On Monday, September 27, Michigan’s Marijuana Regulatory Agency (MRA) will hold a public hearing on draft administrative rules updating all of the State’s current cannabis-related rules other than for hemp. The deadline to provide written public comments is that Monday at 5 p.m. 

In a six-part series, Dykema will outline the substantive proposed changes in each of 10 draft rule sets and then will conclude with coverage of next week’s hearing. We begin today with the Marihuana Licenses Rule Set, encompassing Rules 420.1 to 420.27b.  Rules without substantive changes are not included.

  • R 420.1 Definitions. There are few substantive definitional changes. The definition of “Applicant” would be modified with respect to “trusts” to expand beyond beneficiaries and also capture trustees and anyone else able to direct the affairs of the trust.
  • R 420.3 Application procedure; requirements.
    • MRA would be allowed to administratively withdraw partial prequalification applications that have been pending for more than one year; MMFLA Step 2 applications that have been pending for more than one year; and amendments that have not had notices of deficiencies cured within 30 days.
    • Prequalification status could be revoked if the MRA determines that the applicant is no longer suitable or qualified for licensure.
  • R 420.5 Application requirements; complete application.
    • The proposed rule would delete the requirement to provide projected or actual gross receipts—even though this is mandated by Michigan’s Medical Marihuana Facilities Licensing Act (MMFLA).
    • The municipal attestation requirement for adult-use applications under the Michigan Regulation and Taxation of Marihuana Act (MRTMA) would be dramatically changed. The signature of a municipal official on the attestation would no longer be required.
  • R 420.6 State license under MRTMA; issuance; qualifications; ineligibility.
    • The proposed rule would modify the requirement that licensing fees be paid within 10 days of approval, and set that date at the earlier of that date or 90 days after a complete application was submitted.
    • Limits on who could obtain licenses prior to December 6, 2021, (e.g., MMFLA licensees) would be deleted.
    • MRA proposes lifting language in the MMFLA that a license is not a property right and cannot be used as collateral and proclaiming by rule that the same is true for MRTMA licenses.  
  • R 420.7 Application; fees; assessment. The prequalification application fee would be cut in half to $3,000. MRTMA initial licensure fees would be reduced and basing renewal fees on market share would be eliminated. The new fee schedule can be found below:

State License Type

Initial Licensure and Renewal Fees

Class A Marihuana Grower

$1,200

Class B Marihuana Grower

$6,000

Class C Marihuana Grower

$24,000

Designated Consumption Establishment

$1,000

Excess Marihuana Grower

$24,000

Marihuana Event Organizer

$1,000

Marihuana Microbusiness

$8,300

Class A Marihuana Microbusiness

$18,600

Marihuana Processor

$24,000

Marihuana Retailer

$15,000

Marihuana Safety Compliance Facility

$15,000

Marihuana Secure Transporter

$15,000

Temporary Marihuana Event

See R 420.26

Marihuana Educational Research

N/A

  • R 420.8 Marihuana business location plan. This rule would be revised to include a requirement to designate any areas used for “contactless and limited contact transactions.” This signals an openness to drive-through and curbside service becoming a regular part of the post-COVID world.
  • R 420.10 Proof of financial responsibility; insurance. Event organizers would need to provide proof of coverage for all vendors at an event.
  • R 420.12 Denial of a marihuana license; additional reasons.
    • Although an MRTMA applicant would no longer need a municipal official’s signature on an attestation, the MRA would be able to deny an MRTMA license if the applicant’s establishment is prohibited by municipal ordinance or does not comply with a municipal ordinance. Effectively, this continues to neutralize MRTMA’s requirement that MRA looks at whether there is an opt-out ordinance at the time of application.
    • Applications could be denied for failure to pass a pre-licensure inspection.
    • Applications could be denied for failure to file the annual financial statement.
    • Applications could be denied if the applicant has filed an amendment to a pending application seeking to add an individual or entity that is not suitable for licensure.
  • R 420.13 Renewal of marihuana license.
    • Would change the MRTMA municipal attestation requirement to mirror the proposed changes for initial applications.
    • MRA would be able to refuse to renew a license if the licensee had previously failed to submit an annual financial statement for either the license being renewed or any other license.
  • R 420.14 Notification and reporting.
    • Under current rule, violations of local ordinances are a material change, meaning they need to be reported to MRA before they happen; this would change to be 10 calendar days after the violation.
    • Would add the appointment of a personal representative, guardian, conservator, receiver, etc. to the list of material changes.
    • Would clarify that the reporting requirement for litigation and other issues is 10 calendar days. It is unclear how long MRA wishes the reporting period to be, as changes to the Disciplinary Proceedings rule set would make the reporting period 10 business days.
    • Requires MRA and Bureau of Fire Services to be notified within one business day of a fire.
  • R 420.18 Changes to licensed marihuana business. The requirement for a licensee to provide written documentation of municipal approval for any proposed location change would be deleted.
  • R 420.20 Financial statements.
    • Would clarify that financial statements must be prepared so that they include all required information for each license held by the licensee.
    • The financial statement requirement would not apply to an educational research licensee, which is a proposed new license.
  • R 420.21 Special licenses; eligibility. Two new proposed special licenses (Class A Microbusiness and Educational Research License) would be valid for one year.
  • R 420.25 Temporary marihuana event license; application; operations.
    • Express municipal approval would be required for a temporary marihuana event.
    • Municipal attestation requirements would change as they have for other licenses.
    • Class A microbusinesses, another proposed new license type, would be authorized to participate.
    • There would be an explicit requirement for a responsible operations plan to monitor for over-intoxication, underage consumption, or other criminal activity at the event.
  • R 420.27a Marihuana educational research license. This new license type would allow the licensee to obtain marijuana from an MRTMA establishment, produce marijuana products (for internal research purposes), perform research on marijuana and marijuana products, and dispose of them. These licensees must secure registration from the DEA within 90 days of being issued their MRA license. These licensees will have to provide a research plan to the agency that documents who will have access to the marijuana, the institute of higher education with which they are affiliated, and a brief description of the research.
  • R 420.27b Class A marihuana microbusiness. This proposed new license type will be covered in tomorrow’s post, as the details for this license are in the next ruleset.

Check back tomorrow for a discussion of the next set of proposed rules.