Michigan Medical Marijuana Renaissance Underway as Industry Quietly Booms

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By John Schroyer

Nearly four years ago, Michigan’s medical marijuana industry slipped into a downward spiral after an appeals court ruled that dispensaries are technically illegal under the state’s MMJ law.

Hundreds of businesses shut down as a result, with dispensary owners deciding to exit the industry rather than face the possibility of criminal charges. A state Supreme Court decision almost two years later backing up that ruling seemed to exacerbate the situation.

“People were legitimately scared, and (law enforcement agencies) were raiding” MMJ businesses, said Jamie Lowell, co-founder of 3rd Coast Compassion Center, one of the first dispensaries to open in the state, back in 2009.

But there’s been a quiet resurgence in Michigan’s MMJ industry as of late.

The number of dispensaries – which fell from around 500 in 2011 to less than 100 a year or so ago – is now closer to 200, and some insiders say it could be as high as 250. New ones seem to be opening every couple weeks.

This resurgence has helped lift the industry’s revenues by tens of millions of dollars and put Michigan back on the MMJ map.

What’s been key, insiders in Michigan say, is that numerous local governments around the state have taken a more pro-cannabis stance over the past two years, and as a result they haven’t been actively trying to close down dispensaries.

“In areas where they’re not being aggressively enforced against, (dispensaries) are operating,” Lowell said.

“In Ypsilanti, for example, there wasn’t much change in activity based on the rulings,” Lowell added, referring to the small town east of Ann Arbor where his dispensary is located. “They sent out a letter to say, ‘There’s this ruling that’s out there, be aware of it.’ They did their due diligence as a municipality, but nothing was greatly affected.”

Though the state doesn’t keep precise track of how many dispensaries are operating (which means there are only estimates of how many are in business), sources on the ground say the number has at least doubled since the Supreme Court’s ruling in February 2013.

“Over the past couple of years, probably 100 dispensaries have opened,” said Mark Passerini, co-founder of Om of Medicine, a dispensary in Ann Arbor. “I don’t think too many places in Flint or Detroit or Ann Arbor have had too many issues. I think it’s really a matter of local governments and how they view medical cannabis.”

Rhory Gould, CEO of Arborside Compassion, guessed that the number of dispensaries could be upwards of 250 statewide. He said that many closed down temporarily in 2013, taking a kind of wait-and-see-what-happens approach, and then re-opened after realizing that many municipalities weren’t going to crack down.

“Everything’s been going fine. Knock on wood,” Gould said.

Attorney Matt Abel, who works with the cannabis industry, agreed that not only has there been a resurgence in the number of dispensaries, but said the likelihood of the state fully legalizing the industry this year has emboldened even more entrepreneurs.

“People come in to see me almost daily about starting a new dispensary,” Abel said. “Many decide to go forward, because other people aren’t being prosecuted.”

Another factor has been skyrocketing patient numbers in Michigan. As of mid-April, there were more than 175,000 registered patients, and over 33,000 registered caregivers in the state. That’s a jump of tens of thousands of patients since 2013, which means the customer base has been steadily increasing, even though there are far less dispensaries open than there once were.

The sharp rise in patient numbers is tied in part to the addition of post-traumatic stress disorder to the list of qualifying conditions for MMJ. That opened up the industry to military veterans and trauma survivors, a potentially massive new customer base.

Ghould estimated that his dispensary sees more than 100 patients a day, seven days a week.

“And it just keeps going up,” Ghould said.

But, Abel stressed, dispensaries are still operating in a legal gray area, due to the current lack of clarity in state law.

“I don’t like saying it out loud, but all the sales to the dispensaries are illegal, all the sales from the dispensaries are illegal, all the dispensaries are illegal, unless they’re only serving as a place where a caregiver can meet their patients,” Abel said. “Some of them try to play the game where they’re a safe access transfer point, but hardly any.”

Still, it feels as though political momentum is on the side of activists and the cannabis industry in Michigan, like in much of the rest of the country, Passerini said. There are at least three groups advocating for a recreational marijuana legalization ballot measure for 2016 – which could blow open even more business opportunities in the state – and support from the political establishment is on the upswing.

Passerini noted that at Hash Bash earlier this month, a marijuana festival held annually in Ann Arbor, several local politicos – including the mayor of Lansing – stood up in front of an enormous crowd and voiced their support for reforming marijuana laws, and even legalizing recreational.

“It used to be political suicide to get in front of 10,000 people on the University of Michigan’s campus and say, ‘I’m a proponent of legalization,’ but that’s exactly what these state reps and the mayor of our capital city did, just two weeks ago,” Passerini said.

John Schroyer can be reached at johns@mjbizmedia.com