Last month the Michigan Marijuana Regulatory Agency announced plans to roll back the state’s requirement that applicants for adult-use cannabis licenses must first obtain a medical cannabis license. The change, which would take effect on November 1, 2020, the one year anniversary of the state’s recreational use legalization, is made possible by a provision in the 2018 legalization law, but it contradicts state rules issued last June that ensures only medical license holders can obtain recreational licenses until December 2021.
Michigan law maintains two sets of licenses, medical and adult-use, for every kind of cannabis business, from dispensaries to growers, to transport.
“Everyone expected a two-year runway, and also expected to follow the permanent rules that were released [in June],” says Steve Linder, a representative of the Michigan Cannabis Manufacturers Association, a trade group for the largest growers in the state. “We believe the state owes it to those who spent this money and put in the facilities to grow medical grade product, to be allowed to have the two-year runway that was promised.”
While Michigan already had a substantial medical cannabis market in 2019, state cannabis sales have grown explosively since adult-use was legalized last year. Last month Michigan adult-use retail centers registered over $57.4 million in sales while medical provisioning centers sold over $52.1 million in cannabis, up from $28.6 million in medical sales in October 2019. Meanwhile, registered medical cannabis patients have decreased from 276,253 in October 2019 to 246,577 in July 2020.
The state has also been adding medical provisioning centers and adult-use retail centers at a fast clip. In October 2019 there were 159 medical provisioning centers, and in July there were 274 medical provisioning centers and 148 adult-use retailers. Most medical provisioning centers and adult-use retailers are co-located.
Andrew Brisbo, executive director of the Marijuana Regulatory Agency (MRA) cautioned that while earlier reports have said the MRA plans to make the rule change, his decision is not yet final. “Historically, when our agency has latitude to make changes to the market, we try to listen to stakeholders. We wanted to get out early to understand what the impact would be,” Brisbo said last week.
“I talked about it publicly in the media, and that generated media reports. It’s crucial that we over communicate on the front end,” said Brisbo, “so people can plan ahead for what’s coming.”
Brisbo says state statutes do not require MRA to issue a new rule, that the change is solely in his administrative discretion. Section 9 of the 2018 adult-use legalization law states, “One year after the department begins to accept applications pursuant to this section, the department shall begin accepting applications from any applicant if the department determines that additional state licenses are necessary to minimize the illegal market for marihuana in this state, to efficiently meet the demand for marihuana, or to provide for reasonable access to marihuana in rural areas.”
Robin Schneider, executive director of the Michigan Cannabis Business Association, a trade group that represents a broad collection of cannabis businesses, says that while the organization does not have an official position, they understand the intent, and understand it is the state’s ultimate decision.
“I was a member of the drafting committee for the ballot initiative that legalized cannabis for Michigan, so I can speak to the intent,” says Schneider. “As we were drafting, we had a lot of requests to protect Michigan-owned medical facilities so that essentially Michigan entrepreneurs’ investments wouldn’t be lost, because they had to spend so much money to comply with the [medical licensing law].The reason we put a two-year requirement in was to protect Michigan business owners from too many out-of-state businesses coming in and ruining their business models.”
Linder and the Manufacturers Association has a Solomonic solution to the problem: Allow social equity applicants to apply for recreational licenses early, and keep the medical provisioning center requirement for everyone else for the full two-year period.
“We believe [our suggestion] can encourage entrepreneurs to apply for licenses and set up their own grows or processors, retail centers, transport, or laboratories,” says Linder.
“It’s an interesting idea,” says Brisbo. “I don’t have an opinion on that yet. We’re doing some analysis to see if that’s in our authority.”