‘So many things can go awry’ with Michigan’s medical marijuana plan

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A sudden declaration Tuesday morning by Michigan regulators that all medical marijuana dispensaries statewide should start preparing to close by Dec. 15 made one thing clear:

The next steps for Michigan’s existing MMJ businesses are more akin to a traffic roundabout than an obvious road forward.

“You have a lot of things that could happen. There’s so many things that can go awry,” said Rhory Gould, the CEO of Arborside Compassion, a longtime medical cannabis dispensary in Ann Arbor.

Michigan’s medical cannabis industry has been in a near-constant state of flux for quite some time.

A few years after the state first legalized MMJ in 2008, a Michigan appeals court ruled dispensaries that had cropped up were technically illegal, and subsequently, many either quickly developed close relationships with local governments – thus protecting the businesses from law enforcement – or were targeted by police.

In 2016, Michigan lawmakers finally agreed upon a regulatory framework for the industry – the Medical Marihuana Facilities Licensing Act (MMFLA) – and since then, businesses have been prepping for the transition.

Now they’re in the thick of it, which means Tuesday’s development was cause for both relief and consternation among the state’s MMJ businesses.

Wait for it

For example, the Department of Licensing and Regulatory Affairs (LARA) also said that by November it will develop “emergency rules necessary for the implementation” of the MMFLA.

“We don’t know exactly what’s going to happen leading up into November when they come up with this plan,” Gould said. “Right now, I plan to stay open, to take care of patients.”

“I see an extension here, is what I see,” Gould said, referring to the state’s Dec. 15 closure deadline.

LARA’s announcement followed a discussion by the agency’s Medical Marihuana Licensing Board (MMLB) about the immediate closure of every MMJ dispensary in Michigan.

There was even uncertainty among board members during the MMLB’s four-hour-plus meeting, which included emotional testimony from dozens of pro-MMJ residents who pleaded for dispensaries to remain open.

One board member repeatedly asked when dispensaries could be allowed to reopen if they do close by Dec. 15.

“Our initial estimate was we wanted to be able to issue licenses by the end of March or early April,” Andrew Brisbo, director of the Bureau of Medical Marihuana Regulation, said amid catcalls and boos from the audience.

Michigan now potentially faces an MMJ industry shutdown for four months or longer – though many doubt every dispensary will abide by LARA’s wishes, especially given that many have operated in the illicit market for years already.

And even if law enforcement tried to close every dispensary, attorney Matt Abel said many would just relocate and reopen, as they have for years.

“It’s like Whac-A-Mole. You shut some down, and they open right back up,” Abel said. He added that the current situation demonstrates a “huge gap” in the 2016 state law – the lack of a blueprint for transitioning existing MMJ companies into a regulated market.

Timeline unclear

Brisbo also emphasized during the meeting that the licensing timeline is tentative and could change depending on how many business license applications the department receives starting in December. He said the biggest time suck will be background checks for owners and managers of license applicants.

That leaves possibly hundreds of dispensary owners in the lurch. (Michigan has no official tally of operating dispensaries.)

Some owners, like Gould, have the backing of municipal officials who may be able to support them in a bid for a state license even if they defy LARA and keep serving patients after Dec. 15.

That’s in part because LARA’s announcement Tuesday stipulated that ignoring the deadline would be a “potential impediment to licensure” – not that continuing operations would kill an existing dispensary’s chances of getting a state license.

“For all I know, after the 15th, they might extend it so we can take care of patients,” Gould said. “It’s their move first. Once they make their move, we can figure out what we’re going to do.”

Jamie Lowell – founder of Third Coast Compassion Center in Ypsilanti – said Monday he also is planning to continue operating because he has the backing of his municipality.

Others in the Michigan industry may decide to be more cautious, however.

One Detroit dispensary, The Reef, told multiple Michigan news outlets it planned to close until it obtained a state license because it didn’t want to jeopardize the opportunity.

More potential changes

Jenn Zielinski – a cannabis industry lobbyist who attended Tuesday’s MMLB meeting – said there are several possible ways the next few months could play out, including potential intervention by Michigan lawmakers.

“It was mentioned during the meeting that a legislative ruling on this would certainly pre-empt LARA from having to make those decisions,” she said, “so I’m sure there are a lot of folks in the room that are definitely pondering that and how do they start lobbying and advocating.”

Zielinski also said it’s unclear whether local government ties – such as those held by Gould and Lowell – would be a game changer during the licensing process.

” … If the operator is complying with laws that a local municipality has, why should that be a black mark?” Zielinski asked. “That’s certainly something that was brought up and discussed. Again, just wheels turning for the board and some consideration for (LARA).”

Zielinski’s takeaway: There’s a host of questions about the workings of transition to a state regulatory system, and answers aren’t coming immediately.

“It’s baby steps, and until we can hear the next meeting (Oct. 17) – where those conversations head today and where they develop – it’s anybody’s guess” as to how the licensing process will play out.

Almost lost in Tuesday’s discussion were proposed licensing fees for MMJ businesses, which LARA said will vary depending on how many applications are submitted. Application fees alone will range from $4,000 to $8,000, and annual regulatory assessment fees will cost MMJ businesses $10,000 to $57,000.

John Schroyer can be reached at johns@mjbizdaily.com