Week in Review: Big Ruling in Montana, MMJ Suggestions in Seattle & Patient Plunge in Michigan

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By John Schroyer

A Montana judge rules against the state’s medical marijuana crackdown, Seattle’s city attorney suggests some radical changes to cannabis regulations, and the number of MMJ patients in Michigan tumbles.

Here’s a closer look at several notable developments in the cannabis industry over the past week.

New Lease on Life

Medical marijuana dispensaries in Montana have labored for years under the threat of prosecution, in particular due to a bill passed by the state in 2011 intended to drive most the industry out of business.

But a judge recently tossed several key portions of that law, possibly giving new life to dispensaries and related businesses that stuck it out.

The judge struck down restrictions against selling medical marijuana for profit and rules that prohibit advertising MMJ businesses. He also nixed controversial rules that impacted caregivers and patients.

MMJ advocates praised the ruling – yet also hedged their bets.

Chris Lindsey, a legislative analyst for the Marijuana Policy Project, called it a clear victory for patients but said it might not be enough to stabilize the business climate.

Lindsey – a former caregiver and MMJ businessman in Montana – said the industry really needs the state to implement a regulatory structure to help guide and protect businesses and caregivers.

But there’s a lack of political will in the state Legislature to move forward on that front, Lindsey said.

“I think what’s going to happen in Montana is the Legislature is going to turn to law enforcement and say, ‘What do you think we need to do?'” Lindsey said. “Really, the last thing that anybody wants to do in Montana is figure out how to let the industry survive in a meaningful way.”

Controversial Recommendations

Seattle City Attorney Pete Holmes released a memo this week suggesting several regulatory changes that would impact the city’s cannabis business community in a big way – both positively and negatively.

Holmes proposed that the hundreds of dispensaries and MMJ cultivation sites in Seattle, which are operating in a legal gray area, be absorbed into the I-502 recreational regulatory structure. He also wants to close down cannabis companies that don’t have licenses from the state or are not paying taxes.

This would obviously have a devastating effect on existing medical marijuana businesses, which can’t obtain MMJ-specific state licenses because they simply don’t exist.

Still, Holmes came out strongly in support of a soon-to-be-introduced Seattle City Council measure that would legalize “marijuana use lounges,” where consumers could use edibles or vaporize marijuana. This would open up scores of new business opportunities.

Seattle attorney Ryan Agnew, who works closely with the cannabis industry, said the memo seems like a savvy push for the state’s General Assembly to deal with legal questions surrounding the MMJ industry.

“They (the city attorney’s office) want the Legislature to act. They don’t want this to come down to local enforcement,” Agnew said.

That, he added, is probably why Holmes included a suggestion in the memo that Seattle take action on its own to either force MMJ shops to conform to recreational regulations or close down.

“The big message was, ‘This is the deal we like the most…And if this isn’t passed, this is what we plan on doing,’” Agnew said. “There needs to be some regulatory authority over what (MMJ businesses are) doing, or they’re going to force local jurisdictions to come in and shut them down. And that’s money that nobody wants to spend.”

Market Shrinkage

The MMJ market in Michigan is suffering from a lack of statewide regulations and occasional raids on dispensaries brazen enough to continue operating despite a murky legal situation.

Now, the industry is facing declining patient numbers as well, with the state’s MMJ registry shrinking by nearly 20%

In the 2013 fiscal year, the state Department of Licensing and Regulatory Affairs approved 118,368 MMJ applications out of more than 133,000 received. But in the latest fiscal year, which ended on Sept. 30, that plummeted to 96,408 patients approved, according to a department spokeswoman.

That’s a decrease of 21,960 potential customers for dispensaries.

The drop could also have been affected by new patient rules that are slated to go into effect Jan. 15. While registration costs will dip for 88% of patients for a two-year registration, the new rules also eliminate a reduced rate for about 11,000 low-income patients registered with the program.

But it might not have a huge impact on the existing industry, as the messy legal situation surrounding dispensaries has limited the number of centers that have opened. So there’s still a lot of demand and not enough dispensaries to meet it.

In fact, the industry in some areas is thriving. A reported 180 MMJ dispensaries are currently operating in Detroit alone. That’s a huge increase from just a year ago, when there were an estimated 75-100 dispensaries scattered throughout the entire state.

John Schroyer can be reached at johns@mjbizmedia.com