Michigan Releases Medical Marijuana Regulations, Opens Licensing Applications

Michigan Releases Medical Marijuana Regulations, Opens Licensing Applications

The state’s new temporary rules include rigorous testing requirements, stackable cultivation licenses and the shutdown of unlicensed dispensaries.

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December 19, 2017

Michigan’s Department of Licensing and Regulatory Affairs (LARA) unveiled the temporary emergency rules of the Michigan Medical Marijuana Program (MMMP) on Dec. 5, revising its previous Class C license-stacking allowances, expanding its application requirements and establishing a one-year deadline for testing lab accreditation.

Licensing applications for the state’s cannabis businesses were made available just 10 days later on Dec. 15. 

“The permanent rules [are] a lot longer process,” said David Harns, Public Information Officer at LARA. “It could probably take up to a year or so. These emergency rules are going to be in place for quite some time.”

Matthew Abel, attorney for Cannabis Counsel P.L.C. and executive director for NORML, said issues about stacking the Class C, or 1,500-plant count, cultivation licenses are one of the biggest surprises in the law. Last fall, the state issued an advisory stating that an individual could get as many Class C licenses as they want and consolidate operations in one location, but the new regulations say stacking licenses is only permitted in communities that have no limit on the type or number of licenses, Abel said.

“Most places are putting caps on the number of licenses,” he noted. “Very few are passing ordinances without any caps. These places that thought they were going to allow stacking either are not able to or are going to have to go back and rewrite their ordinances.”

Municipalities continue to pass ordinances allowing cannabis facilities, Abel said, and said more will most likely pass regulations.

“Many of them were just waiting until the rules came out, and when the rules come out only a week before the applications, it doesn’t leave much time for a city to scramble and do something,” he said.

New Testing Requirements

Many testing requirements are laid out in the new rules, Abel said.

Rule 31 of the state’s emergency regulations focuses on the safety compliance facilities, or labs, and mandates that the facilities use analytical testing methodologies for the required quality assurance tests, which include testing for moisture content, potency analysis, THC levels and more.

“As I see it, the laboratory testing is going to be more expensive, but it’ll be more substantial, as well, not just THC and CBD, but other cannabinoids and terpenes, even,” Abel said.

However, the regulations do not specify how many terpenes labs must test for or what the results might say, Abel said. There are five labs that have been operating in the state, he said, and the regulations give them a year to become fully accredited. More labs will surely open, Abel noted, since all product must be tested, and there may be a bottleneck in the beginning until labs determine how to conduct all the tests the state requires, he warned.

According to Alexander Makowski, Ph.D, chief scientist at Sage Analytics, a company that designs and builds portable potency profiling devices, Michigan’s testing requirements are the government’s first line of defense for the consumer, and although they are comprehensive with the variety of testing they require, definitive guidelines have only been provided for a couple of tests.

“Beyond that, they look to the person who’s utilizing those regulations to refer back to other documents or to work with them in coming up with acceptable limits,” Makowski said.

Growers should test their product in their own facilities when possible to ensure they know what to expect from lab results, he added, and noted that Michigan allows for a single attempt at a retest where if a product fails the first test but passes two retests, the first test can be considered invalid.

Applying for a License

The application is more extensive than some might have anticipated, Abel noted, but it is broken into two parts. The first section can be submitted without the applicant selecting a location, he said, so if the state denies the applicant a license after vetting the first part of the application, the individual has not spent time and money finding a location when they are ultimately not even awarded a license.

“People are working on writing business plans, and there were some training requirements that were not completely expected,” Abel said. “They want to know what the training plan is for the employees, and especially for dispensary employees and how they’re going to interact with the patients and what knowledge they have to impart to the patients, how helpful they can be, border lining on practicing medicine.”

“All in all, it looks like we’re finally, eight years later, moving into a licensing phase, so that is exciting, and it should help the real estate market in Michigan, and it should create more employment and better-quality medicine for patients,” he added.

There is no application deadline, and the state has no caps on the number of licenses it will issue. LARA expects to issue the first licenses at the end of March or beginning of April, Abel said, and unlicensed dispensaries that have been operating as part of a gray area of the law will be forced to close. If they are operating past Dec. 15 when licensing applications became available, he added, they must be in a municipality that has authorized them to continue to operate.

“If they continue to operate without that, there’s no safe harbor,” he said. “There’s still no safe harbor from any criminal acts, but just the fact that they’re open and operating, the state won’t use that against them in the licensing process.”

Pending Legislation

More legislation is still in the works, Abel added, with a bill in progress that would allow processors and growers to sell to other processors and growers.

“Otherwise, if you’re making edibles, you’d have to make your own oil, you couldn’t buy oil from somebody because right now there’s no processor to processor transfer that’s allowed,” he said.

Another pending bill would prohibit the stacking of licenses, he added.

There are plenty of challenges ahead for the state’s soon-to-be licensed businesses, Abel said, from familiarizing themselves with the state’s tracking software to training their employees to remaining compliant with substantial labeling requirements.

“There’s definitely going to be a learning curve, but I think within a couple of months, most of the establishments probably will be on board with full compliance,” he said.

Abel anticipates that the price of cannabis will rise with the immediate demand for the product, but will start to decrease over time, as more growers become operational. Prices will continue to fluctuate, he said, likely rising again if adult-use is legalized in November’s election.

The Coalition to Regulate Marijuana Like Alcohol is conducting a signature drive to qualify the initiative for a statewide vote in 2019, and Abel is optimistic about the outcome of these efforts.

“The signatures are being counted and checked by the state, and we expect to have a report from them in the next couple of weeks,” he said. “We’re sure we have enough good signatures, but we want them to say that, and then we’re just going to be raising money and trying to mobilize people until the real campaign starts next summer.”

Top image: © Glenn Nagel | Dreamstime.com