Montana Administrative Register Notice 37-576 No. 6   03/22/2012    
Prev Next






In the matter of the amendment of ARM 37.107.117 pertaining to Montana marijuana program






TO:  All Concerned Persons


            1.  On April 12, 2012 at 10:00 a.m., the Department of Public Health and Human Services will hold a public hearing in the auditorium of the Department of Public Health and Human Services Building, 111 North Sanders, Helena, Montana, to consider the proposed amendment of the above-stated rule.


2.  The Department of Public Health and Human Services will make reasonable accommodations for persons with disabilities who wish to participate in this rulemaking process or need an alternative accessible format of this notice.  If you require an accommodation, contact Department of Public Health and Human Services no later than 5:00 p.m. on April 5, 2012, to advise us of the nature of the accommodation that you need.  Please contact Kenneth Mordan, Department of Public Health and Human Services, Office of Legal Affairs, P.O. Box 4210, Helena, Montana, 59604-4210; telephone (406) 444-4094; fax (406) 444-9744; or e-mail dphhslegal@mt.gov.


3.  The rule as proposed to be amended provides as follows, new matter underlined, deleted matter interlined:


            37.107.117  FEES  (1)  The department will assess the following fees:

            (a)  registered cardholder application fee of $25 $75;

            (b) through (d) remain the same.

            (e)  annual registered cardholder renewal fee of $10 $75.

            (2) and (3) remain the same.

            (4)  Renewal applications received by the department after the expiration date will be treated as new applications and require a $25 fee.


AUTH:  50-46-344, MCA

IMP:     50-46-344, MCA




In 2011, Montana's 62nd Legislature passed Senate Bill 423 (SB423) which repealed the Medical Marijuana Act and established the Montana Marijuana Act (Act), and revised laws relating to the use of marijuana for certain debilitating medical conditions.  The Act includes many new requirements for provider/marijuana infused products providers (MIPPs) and registered cardholders.  Among the new requirements, providers must submit fingerprints to the department for a federal criminal background check, all applicants must be Montana residents and possess a Montana driver's license or state-issued identification, and probationers and parolees are prohibited from being patients or provider/MIPPs.


Since the implementation of the Act, there has been a reduction in the number of patient and provider/MIPP applicants for the program.  In May 2011, prior to the new law going into effect, there were 31,522 active registered cardholders and 4,755 active provider/MIPPs.  There are currently 14,364 active registered cardholders and 533 active providers/MIPPs (February 2012).  The Montana Marijuana Program is solely funded by state special revenue collected through program application fees.  The reduction in applications has significantly reduced the revenues collected by the program.  In light of this reduction, the application fees must be adjusted in order to sustain the program without a deficit.


The current program fees are based on revenue projections prior to SB423 taking effect.  The fees are $25 for a new registered cardholder application or a late renewal (received after the expiration date), $10 for a renewal application, and $50 for a provider or marijuana infused products provider (MIPP) application.  Fees for providers and MIPPs were established using the cost charged by the Department of Justice/Federal Bureau of Investigation (FBI) for conducting fingerprint background checks.  The department considered the costs of processing these background checks in addition to modifications to the administrative and business processes necessary when establishing the fee at $50.  Registry fees were considerably higher at one time.  In 2005, at the inception of the program, a new patient application fee was $200, later decreased to $100 before decreasing again and remaining at $50 for several years.  Fees were reduced to their current levels in 2009 when program revenues exceeded the projections.


Based on the current and projected decline of applications and enrollments over the next fiscal year, the fees must be increased in order for the program to remain self-supporting.  The proposed new fees are $75 for a new registered cardholder application and $75 for a registered cardholder renewal.  The proposed fee for new and a renewal registered cardholder application is the same because processing time is essentially equal.  The department proposes the provider fee be left at $50.


The fees were not raised immediately when the law changed because the department could not project the effect the law changes would have on application and registry numbers.  Six months of registry data is now available and was used to analyze emerging trends based on the new requirements which took effect in July 2011.  The decision to raise the program fees came after careful analysis of the current workload, staffing, program expenses, and projected revenues.


The new law put into practice several new administrative (program) requirements which contain specific costs.  For example, SB423 requires that registry cards be laminated before sending to cardholders.  In order to implement this requirement, the department worked with the General Services Division to purchase equipment that places a UV coating over the registry cards before they are sent to cardholders.  The cost of this equipment was significant and had to be purchased using funds generated by the program.  Additionally, postage and printing costs for the program have increased considerably.


A large part of the State Fiscal Year (SFY) 2012 budget is dedicated to temporary personnel services.  These services were imperative to the success of the program, particularly through the transition from the old law to the new law, as the volume of data entry, phone calls, and walk-ins was staggering.  In October 2011, three permanent staff people were hired and the program no longer utilizes temporary staff.  There are five FTE in the program; a program manager, and four licensing permit technicians.  A fourth licensing permit technician position became vacant in January and the position remains open in order to reduce program expenditures.  This will save the program approximately $12,500 in SFY 2012.


Further reducing FTE was considered, however, reducing staff at this time would not be an efficient solution to cut program expenditures.  While the number of registry applications has decreased, the amount of paperwork, required documentation, and program inquiries has increased considerably.  For example under the former law, new and renewal applications were one page, as were doctor's statements.  Caregivers had no applications and no fee.  They were simply named by a patient and added to the registry as long as they had no felony drug offenses (a named-based background check was conducted).  Data entry for a one-page application was minimal and could be done rather quickly.  As a result of the program changes enacted by SB423, the new registered cardholder application and accompanying doctor's statement requires additional data entry into the registry and a high level of scrutiny.  Three addresses are captured on the application, along with patient and provider signature, a copy of a State of Montana issued ID or driver's license, a Landlord Permission Form (if applicable), doctor's notes and often two doctor's signatures along with their Montana license number and other pertinent information.


The provider application process is lengthy and is an entirely new business process for the work unit.  Providers require an application similar to a registered cardholder which includes the same verifications.  Providers must also submit fingerprint cards to the department to facilitate a fingerprint background check by the FBI.  Fingerprint cards must be requested by provider applicants and sent to those provider applicants by program staff.  When the cards are completed and received by the department they are forwarded to the Department of Justice (DOJ).  When the cards and criminal history documents (rap sheet) are received back from DOJ the background check must be reviewed and disqualifying criminal history assessed in addition to activating or denying the provider's application.  The new processes required for a provider/MIPP application take substantial staff time to complete and the department did consider raising the provider application to cover such costs.  However, given the small number of provider/MIPPs currently registered in the program, the provider fees would have to be raised considerably in order to make a significant impact on program revenues.  Additionally, there is a great need for providers to assist patients throughout the state and instating a higher fee may deter individuals from applying to be providers.


Due to the new program requirements, extensive updates have been made to the registry database in order to capture new information and generate reports.  Information Technology (IT) expenditures were high in the first half of SFY 2012 and more system enhancements are necessary to be in compliance with the Act.  The Act requires that lists of providers in local jurisdictions are sent to law enforcement.  A system enhancement has been designed to deliver the reports to jurisdictions through the Montana Criminal Justice Information Network.  However, the requirement has not been met and may become a manual process in order to reduce programming costs.  Another requirement is that individuals cannot be on the registry if they are under the supervision of the Department of Corrections (DOC).  A system enhancement has been designed to check every applicant, as they are entered into the database, to ensure they are not under supervision.  This enhancement is on hold and all applicants are being checked manually, by marijuana program staff, through the DOC Correctional Offender Network, in order to avoid the additional IT expenditure.  This manual process adds additional processing time to patient and provider/MIPP applications.


Phone calls, general program inquiries, and "walk-ins" from registered cardholders, providers, applicants, and law enforcement have also increased.  To increase efficiency, a new telephone system was recently installed in the work unit.  During business hours, calls are answered as they come in rather than being returned after a voicemail is left.  This not only ensures good customer service but also protects patients, providers, and law enforcement when verification of an individual's card status is necessary.  Staff must be available to accept phone calls during business hours and without 4 FTE to cover the phones, the program would need to revert back to the old system which was ineffective and inefficient.


If program application fees are not increased at this time, the department will have to find additional ways to decrease expenditures.  Based on the current workload, indirect costs, and the resources needed to maintain the registry it is not likely the program could reduce costs enough to remain self-supporting while maintaining even a minimum level of efficiency.


Fiscal Impact


As registry numbers continue to decrease, it is difficult to estimate how many currently registered cardholders and future registry applicants this fee increase will impact.  Considering program projections for new and renewal applicants, and the current fees of $10 for a renewal and $25 for a new application, the cumulative cost of the increase to registered cardholders is approximately $799,075 annually.


            5.  These rule amendments will be effective June 1, 2012, or the day after publication of the adoption notice in the Register, whichever is the later date.


            6.  Concerned persons may submit their data, views, or arguments either orally or in writing at the hearing.  Written data, views, or arguments may also be submitted to: Kenneth Mordan, Department of Public Health and Human Services, Office of Legal Affairs, P.O. Box 4210, Helena, Montana, 59604-4210; fax (406) 444-9744; or e-mail dphhslegal@mt.gov, and must be received no later than 5:00 p.m., April 19, 2012.


7.  The Office of Legal Affairs, Department of Public Health and Human Services, has been designated to preside over and conduct this hearing.


8.  The department maintains a list of interested persons who wish to receive notices of rulemaking actions proposed by this agency.  Persons who wish to have their name added to the list shall make a written request that includes the name, e-mail, and mailing address of the person to receive notices and specifies for which program the person wishes to receive notices.  Notices will be sent by e-mail unless a mailing preference is noted in the request.  Such written request may be mailed or delivered to the contact person in 6 above or may be made by completing a request form at any rules hearing held by the department.


9.  An electronic copy of this proposal notice is available through the Secretary of State's web site at http://sos.mt.gov/ARM/Register.  The Secretary of State strives to make the electronic copy of the notice conform to the official version of the notice, as printed in the Montana Administrative Register, but advises all concerned persons that in the event of a discrepancy between the official printed text of the notice and the electronic version of the notice, only the official printed text will be considered.  In addition, although the Secretary of State works to keep its web site accessible at all times, concerned persons should be aware that the web site may be unavailable during some periods, due to system maintenance or technical problems.


10.  The bill sponsor contact requirements of 2-4-302, MCA, do not apply.




/s/ Kurt R. Moser                                           /s/ Hank Hudson for                                               

Rule Reviewer                                             Anna Whiting Sorrell, Director

                                                                      Public Health and Human Services


Certified to the Secretary of State March 12, 2012.



Home  |   Search  |   About Us  |   Contact Us  |   Help  |   Disclaimer  |   Privacy & Security