Montana’s medical marijuana program bled 126 providers in the first half of 2018, and appears to have lost more than 1,000 patients from May to June.

Providers say new regulatory expenses mean they have to grow, merge or die, and the Department of Health and Human Services claims the drop in patient numbers doesn’t accurately reflect an upward trend.

Patient enrollment in the program peaked in May 2011 at 31,522 patients after a federal pledge of non-interference (since revoked) inspired “cannabis caravans” to enlist patients en masse, prompting a quasi-repeal by the Legislature and federal raids that spooked many patients out of the system. Enrollment stabilized for five years, briefly plummeted to nearly zero after the most draconian aspects of the quasi-repeal went into effect in August 2016, and steadily rose during 2017 as bills enacted by ballot and legislation laid the program’s new regulatory foundations.

Helena retiree Dennis Smalls endured the ups and downs of the past three years as a small-time provider. Like most in the cannabis community, Smalls was thrilled the health department would finally have a well-regulated system.

“But it just totally fucked me,” he says, “I’m completely disgusted by the way it was handled.”

The 2016 ballot measure that reworked Montana’s medical marijuana program called for a fee structure based on the square footage of marijuana grown by providers. Growers tending few patients wouldn’t pay as much as those providing for hundreds or thousands. The Legislature and the Department of Public Health and Human Services changed that to a three-tiered flat fee tied to the number of patients served, meaning providers with 80 patients pay the same as those with 1,000.

Smalls served 17 patients, and the new regulations bumped his annual provider fee from $50 to $3,000, in addition to new fees for mandatory testing of his marijuana.

Then came the new 4 percent excise tax (since reduced to 2 percent), which Smalls said he can’t pass on to his patients — who, like him, are on a fixed-income — because Medicaid and Medicare won’t reimburse for federally illegal medicine. Thanks to the new regulations, Smalls was effectively subsidizing his patients’ purchases out of pocket.

Medical Marijuana providers

Source: Montana Department of Public Health and Human Services

“I still owe myself $23,000, and I’ll probably never see that,” Smalls says.

Smalls had two options: Scale up or close. Since he didn’t have “half a million in cash stashed somewhere like some of these guys,” option one was eliminated.

In May, Smalls testified before a DPHHS panel one last time on behalf of imperiled small growers, and declined to renew his provider license at the end of the month, as five other Lewis and Clark County providers had done the previous month. His patients are looking for new providers.

DPHHS says the 126 providers lost so far this year are mostly small ones like Smalls, but declined to offer a reason for the decrease. Smalls said it should be no mystery, since small providers repeatedly warned the agency what would happen if fees were structured as they are.

The loss of small providers hits especially hard in the state’s remote rural areas, where the closest provider may be hours away. Eastern Montana’s low population and density mean that even if a small-time provider had the capital to go big instead of shutting down, there are too few patients to sustain growth.

“Unless a guy can get really big, he can’t stick with it,” says Joseph Larson Jr., a former Glendive provider for 10 patients who closed his dispensary in March after 10 years.

Larson was the only provider in Dawson County for eight years, and has since moved to Bozeman to work for the Eightfold Path dispensary, the same provider his patients migrated to.

“I just wish they’d look out for their rural patients,” Larson says.

According to DPHHS spokesman Jon Ebelt, department numbers showing a recent 1,000-patient decline don’t accurately reflect the number of patients in the program. He says the actual patient population is obscured by a paperwork backlog of new patients applying for cards, older patients renewing expiring cards or switching providers, delays caused by incomplete applications, and the migration of patient records to a new computer system.

Ebelt says DPHHS fields up to 175 medical marijuana-related phone calls per day, and has hired temporary workers to address the backlog. He says the health department is no longer meeting the 30-day deadline to process patient applications as mandated by law. There’s no consequence for missing that deadline, but Ebelt says meeting it remains a high priority.

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