State releases marijuana rules
The first and long-anticipated rules governing recreational marijuana businesses were released by the Michigan Department of Licensing and Regulatory Affairs on July 3, but it will still take weeks for municipalities and potential businesses to figure everything out in the 64-page document.
“It was a real lot to take in,” said Middleville Village Manager Duane Weeks. “We're kind of in a research stage right now trying to understand the rules.”
Weeks and other elected officials and municipal employees participated in a webinar Tuesday, offered by the Michigan Municipal League and hosted by LARA Marijuana Regulatory Agency Director Andrew Brisbo.
Hastings City Council member Brenda McNabb-Stange said the webinar was helpful in clarifying many issues and pointing out the major points of the new rules, but not every question was answered.
“Some of the answers were 'talk to your attorney,' because they're not about to give legal advice,” McNabb-Stange said. “When it comes to legal issues, there's not a lot of guidance out there.”
Both Weeks and McNabb-Stange agreed that the new rules for recreational marijuana did not contain any major surprises, since many of the regulations are similar to regulations governing medical marijuana.
But a major difference is the possibility of licenses for temporary events, which is unique to recreational marijuana.
The regulations also are called “emergency rules,” which are in place for six months, with the possibility of renewal for another six months. How much those rules may be tweaked once they become more permanent is still up in the air.
But most local municipalities have already taken steps to adopt ordinances that disallow recreational sales, which will give them more time to understand the rules and make a decision on whether to allow it or not. Most townships and villages have said they will return to the issue once the full rules are released.
The ordinance passed by the City of Hastings is set to expire May 30, 2020, to ensure that the city council will vote on the issue once it has all the facts.
Weeks, the Middleville village manager, pointed out that the regulations are complex, and could be studied for weeks without answering every question. He anticipated that the Middleville Village Council will have a discussion in August or September on whether to reconsider its vote to opt out of the new regulations entirely, or to wait until it has more information.
“I expect a deep discussion will take some time,” McNabb-Stange said. Her biggest concern is that recreational marijuana is still illegal at the federal level, and she questioned if allowing the sale of recreational marijuana will hurt Hastings' chances of receiving some federal funding and grants. She also wants to know if municipalities can decide how much they want to opt in, and to what degree they can limit businesses.
McNabb-Stange said some people take the view that, because the majority of Barry County voted for the proposal on the November 2018 ballot, municipalities should vote to allow the sale. But she said she does not believe that was necessarily the case. She believes, on the one hand, that many people voted for the proposal so it would no longer be a crime to carry and use marijuana. On the other hand, she said, allowing businesses to sell it is a different issue for each municipality to decide.
“I'm all for what we can legally do and what makes sense for the city,” McNabb-Stange said. Her goal is for the city council to make a decision on whether to opt in before LARA begins accepting business applications Nov. 1.
In addition to the license types required in the MRTMA legislation, these emergency rules create the following additional license types.
• Marijuana Event Organizer – Allows the license holder to apply for Temporary Marijuana Event licenses from the MRA.
• Temporary Marijuana Event – This license allows a Marijuana Event Organizer to run an event (which has been approved by the local municipality) where the onsite sale or consumption of marijuana products, or both, are authorized at a specific location for a limited time. Licensed Retailers and Micro-businesses may participate. The Marijuana Event Organizer is required to hire security and ensure that all rules and requirements for onsite consumption of marijuana products are followed.
• Designated Consumption Establishment – Allows the license holder, with local approval, to operate a commercial space that is licensed by the MRA and authorized to permit adults 21 years of age and older to consume marijuana and marijuana products on premises. A Designated Consumption Establishment license does not allow for sales or distribution of marijuana or marijuana product, unless the license holder also possesses a Retailer or Micro-business license.
• Excess Marijuana Grower - Allows a licensee who already holds five adult-use Class C Grower licenses to expand the allowable marijuana plant count.
The Medical Marijuana Facilities Licensing Act provides the structure for medical marijuana facilities. The Michigan Regulation and Taxation of Marijuana Act provides the structure for adult-use (“recreational”) marijuana establishments.
Equivalent Licenses with common ownership will be allowed to operate at the same location, without separation, if the operation is not in violation of any local ordinances, regulations or limits. Separate entrances, exits, point of sale areas and operations will not be required.
Adult-use Retailer and medical Provisioning Center licensees who are operating equivalent licenses at the same location must physically separate the entire inventories and the items on display for sale so that individuals may clearly identify medical marijuana products from adult-use marijuana products. Products subject to the adult-use excise tax may not be bundled in a single transaction with a product or service that is not subject to the excise tax.
To ensure marijuana product is available for individuals 21 years of age or older, the MRA may authorize Grower, Processor, and Retailer equivalent licenses to transfer marijuana product from their medical marijuana inventory to their adult-use inventory. The MRA will publish a specific start date, end date, and other requirements for the transfer of marijuana product between equivalent licenses.
The adult-use marijuana Emergency Rules share a large overlap with the medical marijuana Administrative Rules but also contain some significant differences. In the overlap between adult-use and medical, there are similar rules with important distinctions. These distinctions include:
• There are no capitalization requirements for adult-use licenses and fewer financial documents are requested from applicants.
• Adult-use home delivery includes Designated Consumption Establishments and any residence. Medical home delivery is to registered marijuana cardholders only.
• Adult-use license renewal fees are divided into three tiers in which larger volume licensees will pay more on renewal and smaller volume licensees will pay less.
• Growers and Micro-businesses may accept the transfer of marijuana seeds, tissue cultures, and clones from another Grower licensed under the adult-use law or the medical marijuana law.
• Class A Growers and Micro-businesses may accept the transfer of marijuana plants one time from (a) registered primary caregiver(s) so long as the caregiver(s) was an applicant for that license.
• Current medical marijuana licensees who apply for adult-use licenses will be expedited through the application process if there are no changes in ownership.
• All adult-use applicants are required to submit a social equity plan. The social equity plan must detail a strategy 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.
• Adult-use Safety Compliance Facilities are required to hire a laboratory manager.
The application process for adult-use marijuana establishment licenses will continue to follow the two-step process that the MRA has been using for the processing of medical marijuana facility operator licenses. The two-step process will allow applicants to begin the application process while still seeking a location for the adult-use marijuana establishment, if they choose to do so.
The first step, pre-qualification, allows applicants to determine if they have state approval before they invest in property, buildings, or equipment. Some municipalities may require this approval before local support is given.
The second step, license application, will allow applicants to indicate which type of adult-use marijuana establishment license is being sought and must include plans for a marijuana establishment located in a municipality that does not have an ordinance in place which would preclude the business.
Since the adult-use marijuana law requires the MRA to make a licensing decision within 90 days of receiving a complete application, applicants are encouraged to utilize the two-step process to help avoid a default denial occurring at the 90-day mark.
Applicants will have the option of submitting Step One and Step Two materials at the same time and may submit an online or a paper form application to the MRA; both the paper and online application will require the same documentation and information.
Other highlights include:
• Growers and Processors may engage in research and development.
• Growers, Processors, Retailers, and Micro-businesses may offer tested internal product samples for their employees to consume, off-site, to ensure the quality and/or potency of the products.
• Growers and Processors may provide trade samples of marijuana and marijuana products to other Processors or Retailers to help determine whether they want to purchase the product.
• A licensee – holding two or more Processor licenses or two or more Retailer licenses – with common ownership at different establishments may transfer marijuana product inventory between the Processor or Retailer establishments.
• Micro-businesses may not operate at multiple locations and must operate the corresponding areas of their Micro-business in compliance with the operation requirements of a Retailer, a Grower, and a Processor.
• The MRA’s Social Equity Plan will, 1) promote and encourage participation in the marijuana industry by people from communities that have been disproportionately impacted by marijuana prohibition and enforcement and, 2) positively impact those communities.
• A Retailer is not required to retain information from customers other than the following: method and amount of payment, date/time of sale, product quantity and other product descriptors.