensaries, transporters, and testing laboratories.

The Department will offer 13 different cultivation or “canopy” licenses for cultivation facilities of different sizes.

A worker permit will also be required for any employee participating in any part of a marijuana business.

Can anyone apply for a license to grow or sell recreational marijuana, or manufacture recreational marijuana products?

No. From January 1, 2022, until July 1, 2023, only Montana medical marijuana licensees who were licensed on November 3, 2020 (or had an application pending with DPHHS on that date) may be issued a license for cultivation, manufacture, or sale of adult-use marijuana.

Will there be limits on the THC content in adult-use marijuana products?

When licensees are able to operate, edible adult-use marijuana products may contain up to 10 mg of THC per serving, and up to 100 mg of THC in an entire package.

The total psychoactive THC of marijuana flower may not exceed 35%.

Topical products may contain no more than 6% THC and no more than 800 mg of THC per package.

A marijuana product sold as a capsule, transdermal patch or suppository, may contain more than 100 mg of THC, and no more than 800 mg of THC in an entire package.

These limits do not apply to sales by licensed medical marijuana providers to medical marijuana cardholders.

Will medical marijuana and recreational marijuana be available at the same business?

Yes. A licensed recreational marijuana provider and licensed medical marijuana dispensary may operate in a shared location. A single entity may also be licensed for both medical and recreational marijuana.

Are there adult-use marijuana licenses available for tribes?

Yes. The Department of Revenue may issue a total of eight combined-use licenses (for cultivation and sale), one to each of the eight federally recognized Indian tribes located in Montana (or to a business that is majority-owned by the tribe). Those licensees may operate within 150 air miles of the exterior boundaries of the reservation or tribal service area, if all other licensing conditions are met and they are located in a county that allows recreational marijuana licensees.

How can I get more information on licensing for adult-use marijuana cultivation, sales, transportation, manufacture, or laboratory testing?

The Department of Revenue is currently evaluating what rules and processes are necessary about these topics.

Will marijuana licensees be permitted to sell their licenses the way alcohol licensees may sell their licenses to buyers approved by the Department?

No. The marijuana licenses may not be transferred.

Will a cannabis provider need an Alternative Nicotine or Vapor Products License?

You must have an Alternative Nicotine or Vapor Products Retail license if you sell alternative nicotine or related products, including:

  • E-cigarettes
  • Vapor Devices or Mods
  • Accessories
  • Liquid or e-juice

The license has a $20 annual fee. You may apply for a new license or renew an existing license using the eStop Business Licenses Service.

You need an alternative nicotine license even if you have a tobacco retailer license.

Who do I contact for additional information about applying for or managing an Alternative Nicotine or Vapor Products Retail License?

If you have questions or concerns about any Tobacco Product License or Alternative Nicotine or Vapor Product License, please call (406) 444-4351 or email [email protected]

Local and County Cannabis Regulation FAQ

What counties approved Initiative 190, and which counties did not?

The counties currently allowing recreational are outlined on the map. The current status of each county was determined by the results of Initiative 190 or from a local election held since HB-701 was passed by the Montanan Legislature.

  • Counties in red have no recreational adult-use cannabis sales.
  • Counties in green allow recreational adult-sue cannabis sales.
  • Counties in blue have opted to include the local option sales tax on cannabis sales.
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For more information, please see Cannabis Tax.

Could a county change its position on marijuana businesses operating in its locality?

Yes. In a county where the majority of voters opposed Initiative 190, adult-use sales will be allowed if that county holds an election and a majority of the voters choose to allow marijuana businesses to operate in that jurisdiction.

In a county where the majority of voters supported Initiative 190, certain marijuana businesses could be prohibited if that county holds a local election and a majority of the voters choose to prohibit that type of business from operating.

When can a county expect their local option marijuana excise tax distribution?

Local option marijuana excise tax distributions will be made 60 days after the quarter ending due date to ensure tax moneys have been fully received and reconciled.

Period Ending Distribution Date
March 31 June 15
June 30 September 15
September 30 December 15
December 31 March 15

Cannabis Tax FAQ

What will the tax be on recreational marijuana?

Recreational marijuana will be taxed at 20% of retail sales.

Medical marijuana will continue to be taxed at 4% of retail sales.

Local jurisdictions may add an additional tax of up to 3%.

Can I claim a reduction on my cannabis tax return for using higher value products or superior production techniques?

No, the law does not provide for exemptions or reductions of cannabis tax for cost of goods sold.

Will I be taxed on bad debt sales (sales deemed uncollectible)?

Yes. The cannabis tax is calculated on the marijuana provider’s gross sales.

If I am a registered cardholder that cultivates my own product, am I subject to cannabis taxation?

No, the dispensaries are the responsible party for collecting and remitting the tax. If you only cultivate for personal use this is not taxable, being a licensed provider for additional cardholders is a taxable relationship.

What is included as a “sale” for the cannabis tax? Do I pay the tax on products I give away?

All gross sales of marijuana and marijuana infused products are taxable.

The tax is on the gross retail price, which is the established price for which a marijuana product is sold to a purchaser before any discount or reduction.

“Sale” or “sell” means any transfer of marijuana products for consideration, exchange, barter, gift, offer for sale, or distribution in any manner or by any means. This includes marijuana and marijuana infused products.

Am I required to file a cannabis tax return if I have no sales for the quarter?

Yes. You must still submit a tax return through the TransAction Portal (TAP) for zero dollar returns.

What is taxed if I sell marijuana infused products? Can I separate the ingredients on the receipt and only tax the value of the marijuana included in the product?

The entire gross sale amount for the marijuana-infused end-product is subject to the tax.

Can I reduce the price for aged cannabis products?

Yes, if you change your price and that price is offered to all customers, that is the new established retail price.

The established retail price and any changes to that price should be documented and maintained in your records.

Can I offer a reduced price for bulk purchases of cannabis products?

Yes. If the new price is offered to all customers, it becomes the new established price.

If I offer product on credit, when is the tax reported?

Tax is due on the retail price of the products at the end of the quarter in which the product is received by the consumer.

How do I calculate the tax on discounts to individual cannabis customers?

The tax will be applied on the established retail price for the product. Discounts for a group or individual do not change the established retail price.

Products priced below the established price for a select demographic is considered a reduction price, tax must be applied to the established retail price.

As a Cannabis provider, do I need an Alternative Nicotine or Vapor Products Retail License?

You must have the Alternative Nicotine or Vapor Products Retail license if you sell alternative nicotine products, including:

  • E-cigarettes
  • Vapor devices or mods
  • Accessories
  • Liquid or e-juice

This license has a $20 annual fee. You may apply for a new license or renew an existing license using the eStop Business Licenses Service.

You need an alternative nicotine license even if you have a tobacco retailer license.

If I have questions or need additional information about applying or managing my Alternative Nicotine or Vapor Products Retail license, who do I contact?

If you have questions or concerns about any Tobacco Product License or Alternative Nicotine or Vapor Product License, please call (406) 444-4351 or email [email protected]

Cannabis Wage Withholding FAQ

As a cannabis provider, how do I register for a wage withholding account?

You can register your wage withholding account electronically through TransAction Portal (TAP) or by using the Montana Department of Revenue Business Registration (Form GenReg).

As a cannabis provider, do I need an Employer Identification Number (EIN) to issue W-2s?

Yes, you cannot issue W-2s to an employee using your Social Security Number (SSN). If you do not currently have an EIN, you can easily apply for one here.

As a cannabis provider, can I compensate my employee(s) with room and board or any other type of non-cash payments?

As defined in 39-51-201, Montana Code Annotated, “Wages means all remuneration payable for personal services, including the cash value of all remuneration payable in any medium other than cash. The reasonable cash value of remuneration payable in any medium other than cash must be estimated and determined pursuant to rules prescribed by the department.” So, if you pay with livestock, living quarters, material goods or other non-cash payments, you must report their market value as wages on a form W-2.

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As a cannabis provider, will I be considered and agricultural grower/employer?

No, cannabis is not recognized as an agricultural crop in Montana.

As a cannabis provider, can I give my employees a 1099 NEC (Nonemployee Compensation) to report wages earned?

No, employee wages and withholding must be reported on the federal form W-2.

As a cannabis provider, when can I report compensation earned on a 1099 NEC?

Compensation reported on a 1099 NEC should only be given to those individuals or entities that are established and engaged in a business of their own. UI law defines an independent contractor as “an individual working under an independent contractor exemption certificate provided for in 39-71-417, MCA”. If you have paid or contemplate paying someone as an independent contractor, the individual should have an independent contractor exemption certificate. You should ask for a copy of that and retain it for your records.

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Payment and Filing Options

Payment Options

TransAction Portal (TAP) Make payments online using the TransAction Portal. Request a Payment Plan You can request a payment plan for making tax payments through TAP. Requesting a payment plan requires you to be logged in. Learn more about Requesting a payment plan. Payment Vouchers You may also make payments by mail using a payment voucher. The appropriate payment vouchers for each tax taype are available in our Forms Repository.

Filing Options

Free File Alliance The Free File Alliance allows commercial income tax software providers to offer free tax filing services to qualified taxpayers. Approved Software Providers Commercial software available from software providers. TransAction Portal (TAP) Businesses, Alcoholic Beverage Licensees, and Livestock Owners can file and renew most account types through TAP. MT QuickFile

You may qualify for MT QuickFile if you:

    , , ,
  • Only report income from Forms W-2, 1099-INT, or 1099-DIV,
  • Are not claiming any credits except the Montana Elderly Homeowner/Renter Credit.

MT QuickFile is for filing a Montana State Tax Return Only.

You may use MT QuickFile to claim your Montana Elderly Homeowner/Renter credit if you otherwise meet the criteria above. If you do not, you will need to file a full Montana Individual Income Tax Return.

The Department of Revenue works hard to ensure we process everyone’s return as securely and quickly as possible.

Unfortunately, it can take up to 90 days to issue your refund and we may need to ask you to verify your return.

We encourage all Montanans to file early and electronically. This is the easiest and most secure way to file and get your refund as quickly as possible.

Remember, we are here to help. Please contact us if you need additional assistance.

Where’s My Refund?

Filing Options You can take our online quiz to show which options you may be qualified for, or learn about the filing options available and choose which is right for you. You may also be able to find Income Tax Filing Assistance throughout the state. –>

Are you working remotely in Montana? You must pay Montana state income tax on any wages received for work performed while in Montana, even if your job is normally based in another state. Learn more about Montana Residency or see the Nonresident/Part-Year Resident Ratio Schedule instructions in the Montana Individual income Tax Return (Form 2) Instruction Booklet for more information.

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You may now register to receive donations as a Montana Public School District or Student Scholarship Organization.

For more information on tax credits for qualified education contributions, please see our guide.

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If you have records currently saved in My Revenue, we ask you to log into your My Revenue account and download them before July 23, 2021.

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We serve the people of Montana and are here to help you through this time of crisis.

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Information Regarding COVID-19 Stimulus Payments

Stimulus payments are being issued by the IRS.

The Montana Department of Revenue is unable to assist in securing your stimulus payment.

You can check on the status of your COVID-19 Stimulus payment at IRS.gov/Coronavirus/Get-My-Payment.