The Montana Department of Revenue will send notices reminding medical marijuana providers to pay taxes after seeing a sharp drop in payments at the quarterly deadline.

The department reported taking in just $207,000 in medical marijuana taxes as of Jan. 17. That's a little more than half of the $395,000 collected in October.

The tax payments came from 189 providers, which is well below the 434 who paid last fall, which was the first quarterly collection for the industry.

There are 611 registered providers in the program, according to the Montana Department of Public Health and Human Services.

Revenue department officials expect there are more providers who need to pay, but they haven't determined a specific reason for the reduced tax payments. Department spokeswoman Mary Ann Dunwell said that the reminder letters will be sent out this week.

The taxes collected in the first two quarters represent about $15 million in sales for Montana providers during six months.

Currently, medical marijuana providers pay a 4-percent tax on gross receipts. The tax will reduce to 2 percent for the next fiscal year, beginning July 2018. That money, as well as fees generated by the program, is expected to cover the cost of administering the program.

That includes a "seed-to-sale" product tracking contract with Florida-based Metrc, which specializes in the marijuana industry and has contracts with several other states with medical and recreational marijuana. Health department spokesman Jon Ebelt said that they expect tracking through the company to be running by March 19.

The health department has been drafting rules for the expanded medical marijuana program, and a final set could be released by the end of the month. In addition to the tracking provision, it also regulates product testing and a revised fee table.

Some of the regulations will change from the draft rules released in November. During a Children, Families, Health, & Human Services Interim Committee meeting last week, a health department official said that a number of revisions came after a public hearing held on Nov. 30.

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The changes include another licensing fee tier for providers who serve between 11 and 50 patients. Originally, the suggestion was a $1,000 fee for providers with up to 10 patients and $5,000 for those serving more.

“We shouldn’t be reinventing the wheel," said Erica Johnston, branch manager for quality assurance for DPHHS, at the committee hearing. "We should be taking what works in other states, what is proven to offer a legitimacy to this business and offer a safe product to patients.”

Growth of Montana's medical marijuana industry, which added roughly 1,000 registered patients each month in 2017, appears to have slowed. The health department said there are 22,213 patients as of Jan. 19.

That's an increase of about 1,000 patients since October.

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