May 22, 2019

Governor Appoints Agency in Michigan to Replace Medical Marihuana Licensing Board


Governor Gretchen Whitmer’s executive order disbanding the state’s Medical Marihuana Licensing Board (MMLB) went into effect the last week of April. Now, Michigan’s medical cannabis system – as well as its future adult-use market – will be overseen by the Marijuana Regulatory Agency (MRA). According to a report from the Detroit Free Press, the MMLB had approved 89 dispensaries for state operating licenses as of its final meeting in mid-May.

In addition to the nearly 90 dispensaries licensed to operate in Michigan’s regulated medical cannabis market, roughly 50 storefronts running under conditions of temporary authorization will be permitted to keep their doors open until their license applications are denied. According to a report from MLive, state Court of Claims Judge Stephen Borrello ruled that Michigan officials are prohibited from setting any new licensing deadlines for dispensaries going through the application process.

With the advent of the MRA, the new agency will consider applications on a rolling basis, not only at monthly meetings, as was the case with the MMLB. Consequently, it is possible that the 50 or so dispensaries operating with pending state license applications will see their situations resolved more quickly than when the MMLB was overseeing licensing. This was the intent of Whitmer’s executive order disbanding the MMLB and the reports cited above indicate that it is also the expectation of regulators and stakeholders.

While the temporarily authorized dispensaries may continue operating without apprehensions of a new licensing deadline for the moment, the MLive report cited above states that Borrello left the matter of whether caregiver product can still be purchased by dispensaries up to the MRA.

Both licensed and unlicensed storefronts have continued to be allowed to buy product from registered caregivers into this year, despite efforts by the state to suspend the practice. This has led to complaints from licensed growers that they are unable to move their product, as caregivers can undercut them on price due to not being subject to required testing, licensing fees, and other compliance costs.

In an answer to the uncertainties noted above, on Thursday, May 2nd, the MRA released a statement addressing the recent court decisions by Borrello. According to the MRA:

The agency will be reviewing applications for those that paid an application fee but never submitted a complete application and therefore never had it considered by the Medical Marihuana Licensing Board. This review will include applicants that never responded to notices of deficiency and/or failed to provide supplemental applications for owners, as required by the administrative rules. The MRA will swiftly provide these applicants – and others similarly situated – an approval or denial of their application.

Based on this statement, it appears that the roughly 50 dispensaries that have been operating without a state license may soon see decisions on their pending applications. However, the MLive report cited above notes that even if a temporarily operating dispensary’s license application is denied, MRA can only compel it to cease operating 60 days after the denial.

In regard to caregiver product in the state’s licensed medical cannabis market, the MRA’s update states that it will enforce a late-March resolution of the MMLB. Under the resolution, licensed dispensaries will now only be permitted to obtain inventory from licensed producers and processors. Dispensaries may continue to sell caregiver product that is already in their inventories, provided that patients sign a consent form upon purchasing it, a practice that has been in effect since last year.

Licensed growers and processors may continue to purchase caregiver product and sell it along into the supply chain, provided that it passes required testing and is entered into the statewide plant and inventory tracking system. However, based on statements from licensed cultivators, it does not appear that many are taking advantage of this allowance.

Under the new policies, unlicensed, temporarily operating dispensaries will likely continue to purchase caregiver product and keep their doors open for as long as they are allowed. However, the requirement that licensed dispensaries now obtain inventory only from licensed producers and processors may result in upward pressure on wholesale prices. Licensed growers have stated that their asking prices are significantly higher than those of caregivers, though whether deals will be closed at those levels – typically $3,000 per pound or more – remains to be seen.

Finally, the MRA notice indicates that an updated advisory bulletin on the matter will be forthcoming in the near future. It also states that the MRA is considering whether further legal action is appropriate.