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Marijuana sales begin in Michigan

Most communities opt for slow, cautious approach

 

Taylor Owens

Staff Writer

and Bridge Magazine

 

Recreational marijuana sales began Dec. 1 in Michigan, but not in Barry County; where there are no licensed sellers.

Baltimore Township is the lone municipality that passed ordinances to allow recreational marijuana businesses. Other townships and municipalities have opted out – at least for now.

Elected officials in most of these municipalities have said they are waiting to see what the recreational rollout is like before making a more permanent decision.

Hastings passed an ordinance banning recreational marijuana businesses, although the ordinance is set to expire in May 2020.

Mayor Dave Tossava said the city council is currently researching possible ordinances to put a more permanent decision in place. He expects the council to vote on a new ordinance before May.

The first recreational dispensary in Baltimore Township, Kenai Red Group LLC, is expected to open in the Dowling General Store in early 2020. It is set to open first as a medical dispensary, then add recreational sales after about a month.

Michigan’s first recreational marijuana sales began last Sunday, when adults age 21 and up were able to buy it in Ann Arbor, which was only city in Michigan with a licensed recreational marijuana shop.

The number of legal recreational marijuana facilities is expected to grow, but most cities are months away from allowing sales.

“This isn’t going to be a flip of the switch where everybody’s going to be able to” sell recreational marijuana on Day One, said David Harns, spokesman for the Marijuana Regulatory Agency.

As state regulators begin what they call a “slow rollout” of the recreational marijuana market, industry leaders say a shortage of cannabis could leave medical marijuana patients with fewer options and increase prices of recreational pot.

Experts say it likely will be another year before facilities are up and running and supply has balanced out with demand.

“It’s going to be a long time… before you get a system where it’s fairly convenient for people who want to go to a nearby store and buy product,” said Doug Mains, a partner at Honigman law firm who specializes in Michigan marijuana policy and regulation.

Cannabis industry members have complained about a medical marijuana shortage for months.

Industry leaders say there’s not enough marijuana because it takes at least four months to grow, and state regulatory agents didn’t license growers first. Instead, they approved licenses on a first-come, first-served basis for all pot services, such as transporters and testers.

The shortage has driven up prices, said Robin Schneider, executive director of the Michigan Cannabis Industry Association.

“The prices have been upwards of $4,000 per pound,” she said. “Which is incredibly high, when you look at the rest of the country. It’s just because the demand is so high. In Colorado, for instance, marijuana is selling for $1,000 per pound.

Regulators have tried to remedy the shortage by allowing registered caregivers — who have been allowed to grow marijuana for up to five patients since 2008 — to sell to dispensaries. Their product still comprises more than 70 percent of medical dispensary offerings, the Detroit Free Press has reported.

The limited amount of marijuana soon will supply both medical and recreational dispensaries – prompting worries among medicinal users that there won’t be enough for them.

State rules allow marijuana businesses to sell half of their product to recreational users if it has been sitting on their shelves for at least 30 days. The policy was created to help the market begin to get off the ground, while making use of existing product, said Harns of MRA.

“Obviously, patients aren’t interested in purchasing that for medical use, so let’s move that over into the adult-use side,” he said. “Instead of people buying things off the street or through unregulated areas, they’re able to buy them from the state-tested system.”

Instead, some businesses appear to be buying more marijuana and stockpiling it in anticipation of recreational sales.

“We received the largest orders the company ever had on the medical side” the day after the new rule came out, said Omar Hishmeh, CEO of Exclusive Brands of Ann Arbor. The company holds three of the five recreational marijuana licenses awarded recently, allowing it to sell, process and grow pot.

For medical users, the situation means a limited supply could push them to buy on the black market, Schneider said, while recreational users could face higher prices and fewer products.

Most cities aren’t ready for recreational shops. Ann Arbor is currently the only city with a dispensary that was able to open its doors to recreational users on Dec. 1.

And a flood of new stores won't be popping up on street corners, observers said.

Despite voters approving the adult-use marijuana law last year with about 56 percent of the vote, more than 1,400 of the state’s nearly 1,800 communities have voted to bar recreational marijuana facilities in their communities.

Many communities that are allowing these businesses are doing so on a small scale as they work through licensing and application issues.

Lansing, for instance, is allowing them, but placed a cap on the numbers of growers, dispensaries and microbusinesses.

The city hasn’t yet started accepting applications for those coveted spots, which further delays local dispensaries opening their doors to adult-use customers.

Mains, the marijuana attorney, said many smaller communities are watching how bigger cities like Lansing handle licensing “before really making a decision.”

Others, like the city of Detroit, have opted out altogether for the short term while officials consider how to shape local ordinances.

“There’s always learning and growing inside a new industry like this,” Harns said.

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