Montana’s adult-use cannabis law automatically grants licenses to each of the state’s tribal nations to cultivate and sell cannabis, but new guidance from regulators prohibits tribal grows from expanding beyond tier 1 licenses.

Brendan Beatty, director of the Montana Department of Revenue, sent a letter June 2 to the Economic Affairs Interim Committee declaring that tribal cannabis cultivation operations must remain within the smallest grow size, which allows for a maximum of 1,000 feet of grow space, according to the Montana Free Press.

This differs from confirmation that the Economic Affairs Interim Committee received from the Department of Revenue after House Bill 701 passed during Montana’s 2021 legislative session to implement the state’s adult-use program. At that time, the committee verified with the department that although the legislation defines tribal licenses as tier 1, the licensees could scale up over time like the other license holders in the state, the Montana Free Press reported.

“During the last legislative session, a lot of the tribes and the legislators saw this as an opportunity, finally, for the tribes to get in on equal footing on the ground floor of the marijuana industry, and start bringing in additional revenue for themselves,” State Sen. Jason Small, R-Busby, a member of the Northern Cheyenne tribe, told the news outlet. “Unfortunately, it seems the Department of Revenue has been trying to hamstring our efforts.”

No tribe has applied for a cannabis license to date, and Small told the Montana Free Press that some are wondering if they should now that regulators have capped the licenses.

Montana’s moratorium on new cannabis licenses ends July 1, 2023, and at that point, tribal nations will be able to apply for licenses like anyone else in the state, and the new licenses will not carry the tier 1 restrictions, the Montana Free Press reported.

In the meantime, the Economic Affairs Interim Committee will meet June 14 and 15 and it is likely that the issue will resurface, according to the news outlet.