The Montana Cannabis greenhouse sits just outside the Helena city limits and houses around 1,500 plants. It’s huge -- at least half the length of a football field.
Chris Williams is the head gardener and part owner in one of the state’s largest medical marijuana operations. On every square inch of floor space sit varying sizes of plants -- some up to 8 feet tall.
"In the summer we’ll stunt them a little bit because they can grow two to three inches in a day," Williams says.
Montana Cannabis started growing for 20 patients and now has more than 300.
Williams and his business partners launched their growth operation in April 2009.
But while business is booming in California, in Montana -- where the industry has just started to take off -- the economic impact is harder to gauge because the business is almost completely unregulated.
"All of us put together the financing we had, the equipment we had, our own personal savings and a whole lot of sweat equity and hard work," Williams says.
The three owners of Montana Cannabis invested a total $20,000 to start.
Co-owner Tom Daubert says he can’t think of any growers in the state who got traditional bank financing to launch medical marijuana businesses. "Most of the folks doing it started off with a lot of money, or got investors who’ve put up the money," Daubert says. "There is a prevailing public image that this is a very profitable business. The reality is starkly different."
Nervous Bankers
"We aren’t here to discourage anyone from being an entrepreneur," says Lyle Knight, CEO of First Interstate Bank, Montana’s biggest bank. First Interstate closed a handful of business checking accounts once it realized that growing pot was the business.
"We are a member of the Federal Reserve System, and our primary regulator is the Federal Reserve System," Knight says.
Since medical marijuana is still illegal federally, Knight doesn’t want to take the chance that his bank could get punished for financing growers. "The way I look at it, there is conflict and unknowns between federal law and state law," Knight says. "Our position is we’re going to let this stuff get figured out first, before we make a commitment one direction or another -- so we’re just on the sidelines."
None of the local banks who’ve opened business accounts for growers were willing to talk on the record. And trying to get information from the state on just how much money is moving around the industry is nearly impossible.
Growers don’t have to register. Montana’s health department only requires medical marijuana patients to register for what’s called a green card and pay a $25 application fee.
So far the application fees have brought in at least $400,000.
Still Far From Profitable
At the greenhouse, half a dozen employees stand at counter-height tables clipping buds; some are smoking it. Most of them are medical marijuana patients. Daubert says despite about $350,000 in sales last year, he’s still not turning a profit.
"Last month we did in the neighborhood of $90,000 in sales, and that did not cover our costs," Daubert says. That’s because of $10,000 monthly utility bills, along with soil, nutrient and insurance costs.
Since marijuana isn’t taxed in Montana, there’s no real way for the state to keep a careful account of what’s being sold. But Daubert says one economic measure is employment.
"I think almost everyone who is working for us right now would probably be living in some other state, working in construction where things are being built, if it were not for the opportunity to work here," he says.
Montana Cannabis has 15 full-time employees with salaries up to $45,000 annually -- and they all pay income taxes.
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