Montana Department of Revenue

Medical Marijuana Provider Tax

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Medical Marijuana Provider Tax

Quick Information

Due Dates

First Quarter
April 15
Second Quarter
July 15
Third Quarter
October 15
Fourth Quarter
January 15

Fees

4% of Gross Sales

Medical marijuana providers pay a 4% tax on gross marijuana and marijuana products sales.

Fees

Montana charges a 4% tax on marijuana and marijuana products sales beginning October 1, 2019. Previous sales were charged a 2% tax.

The tax applies to the gross retail price when a product is:

  • Sold
  • Exchanged
  • Bartered
  • Gifted

Due Dates

The Medical Marijuana Provider Tax Return is due on the 15th of the next month following the end of the quarter:

First Quarter
April 15
Second Quarter
July 15
Third Quarter
October 15
Fourth Quarter
January 15

Reporting and Payment Options

TransAction Portal (TAP)

Report and pay your Medical Marijuana Provider’s Tax through the TransAction Portal (TAP).

Mail a Check or Money Order

Mail checks and money orders along with your Medical Marijuana Provider Tax Payment Voucher to:

Montana Department of Revenue
PO Box 6169
Helena, MT 59604-6309

Make a Cash Payment

We only accept cash payments at our drop box in Helena:

Montana Department of Revenue
340 N. Last Chance Gulch
Helena, MT 59601

Monday through Friday, 9:00 AM to 4:00 PM

Get Directions

All cash payments must be in a tamper-evident deposit bag no larger than 11″ x 13″.

Multiple bags may be used if needed. Bags may be purchased online at numerous locations and office supply stores.

  1. Print a Medical Marijuana Provider Tax Payment Voucher
  2. Include a copy of the voucher in each deposit bag
  3. Write your name and Provider ID on each deposit bag

To maintain the accuracy of your deposit, please sort cash by denomination and face all bills in the same direction. We will not accept any mutilated or contaminated currency.

Exact amount is required. The department is not equipped to provide change.

Sample Deposit Bag

Penalties and Interest

The Medical Marijuana Provider Tax is subject to uniform penalties and interest.

Frequently Asked Questions

What is taxed by the Medical Marijuana Providers tax?

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.

Can I change my established retail price for medical marijuana?

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 medical marijuana?

Yes, if the bulk price is consistent, documented and offered to all customers.

How do I calculate the tax on discounts to individual medical marijuana 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.

Can I reduce the price for aged product?

Yes, if the new price is offered to all customers that is the new established price.

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

Yes, the medical marijuana tax is calculated on the Marijuana product provider’s gross sales.

Can I claim a reduction on my Medical Marijuana Return for using higher value products or superior production techniques?

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

Will I be taxed on complimentary marijuana or marijuana infused products I give away?

Yes, the complimentary gifts are taxed at the established retail price.

Will the Department of Revenue accept payment from another entity on behalf of the taxpayer?

Yes, we can accept payment for taxes on behalf of another entity if the payment is properly directed by payee.

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

No, the taxpayer is the Licensed Providers. If you only cultivate for personal use this is not taxable, being a licensed provider for additional cardholders is a taxable relationship.

If I am a guardian and registered provider for a minor, are those transactions taxable?

No, in this situation the law provides that the guardian as the registered provider is responsible for the control of the product and this would not create a taxable situation. If the product is purchased from a licensed provider who is not the guardian of the minor, this does create a taxable transaction.

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

The tax is reported in the quarter the transfer of product occurred.

Do I need a license separate from my medical marijuana license to sell vapor products or tobacco?

Yes, by law you need a separate license to sell vapor products or any tobacco products.

For more information or to purchase one of these licenses go to eStop Business Licenses.

Property Appraisal Notices

The department is statutorily required to determine:

  • The market value of all residential, commercial, and industrial real property every two years. January 1, 2018 is the valuation date for the 2019-2020 appraisal cycle;
  • The productivity value of all agricultural land value every two years. January 1, 2018 is the valuation date for the 2019-2020 appraisal cycle;
  • The productivity value of all forest land every six years. January 1, 2014 is the valuation date for the 2021-2026 appraisal cycle; and
  • The market value of all personal property (i.e. business equipment) annually.

Understanding Your Notice

Your classification and appraisal notice informs you how your property is classified and valued for property assessment and tax billing.

Here is an example of a data table from a classification and appraisal notice:

(Please Click on Red Icons Below for additional information.)

**The tax amount shown is an estimate of the 2020 general property taxes based upon the 2019 millage rate where this property is located.

Note: The property may be subject to the local government’s special assessments and fees in addition to the general taxes. Property owners should review their previous year tax bill or contact their county treasurer’s office for more information about special assessments and fees that affect their property. Mill levies are determined by local government each September. This number is the total amount of mills levied against the property last year.For residential, commercial, industrial real property, the current assessed value shown is the department’s determination of market value. Market value is the value at which property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of relevant facts. 15-8-111(2)(a), MCA.
For agricultural and forest land, current assessed value is the department’s determination of productivity value; land values are based on productivity capacity per acre.

For personal property (i.e. business equipment), current assessed value is the depreciated value of the personal property less any exempt amount as of January 1, 2020.The $7,350 change in value from January 1, 2016 to January 1, 2018.Classification CodesGeocode
(property id)Move decimal 3 places to the left to calculate estimated tax. (.85738)

How estimated taxes are calculated:
 \text{Current Assessed Value} \times \text{Tax Rate} = \text{Current Taxable Value}
\text{Current Taxable Value} \times \text{Prior Millage Rate} = \text{Estimated Taxes}
Using values from the example:
\$2093 \times0.85738 = \$1795

Find your property’s tax rate based on its classification code.

The Informal Review Process

Step 1

Check your property information on Property.MT.gov

We want to make sure you don’t have any questions about your property.

You can use Property.MT.Gov to view details about your property and review its characteristics, such as:

  • Number of bedrooms
  • Number of bathrooms, or
  • Square footage

Step 2

Get your questions answered by our local staff

You may contact your field office to talk to an appraiser. We will make every effort to address your concerns and resolve any possible misunderstandings.

If you have no additional concerns, your local county treasurer’s office will use the values reported in your notice to calculate your property tax bill.

Time Sensitive Information! If you disagree with our valuation or need us to correct your property’s characteristics, you will need to fill out the Request for Informal Classification and Appraisal Review (Form AB-26)  within 30 days from the date on your classification and appraisal notice. The department will review your request for informal review and if we determine any valuation adjustments are warranted, the adjustments will apply to tax year 2020.

If you miss the 30-day deadline in 2020, your next opportunity to submit a request for informal review will be in year 2021, after you receive your new classification and appraisal notice for the 2021-2022 valuation cycle.

Step 3

Request an Informal Review

Before filling out your Request for Informal Classification and Appraisal Review (Form AB-26), be sure to have the following information easily available:

  • Your classification and appraisal notice, showing your:
    • Assessment Code
    • Geocode
    • Current Assessed Value
  • If you are requesting an overall valuation change not related to physical characteristic changes, submit any of these documents you have available:
    • Your own estimate of market value as of January 1, 2018 (department’s valuation date.)
    • The purchase price of subject property within six months of the January 1, 2018, valuation date; copy of executed buy/sell agreement.
    • A fee appraisal within six months of the January 1, 2018, valuation date.
    • Comparable property sales or listings within six months of the January 1, 2018, valuation date.
    • Builder’s cost breakdown worksheet for building remodels or construction.
    • Detailed information on income and expenses for income producing commercial or industrial property.

Step 4

Formal Appeals

You can choose to appeal the classification or values shown on your notice directly to your local county tax appeal board (CTAB) rather than using our informal review process. Or, if you disagree with the department’s decision after the informal review process, you may appeal our decision with a county tax appeal board (CTAB) in the county where the property is located.

County Tax Appeal Board
The County Tax Appeal Board (CTAB) is an independent board appointed by the county commissioners and not connected to the Department of Revenue. You can learn more about the CTAB process on the Montana Tax Appeal Board’s Appeal Process page.
Montana Tax Appeal Board
The Montana Tax Appeal Board (MTAB) is an administrative board tasked with providing an independent and neutral review of the Department of Revenue’s property valuation. Board members are appointed by the governor.
MTAB decisions are final unless you pursue district court action.
You can learn more about MTAB and the appeals process on the Montana Tax Appeal Board website.
Court of Appeal
 To appeal decisions made by the Montana Tax Appeal Board, you need to file with a district court.

Revised Montana NOL Schedule for Tax Years 2018-2020

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Congress enacted the Federal Coronavirus Aid, Relief, and Economic Security (CARES) Act on March 27, 2020. Among other things, the Act addresses net operating losses (NOLs) and other related provisions.

For example:

  • Section 2303 allows a five-year carryback for NOLs arising in the 2018, 2019, and 2020 tax years. Section 2303 also temporarily repeals the 80% of income limitation for tax years beginning before 2021.
  • Section 2304 temporarily repeals the loss limitation for individuals, estates and trusts under section 461(l) of the Internal Revenue Code (IRC) for tax years beginning before January 1, 2021.
  • Section 2306 amended section 163(j) of the IRC increasing the interest expense deduction for tax years 2019 and 2020.
  • Section 2307 made some technical amendments to section 168(e) of the IRC related to qualified improvement property.

The above-provisions apply when a taxpayer calculates Montana taxable income.  As a result:

  • Some taxpayers may have to amend their 2018 and/or 2019 tax returns;
  • Individuals, estates and trusts with an NOL incurred in tax years 2018 or 2019 may carry their NOL back five years and amend the corresponding returns filed in those years. A waiver of the carryback period will be available on their 2020 Montana income tax return for each impacted tax year.

As a result of the changes from the CARES Act to the treatment of NOLs for tax years 2018, 2019, and 2020, the department updated the Montana Net Operating Loss for Individuals, Estates and Trusts Schedule and it is now available to recalculate the NOL for 2018 and/or 2019 to carry back to previous years. Taxpayers will also use this schedule to calculate their 2020 NOL. Please note that a taxpayer cannot carry back a 2020 NOL before tax year 2020 has ended.  To carry back a 2020 NOL, you must complete your 2020 return and include the Class B NOL Schedule.

For Corporations, amended return instructions and NOL provisions remain unchanged. See the Corporate Income Tax Return Instructions for more information.

HELP Integrity Fee (HIF)

The Integrity fee is a monthly fee that certain participants of the Montana Health and Economic Livelihood Partnership (HELP) program must pay in addition to their premiums. If you are enrolled in the program, you are required to pay this fee if your equity in real property and/or improvements, or your equity in vehicles, or the taxable value of agricultural land you own, is above a certain limit. 

Complete the Asset Test

This asset test questionnaire is available at Integrityfee.mt.gov. If you would like a paper questionnaire, please call (406) 444-6900. 

If at least one of the three asset tests below show a result of more than zero, you are required to pay the integrity fee. 

The three tests are:  

  • Test 1: Your equity in the real property and improvements you own is more than $255,000: 
  • Test 2: You own more than one light vehicle, with a combined MSRP greater than $20,000, and your total equity in these vehicles is greater than $25,000; 
  • Test 3: The taxable value of agricultural land you own is more than $1,500. 

Calculation of the Fee

You do not need to calculate the Integrity Fee. Instead, the Department of Revenue will calculate the fee based upon the values reported in all three tests.  

The integrity fee is $100 a month, plus: 

  • $4 for every $1,000 above the thresholds in Test 1 and 2, plus 
  • $4 for every $100 above the threshold in Test 3. 

Changes to Assets/End of Coverage

If there are changes to your assets after you complete the tests, such as the sale of a home or car, please update your information at Integrityfee.mt.gov.  

If you are no longer a member of the HELP program, notify the Montana Department of Revenue by updating your information at Integrityfee.mt.gov.

Frequently Asked Questions

Why have I never heard of the Integrity Fee before now even though I have been enrolled in the HELP Program?

This was passed in the 2015 Montana Legislative session. Changes to the language and requirement were passed by the 2019 Legislature.

If I fill this out, how will it affect my coverage?

It will not affect your coverage.

When will I get billed for this? Who sends the bill? How and to whom do I pay the fee?

Once the asset test has been submitted, and evaluation completed, a bill will be mailed within 30 days. We will begin this process in September 2020.

All payments concerning the Integrity Fee should be directed to the Department of Revenue.

Where do I find property tax information?

You can visit your county’s web page, search for either Treasurer or Property Taxes, and follow prompts or instructions on locating your personal property tax information.

You can also use Montana Cadastral.

What if I am in the process of selling my home?

You should submit your asset test for the assets you owned as of July 1, 2020.

If you sell your home or any vehicles, you can submit an amended asset test.

Do I need to include the MSRP for motorcycles, RVs, or ATVs?

No.

The definition of light vehicle does not include Motorcycles, RVs, or ATVs.

A light vehicle is a motor vehicle commonly referred to as an automobile, van, sport utility vehicle, or truck having a manufacturer’s rated capacity of 1 ton or less. (61-1-101 (31), MCA)

How do I find the MSRP for my vehicles?

You may choose to use the following websites or similar websites to find that information:

I own one vehicle for personal use and two for business use. Do I need to include all vehicles in Test 2 or just the personal vehicle?

Include just the personal use vehicle. We are reviewing personal assets, not business assets. If the business vehicles are driven for personal use, we will need to know the percentage of the personal use to calculate the fee.

Where does this money go?

All funds collected will be deposited into the Montana HELP Act Special Revenue Account to help cover the costs of the Montana HELP Program.

What if I do not complete the worksheet?

We strongly encourage participants to complete the worksheet using their current information.

If the first worksheet is not completed within 30 days, a second request will be mailed.

If we receive no response to the second request, we will use the information available to complete the form on behalf of the participant. Our information may not be current.

When does this need to be done before you manually assess the fee?

We will not manually assess the fee until September, although the fee is effective as of July 1, 2020. It is in your best interest to complete the asset test. They may not owe as much as the department assesses, or anything at all, depending on your responses.

What if I cannot pay? Will I lose coverage? Will the Department of Revenue assess penalties and interest?

We can set up payment plans and work with the individuals. No, you will not lose coverage. No, there is not penalties and interest.

I received this letter for a family member who is deceased. What should I do?

Please notify us about the deceased individual. We will update our records.

Why is the Department of Revenue assessing this fee instead of the Department of Public Health and Human Services?

Per House Bill 658 passed by the 2019 Montana Legislature, the Department of Revenue shall assess and collect the Integrity Fee.

What if I own my home, vehicles or land jointly with another person?

For joint ownership where two names are recorded on a title, the participant can report 50% of the property value and 50% of mortgage debt. The participant can report 50% of MSRP on vehicles and 50% of amount owed, not including interest. The participant can report 50% of the taxable value of the agricultural land. Remember this only pertains to land, not to buildings on the agricultural land.

Have You Received a Withholding Nonfiler Letter?

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Recently, the department sent letters to business owners who have not filed their 2019 Montana Annual W-2 1099 Withholding Tax Reconciliation (Form MW-3). The Form MW-3 was due January 31, 2020.

What we are asking you to do

  • Send us your Form MW-3, Forms W-2 with or without withholding, and Forms 1099 that report withholding by July 31, 2020.
  • Contact us if you do not believe you have a filing requirement or if your account is closed.

What happens if I don’t respond?

If you do not respond, we will estimate your withholding tax along with any penalties and interest based on the information available to us. You may have an additional penalty if you do not file within 60 days of receiving your letter.

TransAction Portal Banner

Additional Tips for Successful Filing

The Montana Department of Revenue reconciles employer information with the Forms W-2s or 1099s filed by employees or retirees. Many errors occur that can be easily avoided. Following the tips below will help employers and tax preparers reduce the chance of receiving a letter or phone call from us. This will also speed up the processing of tax refunds for employees or clients.

  • Complete all required fields
  • Use the correct Employer Identification Number (EIN)—use the EIN the IRS issued you. If you are a service provider, use the EINs issued to your clients.
  • Use the correct state account number. This number is formatted as XXXXXXX-XXX-WTH.
  • Make sure all copies of Form W-2 and Form 1099 are legible and no numbers are truncated or masked.
  • Use the correct Form W-2 and Form 1099 for the reporting year.
  • File Form MW-3 with your Forms W-2. Federal Form W-3 will not be accepted.
  • If you are reporting for Forms 1099 without withholding, do not send them with the Form MW-3. They should be filed with federal Form 1096.
  • If you file your Forms W-2 electronically, do not send a paper copy.

 

If you are mailing your information, please send it to:

Montana Department of Revenue
PO Box 5835
Helena, MT 59604-5835

Paycheck Protection Program (PPP) Tax and Deduction Clarifications

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The Paycheck Protection Program (PPP) is a loan at first that becomes a grant if certain requirements are met.

To the extent the loans are forgiven under the CARES Act, the amounts are not included in gross income and are not taxable.

IRS Notice 2020-32 provides that the business expenses paid with the loan-grant money are not deductible for federal tax purposes. Because the PPP is a loan-grant and not a credit, 15-30-2110(4), MCA, does not apply and the business expenses offset by the grant are not deductible for Montana tax purposes either.

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