As the Michigan cannabis industry continues to grow and mature, medical and adult-use licensees would be well served to take proactive steps to ensure compliance with Environmental, Health and Safety (EHS) regulations. We’ve previously written about the importance for cannabis businesses to be mindful of EHS regulations and the issue of environmental sustainability in the cannabis industry. In addition to federal EHS regulations from federal agencies like the Environmental Protection Agency (EPA) and Occupational Safety and Health Administration (OSHA), Michigan cannabis licensees must also pay careful attention to state EHS regulations from the Michigan Department of Environment, Great Lakes, and Energy (EGLE) and the Michigan Occupational Safety & Health Administration (MIOSHA).
With the increased exposure from rapid growth, we are beginning to see and hear about increased scrutiny and enforcement activity from EGLE and MIOSHA for Michigan cannabis businesses. Various enforcement actions have included topics such as: (1) failure to obtain appropriate air quality permits; (2) inadequate self-inspection and recordkeeping for extraction equipment; (3) improper documentation of hazardous waste and/or its removal; (4) failure to treat industrial wastewater before discharging to the publicly owned treatment plant; (5) improper implementation of a respiratory protection program; and (6) missing written health and safety programs and procedures. Consequently, existing and prospective cannabis businesses would be well served to take the time to assess and audit their current and prospective business practices to ensure that they are compliant with EHS regulations, including particularly those from EGLE and MIOSHA.
If a Michigan cannabis business receives a violation from an EHS regulator, such as EGLE or MIOSHA, the business could find itself facing disciplinary action not just from the EHS regulator but also from the Marijuana Regulatory Agency (MRA). The MRA’s administrative rules, Mich Admin Code, R 420.203(3)(a), explicitly require licensees to comply with Michigan’s natural resources and environmental protection act, 1994 PA 451, MCL 324.101 to 324.90106. Further, the MRA’s administrative rules, Mich Admin Code, R 420.14(4)(c), 420.14(5), 420.802(4)(c), and 420.802(5) require a licensee to notify the MRA within 1 business day of the commencement of any pending regulatory disciplinary action and require the licensee to notify the MRA within 10 days of the initiation of any government investigation of the licensee. Failure to comply with these reporting obligations is grounds for additional disciplinary action by the MRA, including fines and sanctions, which can include revocation, suspension, non-renewal or an administrative hold on the license. Mich Admin Code, R 420.14(6), 420.802(7), and 420.806(7). Further, if the cannabis business is found responsible for a violation from the EHS regulator, it could face further disciplinary action from the MRA based on the nature and severity of the regulation.
Indeed, in November 2021, the MRA sent a voluntary survey to licensed processors across the State of Michigan. Based on survey responses, in January 2022, the MRA sent form letters to various processors indicating that their responses to the survey contained information that would amount to one or more unidentified violations of Michigan’s natural resources and environmental protection act in violation of Mich Admin Code, R 420.203(3)(a). The MRA’s form letter requires the licensee to contact EGLE and to report to MRA after the fact. The MRA has further indicated that it intends to host a future educational training session with EGLE for some time in February 2022.
As a result, Michigan cannabis businesses should take proactive efforts to ensure that they are compliant with federal and state EHS regulations and are prepared for the knock at the door by a regulatory agency. The MRA’s website has links to guidance documents and FAQ’s under the “Other Resources” tab on its Bulletins page. While this information provides a helpful overview, much more detailed information regarding both EGLE and MIOSHA requirements can be found in EGLE’s online Michigan Guide to Environmental Regulations.
Michigan cannabis businesses have various options for learning what EHS regulations apply, how to comply, and how to get personnel to properly execute. Two results-driven options are consulting with an environmental attorney or EHS consultant to have a compliance gap assessment or audit conducted of their current business practices to ensure compliance with all applicable EHS regulations. In addition, both EGLE and MIOSHA have audit and training programs to encourage Michigan businesses to take initiative to evaluate and ensure their compliance with applicable EHS regulations. These programs are voluntary and generally provide for EGLE or MIOSHA officials to come onsite to the business for the purpose of educational and compliance training. To incentivize Michigan businesses to voluntarily seek compliance with the applicable rules, both programs generally provide for immunity from disciplinary action or fines so long as the business voluntarily agrees to promptly correct any non-compliant matters. There are some exceptions to the immunity offered by these programs, so interested businesses should contact their legal counsel with any questions prior to agreeing to voluntarily participate.
Regardless of how Michigan cannabis businesses choose to verify compliance, making the affirmative choice to do so may be critical to the business. As cannabis businesses strategize on compliance efforts, they also need to train business representatives and key personnel on what actions to take if and when an agency inspector knocks on the door. We look to forward to diving into this topic in our next blog post in this series.