November 21, 2018

Existing Inventory of Cannabis in Michigan At Risk If Proper Protocol Is Not Followed


State regulators have issued guidelines regarding the disposition of existing inventory after the now-revoked October 31st deadline for licensure. Despite the judge’s ruling invalidating the deadline, it is likely that, whenever a new deadline is finally put in place and held to, that the same rules will stand.

According to a bulletin from the state Department of Licensing and Regulatory Affairs (LARA), current emergency rules provide a 30-day transition period for newly-licensed businesses in regard to their existing inventory. The bulletin states that, “Within 30 days from a business receiving a state operating license, the licensee shall:

  • Record, tag, and / or package all marihuana product in the licensee’s possession in accordance with the statewide monitoring system.
  • If licensed as a grower or processor, comply with all testing requirements as prescribed by the MMFLA and the 5/30/18 Emergency Rules prior to transferring marihuana product.
  • If licensed as a provisioning center [dispensary], obtain a signed written acknowledgement from caregivers / patients consenting to the sale or transfer of marihuana product. Prior to sale or transfer, verify the patient / caregiver has a valid driver license or government-issued identification card, holds a valid registry identification card, and is not over the purchasing limits as prescribed in Rule 41 of the 5/30/18 Emergency Rules.”

Furthermore, after the 30-day transition period, any product that was not acquired from another licensed facility in compliance with the 5/30/2018 Emergency Rules – that is, any inventory that was in the business’ possession prior to licensure – must be destroyed. Consequently, it is possible that businesses of all license types may be compelled to destroy product.

However, it is also possible that dispensaries will be hungry for inventory as producers and processors get their operations up and running and could be looking to take the existing inventory of such entities to hold them over until newly-licensed commercial operations can ramp up and begin producing consistently.

Additionally, a reminder from LARA emailed to stakeholders on Monday, October 29th, stated that “Unlicensed provisioning centers may sell product to other provisioning centers that were approved for licensure as long as the product arrives before the approved provisioning center receives its state license AND the product is sold in accordance with the parameters of the 30-day transition period rule.”