Michigan officials prepare for influx of medical marijuana applications

Detroit Free Press/October 15, 2017/Kathleen Gray

Medical marijuana advocates gathered in Ann Arbor Sunday to learn about the regulations and taxes the business will face next year.

Officials are expecting a rush  December 15 when Michigan begins offering applications to people who want to start a medical marijuana business and be part of what is expected to be a $700-million-a-year industry in the state.

“We may have 50. We may have 1,500. We may have 5,000,” Shelly Edgerton, director of the Michigan Department of Licensing and Regulatory Affairs, told an audience of nearly 200 people who showed up at an Ann Arbor hotel on a rainy Sunday afternoon to learn about getting into the lucrative medical marijuana business.

“But we’ve had close to 1,000 people who have signed up for our  training. So we envision a large number of applicants on the first day.”

The license applications for five categories of medical cannabis licenses — growers, processors, testers, transporters and dispensaries — will become available on Dec. 15 and the Michigan Medical Licensing Board is expected to begin awarding licenses in the first quarter of next year.

People attending the session wanted to know everything from how much it will cost them to get approval from local and state authorities for the license, to how the state will accept tax payments from an industry that has so far been shunned from traditional banks because marijuana still is considered an illegal drug by the federal government.

The answers from Edgerton, lawmakers and lobbyists for the medical marijuana industry are everything is still a work in process as the state has been rolling out the rules and regulations that will govern the medical marijuana industry.

One of the big concerns for the people attending the meeting will be the transition time between the beginning of the application process and the actual availability of medical marijuana, especially since the state has said that they want existing dispensaries to close during the licensing process. And it will take licensed growers about six months to produce a medical marijuana crop.

“We’re trying to bring this into a new regulatory market. We had to have some date to start and we view that day as Dec. 15,” Edgerton said. “The Legislature didn’t provide for any transition. They didn’t recognize the problem, intentional or not.”

The meeting comes on the heels of raids on eight medical marijuana dispensaries in northern Michigan by undercover narcotics police teams earlier this month who asked the Grand Traverse County Prosecutor’s Office to send cease-and-desist letters to the shops operating in the county.

The undercover team, armed with medical marijuana cards, was able to purchase the cannabis at the eight shops — four in Traverse City and four in other parts of the county — even though they didn’t have a registered caregiver listed at the dispensary.

“They were pretty much selling to anyone who walks in the door, which is illegal under current state law. They can only sell from caregiver to registered patient,” said Grand Traverse County Prosecutor Bob Cooney.

Technically, that’s illegal until Michigan begins licensing medical marijuana businesses next year. Traverse City’s medical marijuana ordinance allows for dispensaries where caregivers can provide products to the patients they care for. Before the raid, seven dispensaries that went through a zoning and background check by the city were operating in Traverse City and three more are going through remodeling or renovation, said Dave Weston, the city’s zoning administrator.

Cooney said he’s not a big fan of the legalization of medical marijuana, but welcomes the new rules and regulations that are on the way.

“The Legislature, over the past five years, has flip flopped back and forth,” he said. “So we’re constantly trying to figure out what the state is going to do. It’s been very confusing for law enforcement.”

Before the new regulations were passed last year, the 218,556 medical marijuana card holders were supposed to rely on the 38,100 registered caregivers, who could supply marijuana to up to five patients to use to help treat a variety of ailments. That model will stay in effect with the new regulations, along with five categories of licenses — growers, who can produce up to 500, 1,000 or 1,500 plants, processors, testers, transporters and dispensaries.

To start fresh, the state Department of Licensing and Regulatory Affairs wants the dispensaries that are operating now to shut down Dec. 15 and not open again until they get a license. And that has caused a panic among medical marijuana users, who have crowded licensing board meetings to tell regulators that the transition time will leave them without the medicine that they need to function.

As a result, lawmakers have introduced bills in the House and the Senate that would allow the dispensaries to stay open during that transition period while they’re awaiting a license.

At a hearing on the bill in the Senate Michigan Competitiveness Committee last week, Carla Boyd, a board member of the Michigan Epilepsy Foundation from Grand Rapids, said shutting down the dispensaries would be devastating for many people, including her 15-year-old daughter Laine, who has found relief from epileptic seizures with cannabis-infused oils.

“You just can’t abruptly stop take any anti-seizure drugs,” she said. “If you shut down existing dispensaries for any amount of time, people are going to end up in the hospital, I promise you that.”

But Steve Linder, a Republican political consultant representing the Michigan Responsibility Council, which consists of successful entrepreneurs who want to get into the medical marijuana business, want the dispensaries shut down immediately.

“This gives a carve-out for people who knowingly are breaking the law,” he said. “Everyone feels compassion for people who need access to medicine. But it’s a patient’s responsibility to find themselves a caregiver.”

His stance brought this testy exchange from Sen. Rick Jones, R-Grand Ledge, one of the sponsors of the legislation allowing dispensaries to stay open during the transition.

“What millionaires are you working for and who wants a monopoly in this business?” Jones asked Linder.

“That’s kind of like my wife asking if I look fat in this dress,” Linder replied. “I’m not going to dignify that with an answer.”

Sen. Mike Shirkey, R-Clarklake, said he supports the bills and expects quick action in both the committee and the full Senate.

“This was an unintentional oversight when we passed the comprehensive legislation last year,” he said. “But this is not going to drag out. It’s not going to linger.”

New Proposed Law in Michigan For Growers and Dispensaries

Medical Marijuana/April 4, 2017/Jason Draizen

In 2008, more than 60 percent of voters approved a new law that would regulate Michigan’s medical marijuana industry. Like other medical marijuana laws in the nation, Michigan’s original legislation provided clear directives to caregivers and certified medical users, but did not provide regulations for growers and dispensaries.

As the number of medical marijuana patients in Michigan grew from hundreds to tens of thousands, the community also grew. Unfortunately, Michigan’s lack of clear regulations led to a lot of confusion.

In March 2017, lawmakers passed a bill that overhauled the state’s medical marijuana program. According to Sen. Patrick Colbeck, R-Canton, the new medical marijuana law in Michigan takes the 2008 small home-grown industry created by a ballot proposal and puts the industry “on steroids.”

New Michigan Laws

Under the previous legislation, Michigan allowed the growing of limited marijuana by certified medical users and caregivers. A certified medical user was authorized to grow up to 12 marijuana plants. A caregiver was allowed to grow a maximum of 12 plants for each of their patients. Each caregiver was allowed to serve five patients at a time. This meant a caregiver could grow a maximum of 72 plants.

The new law creates three classes of growers: people who can grow a maximum of 500 plants, 1,000 plants and 1,500 plants. It also creates five types of licenses for growers, dispensaries, testing facilities, transporters and seed-to-sale tracking.

Participating in the new law will come at a cost. The community will charge dispensaries an annual fee, which could total $5,000 for each dispensary. Also, they’ll decide whether a dispensary will be allowed to operate and where it will operate.

The state will charge dispensaries a licensing fee of no more than $10,000 per license for the lowest class of growers who cultivate 500 plants or fewer. Every dispensary will pay a 3 percent tax on gross sales, of which 70 percent will go to the local governments and police departments. Much of the balance will go to the state general fund.

For the most part, licensing fees will support a bureaucracy that is projected to cost about $21 million a year. This includes $550,000 to the attorney general’s office for legal expenses, 34 officials from the Michigan State Police and 113 permanent state licensing employees.

Local Control

Beyond the state’s licensing laws, which are yet to take effect, local communities will decide whether they’ll allow newly legalized entities to operate in their areas. A city, village or township may set the number of medical facilities allowed in its jurisdiction, along with laws to restrict zones where a dispensary, grower or other entity may operate.

In some ways, the new laws will legalize dispensaries, which have operated in the legitimate shadows since the original law was approved in 2008. The old law wasn’t clear about marijuana dispensaries, and that’s why there was an oversupply in cities like Lansing and Detroit, which failed to honor the business in the community. This led to numerous shutdowns by the police.

Administrators are weighing the benefits that the medical facilities will bring — such as more tax revenue for the state and greater accessibility to medical marijuana for patients — against potential safety concerns.

State Marijuana Laws

Across the nation, 28 states have laws largely legalizing cannabis in some form. More states will soon join them after recently passing laws authorizing the use of medical marijuana.

Eight states have adopted extensive laws permitting the use of marijuana for recreational use. Most recently, in November 2016, Massachusetts, California, Nevada and Maine also passed measures legalizing the use of marijuana for recreational purposes. In California, for instance, adults 21 and above are allowed to possess up to 1 ounce of cannabis as well as grow up to six plants in their homes.

In states that have recently passed regulations, several officials are debating proposals regarding the use and sale of cannabis. Massachusetts legislators are weighing bills that could lower the amount of marijuana people can legally possess. In Nevada, lawmakers are proposing that businesses should obtain permits from the state allowing for the public use of cannabis. A few other states have legalized the possession of limited amounts of cannabis.

Some marijuana laws are more accommodating than others, allowing possession of medical marijuana for certain preapproved conditions. Otherwise, most states have approved narrow laws permitting citizens to possess medical cannabidiol, a strain of cannabis that provides relief from pain without the usual high that accompanies traditional cannabis.

Karen O’Keefe, director of state policies for the Marijuana Policy Project in Washington, D.C., said, “We support a structure that gives patients the most options.” She mentioned Colorado, the first state to legalize recreational marijuana, as a good example. “Anyone who meets the requirements can get a license. As long as you qualify, you can get a permit, and that’s best for patients.”

Under Michigan’s new laws, the five-member licensing panel, which will be appointed by Gov. Rick Snyder, cannot put a limit on the number of marijuana licenses available to businesses that will have gone through a thorough and conclusive background check to ensure they qualify for a license.

What to Expect

With marijuana activists launching a petition to put recreational legalization of marijuana on Michigan’s 2018 election ballot, it’s not clear how long the new medical system will last before the marijuana industry gets another law.

One group of legislators tried to place a legalization bill on the 2016 election ballot, but they failed after state officials said many of the 350,000 signatures on the petition were collected outside of the stipulated 180-day window.

Nonetheless, the Marijuana Policy Project is working to form a coalition that will put the recreational use of marijuana up for a vote. It believes there’s an excellent chance of prompting state lawmakers to move forward with legalization.

In fact, Mike Callton, who plans to run for Senate in 2018, said he had successful talks with one legislator who plans to introduce marijuana for recreational use before the beginning of spring. “Moving from medical use to recreational use is going to be a much shorter route,” he says.

For now, we’re all looking forward to getting more growers and dispensaries licensed, allowing for greater accessibility in Michigan as well as reduced marijuana prescriptions and more tax revenue for the state.