Recreational marijuana: Do’s and dont’s

License types, social equity programs part of rollout

By: Nick Mordowanec | C&G Newspapers | Published July 29, 2019

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LANSING — In November 2018, nearly 56% of voters approved a ballot proposal that would regulate marijuana like alcohol. Now, the state is finally offering both business owners and residents a glimpse of what they can expect once adult recreational use licenses become official.

On July 3, the Marijuana Regulatory Agency, or MRA, issued emergency administrative rules pertaining to the implementation of the Michigan Regulation and Taxation of Marijuana Act, or MRTMA. Signed by Gov. Gretchen Whitmer, the rules allow the MRA to move forward in the process of fully establishing the proposal that the majority of voters approved in 2018.

The state says the rules “ensure a fair and efficient regulatory structure for Michigan businesses, as well as access to safety-tested marijuana for Michigan’s citizens and visitors.”

MRA Executive Director Andrew Bisbo said in a statement that the state plans to start accepting business applications Nov. 1.

“The release of the rules today provides local municipalities and prospective licensees with the information they need to decide how they want to participate in this new industry,” Brisbo said. “Since we plan to start taking business applications Nov. 1, stakeholders will have four months to evaluate these rules and make their decisions. These rules set Michigan’s marijuana industry on a path for success while ensuring safety for marijuana consumers.”

These emergency rules allow for the creation of additional license types, including for marijuana event organizers who host temporary events — such as growing competitions — approved by local municipalities. It allows for the on-site sale or consumption, or both, of marijuana products “at a specific location for a limited time.” Licensed retailers and microbusinesses will be able to participate. Security hirings would be required.

Another new license, known as the Designated Consumption Establishment license, would allow a license holder with local approval to operate a commercial space where adults 21 and older can consume marijuana-related products on the premises.

It would be akin to a social club where enthusiasts could either smoke or eat marijuana-based products. However, the license does not allow for the sale or distribution of marijuana or marijuana-based products unless the license holder simultaneously possesses a retailer or microbusiness license.

Another license, coined the Excess Marijuana Grower license, allows a licensee who already possesses five adult-use Class C grower licenses to expand their allowable plant count.

Josh Hovey, communications director for the Michigan Cannabis Industry Association, said the excess grower license was a smart move because those who reach their growing capacity can theoretically grow more plants if the market demands it.

“That’s important, because there’s been a supply shortage in the medical marijuana market for many months now, so hopefully that will address that issue,” Hovey said.

And while the adult-use rules overlap in many facets when it comes to recreational marijuana and medical marijuana, there are some notable distinctions.

One difference is to the elimination of capitalization requirements of adult-use licenses, meaning that intended licensees will need fewer financial documents as part of their applications.

Hovey believes that change should make license accessibility easier for small business owners. He added that having social clubs and public venues is what the market requests.

“I think that’s an area that’s in high demand, so we’re glad the state had the foresight to offer those licenses as things that will cater to the consumer market,” he said.

Other differences are as follows:

• Adult-use home delivery includes designated consumption establishments, where medical home delivery is for registered cardholders only.

• Adult-use license renewal fees are divided into three tiers, with payment configurations depending on volume.

• Growers and microbusinesses may accept the transfer of marijuana seeds, tissue cultures and clones from another licensed grower under the recreational or medical law.

• Current medical marijuana licensees who apply for adult-use licenses will be expedited through the application process if no ownership changes exist.

 

Effect on the disenfranchised
On July 18, the MRA announced details related to its Social Equity Program.

Section 8 of the MRTMA states that the MRA must develop “a plan to promote and encourage participation in the marijuana industry by people from communities that have been disproportionately impacted by marijuana prohibition and enforcement and to positively impact those communities.”

For the last several months, the MRA has solicited input from stakeholders and online surveys as to how to determine criteria related to and affecting disproportionately affected communities while also helping determine future services that should be offered to qualifying individuals.

The communities are Albion, Benton Harbor, Detroit, East Lansing, Ecorse, Flint, Highland Park, Hamtramck, Inkster, Kalamazoo, Mount Morris, Mount Pleasant, Muskegon, Muskegon Heights, Niles, Pontiac, River Rouge, Saginaw and Ypsilanti.

Those communities will be visited by social equity representatives multiple times prior to applications being accepted Nov. 1.

“A lot of work has gone into the development of this program, and we are proud of the results,” Brisbo said. “I believe that our Social Equity Program will lead the nation in accomplishing the social equity objectives that Michigan voters assigned us last fall when they passed the adult-use marijuana proposal.”

The program identifies eligible communities based on marijuana-related convictions and poverty rates. Counties where marijuana-related convictions exceeded the state rate were selected, and from that group, communities were chosen that had 30% or more of their populations living below the poverty line.

Benefits for individuals and businesses in those 19 communities include educational sessions regarding the application and licensure process; a reduction of up to 60% off the application fee, initial license fee and future renewal fees, including a 25% reduction for those who have been residents of the aforementioned communities for at least five years; and program resources, such as state agencies and those in the private sector, to provide education and services.

As of July 5, the Michigan Department of Licensing and Regulatory Affairs stated that 522 municipalities statewide had “opted out” of having licensed facilities in their communities — including 17 municipalities in Macomb County and 22 in Oakland County.

Hovey said many local government units have committed to a “wait-and-see” approach in relation to recreational adult-use rules, applying an “abundance of caution” before jumping into the fray.

“Now that they know, I think you’ll see a lot of communities looking at their own local zoning and licensing laws and seeing what’s best for them,” he said.

Some facets of the law are still undetermined, such as how plants will be transitioned from medical to adult use, how fast that process will occur, and how packaging requirements will be signified in terms of milligrams of THC per package, or for recreational use versus medical use.

As for when adults can walk into a shop and purchase their own recreational marijuana, Hovey said it will depend on local licensing and how governmental entities want to proceed.

“It could be a month; it could be several months,” Hovey said. “We’re estimating it could be the end of the first quarter of 2020, as to when products are on sale. There’s not much we can complain about as an industry.”