Understanding Out-the-Door vs. Pre-Tax Cannabis Pricing in Montana
When comparing cannabis prices in Montana, consumers should ask one important question:
Does the advertised price include tax?
The answer can make a significant difference.
Cannabis retailers may present their prices differently. Some display a pre-tax price and add applicable marijuana taxes at checkout. Others use out-the-door (OTD) pricing, where applicable taxes are already accounted for in the displayed price.
Both approaches ultimately account for the taxes that must be collected. The important difference for consumers is whether those taxes are visible in the price they see while shopping.
In Some Montana Counties, 23% Makes a Big Difference
Montana’s state tax on adult-use marijuana is 20%. Montana law also allows counties to impose a local-option marijuana excise tax of up to 3%. In a county imposing the full 3% on adult-use sales, that means a consumer is paying a combined 23% in marijuana taxes.
That 23% can significantly change an advertised pre-tax price.
Here is the calculation:
Pre-Tax Price × 1.23 = Final Price
For example:
$20 advertised price
$20 × 23% = $4.60 tax
Final price: $24.60
$30 advertised price
$30 × 23% = $6.90 tax
Final price: $36.90
$40 advertised price
$40 × 23% = $9.20 tax
Final price: $49.20
$50 advertised price
$50 × 23% = $11.50 tax
Final price: $61.50
$100 advertised price
$100 × 23% = $23.00 tax
Final price: $123.00
That is why the number displayed on a menu doesn’t always tell the whole story.
A $30 Product May Not Really Cost $30
Imagine you’re comparing similar products at two Montana dispensaries.
Dispensary A:
Advertised price: $30
Tax: Not included
23% marijuana taxes: $6.90
Actual price at checkout: $36.90
Dispensary B:
Advertised out-the-door price: $35
Applicable marijuana taxes already accounted for
Actual price at checkout: $35
Looking at the menus alone, the $30 product appears to be $5 cheaper.
But it isn’t.
After taxes, the supposedly less expensive $30 product actually costs $36.90, making it $1.90 more expensive than the $35 out-the-door product.
This is why consumers should be careful about comparing advertised cannabis prices without first determining whether taxes are included.
Why Out-the-Door Pricing Is Easier for Consumers
Out-the-door pricing provides consumers with the information that matters most:
What will this actually cost me?
When applicable taxes are already accounted for in the displayed price, consumers don’t have to calculate an additional 23% while shopping in a Montana county imposing the full 3% local-option tax.
A product marked $25 costs $25.
A product marked $40 costs $40.
A product marked $100 costs $100.
That makes budgeting and comparison shopping considerably more straightforward.
Pre-tax pricing isn’t necessarily a lower price. It is simply a price that still requires applicable taxes to be added.
When Shopping Online, Look for the Fine Print
Online menus make it easy to compare products and prices among dispensaries, but consumers should make sure they’re comparing the same type of pricing.
Before assuming one dispensary is less expensive, look for disclosures such as:
“Tax not included”
“Taxes calculated at checkout”
“Prices do not include applicable taxes”
“Plus tax”
The disclosure may appear at the bottom of a webpage, within the shopping cart, during checkout or in other fine print rather than directly beside the advertised product price.
If you see one of these disclosures, remember that the displayed price is not necessarily your final price.
An Easy Way to Compare Prices
When shopping in a Montana county with a 3% local-option adult-use marijuana tax, multiply a pre-tax adult-use price by 1.23 to estimate the final price after the 20% state and 3% county marijuana taxes.
$25 × 1.23 = $30.75
$50 × 1.23 = $61.50
$75 × 1.23 = $92.25
$100 × 1.23 = $123.00
Then compare that number with the other retailer’s final out-the-door price.
This creates a true apples-to-apples comparison.
Price Transparency Helps Consumers Make Informed Decisions
The purpose of transparent pricing is simple: consumers should be able to understand what they’re going to pay before reaching the register.
Out-the-door pricing makes that easier because the displayed price more closely reflects the final transaction amount.
Pre-tax pricing requires consumers to take the additional step of identifying the applicable taxes and adding them to the advertised price.
Neither a large sale sign nor a low online menu price necessarily tells you which retailer has the lower final price.
The most meaningful comparison is:
Final price vs. final price.
Before You Buy, Ask: Is Tax Included?
Whether you’re shopping online or standing inside a dispensary, take a moment to check.
Is tax included in the displayed price?
Does the website say “tax not included”?
Will additional taxes appear at checkout?
What is the actual out-the-door total?
In a Montana county imposing a 3% local-option tax on adult-use marijuana, a $100 pre-tax menu price can become $123 at checkout.
That’s a difference worth knowing about before making a purchasing decision.
Don’t compare menu price to menu price. Compare what you actually pay.