This past weekend, Director Shelly Edgerton, head of Michigan’s Department of Licensing and Regulatory Affairs (LARA), made several important announcements at the State Bar of Michigan’s Marihuana Law Section annual conference.

As we have been reporting, the Michigan Medical Marihuana Licensing Board (the Board) has been grappling with the issue of how to address licensing applications that may be filed by businesses that are currently operating as dispensaries, caregivers selling “overages” of marijuana to persons other than their five connected patients, and even testing labs serving dispensaries and caregivers. Despite the fact that a 2013 Michigan Supreme Court opinion ruled that the Michigan Medical Marihuana Act does not permit sales of marihuana except from a caregiver to his or her maximum five patients, businesses selling marihuana outside of that framework appear to be flourishing in some Michigan communities. The Board has now twice suggested that any such businesses must close, or be ineligible for licensure as the State implements a new law allowing for regulated provisioning centers and other related businesses.

At its last meeting, the Board requested that LARA issue a recommendation on this issue. At the State Bar conference, Director Edgerton confirmed that this recommendation will be announced at the Board’s September 12 meeting. She also stated that LARA views testing labs and businesses other than dispensaries as no different than the dispensaries that are operating, and therefore subject to the same recommendation. We anticipate that the Board will provide a very short window for currently operating businesses to close. According to the Detroit News, some dispensaries anticipate the same action and are already closing.

While the Board’s impending action on current businesses has garnered lots of attention, Director Edgerton also announced several other very important action items that can be expected at the next Board meeting, and over the next few weeks. These include:

  • Announcement on September 12 of the selected members of public workgroups that will provide input to LARA on rules and regulations for the industry. LARA received more than 700 applications.
  • An announcement on September 12 of the amounts for application fees and the per licensee regulatory assessment.
  • An announcement in the next few weeks of the capitalization and other financial requirements that license applicants will need to satisfy, including what types of financial instruments can support those financial obligations.
  • Before the release of the emergency rules that will govern the industry, expected in early November, LARA will publish an “advisory draft” of those rules.
  • Release in the next two weeks or so of the API agreement between the State and Franwell’s Metrc system, which will allow potential licensees to understand how third party software can interface with the State’s seed-to-sale tracking system.

In addition to those upcoming actions, Director Edgerton also informed conference attendees that LARA has concluded that different license types may be co-located, that businesses may own multiple licenses, and that “Secure Transporters” will only need to be locally authorized by the municipality where they have brick and mortar facilities. She stated that the emergency rules the State issues will not seek to regulate the time, place and manner of operations, leaving control in the hands of local government until LARA addresses these issues in its final rules. Finally, Director Edgerton stated that LARA is working with the Legislature on at least two bills, one to revise the municipal review process so that the municipalities do not have to send LARA paper copies of their ordinances in response to every application, and another to clarify that CPA’s will not face license repercussions by serving participants in the industry.

As Director Edgerton put it, LARA personnel have moved beyond “drinking water from a fire hose” to “trying to build the airplane while flying it.” We have found that every time we see the Director and her senior staff, they have important news to impart, and that they are doing their absolute best to keep the industry informed.