Michigan Regulation and Taxation of Marijuana Act

Michigan Regulation and Taxation of Marijuana Act
By: Attorney Benham Wrigley, Wrigley Hoffman

On November 6, 2018 the voters of the State of Michigan approved by a 56% - 44% margin a ballot initiative to approve the cultivation, distribution and sale of marijuana for adult use in Michigan. This law known as the “Michigan Regulation and Taxation of Marijuana Act” (“MRTMA”) does not replace the currently effective Medical Marijuana Facilities Licensing Act (“MMFLA”) nor the 2008 ballot initiative known as the Michigan Medical Marijuana Act (“MMMA”) which established the caregiver/patient system. Michigan now has three separate
acts regulating marijuana in the state.

MRTMA establishes a regulatory system for the issuance of licenses for growing, processing, testing, transportation and sale of marijuana for use by persons 21 years of age and older. It is believed that many of the MMFLA systems currently in place will transfer into regulatory systems for the new act. A main distinction between current and future is that under MRTMA there is no supervisory board to handle the system as with the current MMFLA. All regulatory processes under MRTMA will be through the Department of Licensing and
Regulatory Affairs (“LARA”). Whether those functions are consolidated with the current Bureau of Medical Marijuana Regulation (“BMMR”) or handed off to a new bureau within the department remains to be seen.

MRTMA, like the MMFLA, has five main categories of licensees: Growers; Processors; Secured Transporters; Testing Labs; and Retail Centers. The types and numbers for grower categories has changed and a new one known as the “micro business” added. Pay particular attention to it as it offers some unique opportunities.

As with MMFLA the municipalities will control primarily the number and types of operators allowed within the municipal boundaries. The significant distinction between MMFLA and MRTMA is that under the former the municipality must “opt-in” while under the latter the municipality must “opt-out.” This is stated without reservation by us, though the language in the act is not totally clear. The consensus of lawyers is that MRTMA has established an “opt-out” system as opposed to the “opt-in” system. Does that mean that on the effective date of MRTMA every municipality in the state is “in”? It could mean that but the consensus is “no”. Some municipalities anticipating the results of Proposition 18-1 acted to restrict all marijuana business activities within its jurisdiction. Your writer believes municipalities will soon act to “opt-out” with the idea that they can then decide later to opt-in and under what circumstances. With only
108 municipalities out of 1,773 having opted-in under the MMFLA, is it likely that fewer municipalities will eventually opt in for recreational use. There are some subtleties in the law as to municipal regulations which are beyond the scope of this blog but could come into play in some places. Beware and understand all state and local rules and regulations as we have learned in this field, the only constant is change.

There are new compositions for growers:

• Class A – 100 Plants maximum
• Class B – 500 Plants maximum
• Class C – 2,000 Plants maximum
• Micro-business– 150 Plants.

There are also limitations on who may obtain these licenses and the number of licenses a business can have. This limiting language requires substantial review and planning. Also note that under MRTMA the retail outlet is now known as a “retailer”.

MRTMA becomes effective 10 days after the election results are certified. The law grants to LARA the obligation to establish a system to regulate this business activity but it must begin accepting applications for MRTMA type licenses “within 12 months after the effective date of
the act”. Think and plan for application submissions around November 20, 2019 at the latest.
Could be sooner.

Will everyone switch out of MMFLA and begin gravitating to file applications under MRTMA? They will only if they now hold, or can obtain in the next 12-24 months, a license under the MMFLA. MRTMA prohibits granting a license (except microbusiness and Class A Grow) to any non-MMFLA licensed individual or entity for possibly up to two years from the date LARA first begins accepting applications. You can call that a grandfather clause. Thus, the MMFLA licenses are now gold and will become even more valuable over the next year or two while businesses jockey to get placed in one or both of the industries.