Michigan cannabis regulator plans to keep a light touch on market and propose legislative changes in early 2021

Michigan’s MRA Director Andrew Brisbo dialed in from his home for last Thursday’s quarterly agency public meeting. (Zoom)

Last Thursday, Michigan Marijuana Regulatory Agency Director Andrew Brisbo delivered a train of good news in his agency’s quarterly public meeting and report. For instance, the state has 753 active medical licenses, 473 active adult-use licenses and has collected over $100 million as a result of legal cannabis sales. 

After bleeding off about 22,000 registered patients, Brisbo says the state has leveled off at about 242,000 registered medical marijuana patients, which is good news for the many provisioning centers sited in municipalities that won’t allow adult-use sales. And last month, Brisbo helped announce the creation of the Cannabis Regulators Association, of which he is one of the organization’s founding officers.

With so many successes under his belt, Grown In checked in with Brisbo with a Friday afternoon interview to get a better understanding of what’s to come next.

[Interview edited for grammar and clarity.]

Grown In: How do you view the tribal canvas operations in the U P.? Specifically, with Bay Mills, which is going it alone without Michigan regulation. Under what circumstances would you allow them to sell products to non-tribe dispensaries?

Andrew Brisbo: So, we’ve been working with tribal nations for quite a while that have had a potential interest in engaging in the cannabis market. Specifically in the context of the marijuana market, which is really what our agency does, just to differentiate from industrial hemp, which is still under that broader cannabis umbrella.

We’ve been working on solutions for basically three different pathways for various tribes to express an interest. One is a direct investment in state licensed facilities on non-tribal lands.

The second was having a state licensed facility on tribal lands where you know basically, the tribe is leasing land to a state licensed operation in order to create some economic development. And then the third, which is essentially the way in which Bay Mills is operating, a tribally-owned and operated facility on tribal lands that wants to engage in commerce with those licensed in the state regulated market. 

So, what we need in order to fully execute that sort of third version is some statutory authority to allow the agency to have intergovernmental agreements or MOUs, compacts, or something of the like that that allows that to take place. That’s something we don’t have yet. 

So, as it stands Bay Mills is a sovereign nation. So, what they’re doing is independent of the state system.

Grown In: Is that something that you anticipate seeking in the next legislative session?

Brisbo: Yes.

Grown In: So, microbusinesses and Class A cultivation licenses were supposed to be a way to attract small businesses to cannabis. But a lot of entrepreneurs argue that the capital demands of the businesses have made those less viable. Is there a way for mom and pop cannabis businesses to grow and exist in Michigan?

Brisbo: I think there’s a place for businesses of a variety of sizes in this market. In terms of those types of licenses that are available on the adult-use side, the Class A grower or the microbusiness, so those are kind of new to the scene. So, we haven’t seen this much interest initially. 

Most of the interest in the licenses we’ve issued early on in the market are those that had a parallel operation in the existing medical market and then just expanded the scope of their operation with, you know, pre-existing facilities into the adult use market. Which you know, if you think about it from a planning perspective, obviously, it’s much simpler execution than starting up a new business. 

So I think there’s still opportunity there. There’s not been a great number of municipalities who have adopted authorizing ordinances, in the adult-use space there are some noticeable municipalities missing from that list. So, we have 85 now that have authorizing ordinances, but I still think there’s opportunity for growth. 

There are large cultivators in the space now, and the existing market in those municipalities that already had allowed operations on the medical side–I think that expansion occurred first– but there’s still room for other growth as we see more participation and see less urban areas of the states and in the northern lower peninsula in the Upper Peninsula. I think maybe that’s where there’s an additional space for growth in terms of those smaller, more boutique kind of grow and retail operations.

Grown In: Despite having a relatively open legal market, Michigan cannabis wholesale prices haven’t really dropped below $3,000 a pound for very long. Uh, and from what we’ve observed, illegal market prices are consistently about 40% less than legal market prices. How can you battle the illegal market under these circumstances?

Brisbo: What were the prices you cited?

Grown In: What we’re hearing is that they’re around $4,000 and $4,500 per pound wholesale these days. But in the time that we’ve been operating in the last year or so, it hasn’t really dropped below $3,000 a pound wholesale.

Brisbo: It is now. The data that we track puts it at just over $2,000 a pound wholesale. In the adult-use market it’s about $2,600 on the medical side. But you know that that’s data out of the statewide monitoring system, which, admittedly on the wholesale side, is imperfect in that,

with vertically-integrated operations. That may not be realistic on the wholesale side.

Grown In: That is inconsistent with what dispensaries have been telling us. Dispensaries have been telling us that it hasn’t dropped below $4,000 for some time. They’ve been telling us that it’s very high and staying high for at least the last three to four months.

Brisbo: I appreciate that perspective. The data in the statewide monitoring system is just what it is. It’s data. It’s numbers, And being that we do have a number of vertically-integrated operations, we look at it more of a relative measure than an absolute measure. Than we would see on the retail side, which is a more absolute measure because that’s obviously the price the consumer is paying. 

But we’ve seen a decrease, even if you look at it as a relative measure in the wholesale price, which I think is expected, as we see an increase in production. So, I think that’s an important economic indicator when we look at how the market is going to respond. And when we look at the number of plants in production, if we just combine the two markets medical and adult-use, if we just look back to the beginning of the year there were just over 100,000 plants being grown in the regulated market now we’re well over 400,000 plants. So, as that production increases, and we get closer to the amount of production necessary to meet that demand, prices will come down and I think that’s that’s allowing the regulated market to overtake the illicit market. 

I think it’s also important to note that there are regulatory costs of producing a legal product. But that’s ultimately to the consumer’s benefit when we can validate that products do not contain harmful contaminants that otherwise might be present in the illicit market.

Grown In: Do you see a time in the near future when the price of legal cannabis can drive illegal cannabis out of the market purely through economic forces?

Brisbo: I don’t know that any state has seen that happen purely where simply that the price is the sole factor. I think markets are more complicated than that, whether it’s cannabis or not. I think the price is one factor. Availability and convenience and consumer confidence are others, increasing the risk profile of operating in illicit markets or enforcement is another. So, I think we continue to pursue all of those avenues to ensure that when products are ending up in the hands of consumers, we can ensure that that’s the safest possible mechanism for that to occur.

Grown In: Independent dispensary owners tell me that unless they’re tied to a specific cultivator, they risk having their supply cut off. Is that a concern worthy of regulation?

Brisbo: I think the agency’s role is to set standards that ensure consumer safety and to ensure that businesses have the opportunity to succeed. And those two things are sometimes at odds. 

Controlling the businesses and how they operate in mandating competition that may be against one’s own best interest, from a business perspective. When we’ve looked at avenues to pursue that, those are challenging things politically to move forward. I don’t think it’s our major focus. The concerns that were voiced at our level, at the agency level, that occurred mostly early on in the market. We have a number now, of major cultivators who are focused on the supply side and being wholesalers versus focusing specifically on being vertically integrated with retailing. And like I said, if you recall those numbers on the number of plants in production, I think there’s a greater opportunity for supply, and that should improve that competitive playing field ultimately

Grown In: Do you expect to find somebody to help introduce a merger bill in January?

Brisbo: I think we’ve been having productive conversations on the evolution of the market overall, which may involve consolidating the regulatory framework both statutorily and in administrative rules. And on the rules side, we’ve already done that as an agency. I think the timing of that is subject to a number of factors, and I’m not really concerned about whether it happens in January or not. My main focus is trying to keep policy thoughtfully ahead of inevitable shifts in the market.

Grown In: What are some other things you expect to see in a bill?

Brisbo: In general? Like what are my policy goals?

Grown In: Yeah.

Brisbo: I think the statutory consolidation is something that we’ve been having conversations about. We already discussed opportunities for the agency to have authority to enter into intergovernmental agreements with tribes. And then the only other thing that’s really on my policy radar, it’s kind of a big picture thing, ideas that we’re working through, through the racial equity work group that we established. Trying to improve equity, diversity, and inclusion within the industry. So those ideas haven’t been fully formed and published yet. But that’s likely to happen by the end of the year.

Grown In: My last question: Have you tried pot recently?

Brisbo: No.

Grown In: You have not. Have you imbibed since it has become legal?

Brisbo: No.

Grown In: So, I’m curious about that. Do you see a disconnect? I mean, a guy who would regulate alcohol might try the alcohol. Now and then.

Brisbo: [chuckles] I used to regulate over 100 professions, and I was never an architect or an engineer or a doctor or a nurse or any of those other things. Uh, I’m a guy that takes policy ideas and gets them implemented, looks for efficiencies and processes in governmental regulation. And that’s what I specialize in, and that’s what our team is good at as well. It’s not really about, in that case, what we’re regulating, so much as understanding the market factors, the needs of the businesses, and protecting consumers and implementing policies that achieves that.