Three weeks ago, when asked about the future of investigations of illicit sales at license dispensaries, Michigan’s top regulator, Brian Hanna, said, “Stay tuned.” This week some of his promised new programming began to come out.
On Tuesday and Wednesday, Michigan’s Cannabis Regulatory Agency announced the forced permanent shuttering of one dispensary, a temporary shuttering of another, and $184,000 of fines levied across 11 dispensaries and a testing lab.
Many of the fines – and all of the suspensions – were for operators who had been selling illicit cannabis under the table, or sometimes not so under the table. During one September visit, regulators found multiple illicit products without Metrc tags for sale on the sales floor. Subsequent testing found much of it to be of high THC content and the dispensaries point of sales system recorded 17,947 sales of those products between February and September 2022.
“This is what we’ve been looking for in the cannabis industry for some time. Interim director Brian Hanna is fulfilling his promise,” said Michigan NORML executive director Rick Thompson, who has been calling for increased enforcement to strengthen the legal market.
Similarly, Robin Schneider, executive director of the state’s largest cannabis trade group, the Michigan Cannabis Industry Association, also applauded CRA’s actions.
“Our members applaud the CRA for their effort to ensure that all state licensed cannabis companies are playing by the same rules. Having a license to sell cannabis is a privilege brought to us by the Michigan voters with conditions. Those conditions include seed-to-sale tracking and testing of all products that are sold by state licensed businesses. The time for compliance is now,” said Schneider.
But some operators cautioned that levying fines won’t be enough to dissuade operators who are making large sums of money from illicit cannabis sales.
“If you’re making millions of dollars doing things maliciously aren’t you going to keep going until the well runs dry? I don’t see why you would stop,” said Redbud Roots cultivation owner Dave Murray.
Illicit distillate in particular has been a continuing problem for Michigan, says Murray.
“We need to be looking at what average yields are. For making distillate, you’re going to make not more than 15% on a great run. So when guys are getting 20% or 30% on distillate runs, you know there’s stuff coming in the back door,” said Murray.
Similarly, as Michigan’s production wholesale prices drop through the floor, there’s more and more incentive to resell it in states with higher retail prices. Recently a Grown In reporter bought cannabis in a New York gray market shop that was labeled from Michigan.
“Michigan’s yield per pound is so low for cannabis cultivations, that shuttling to other states may make things look attractive for states just staying to stay in business,” said NORML’s Thompson.