US (MI): MMJ businesses navigating regulatory uncertainty

Michigan’s medical cannabis market has experienced a flurry of activity in the past two weeks involving court rulings, state guidelines and legislation, and culminating in a showdown within the cannabis business community.

The contention hinges on competition between state-licensed and unlicensed businesses and growers. Specifically, the question lies in whether unlicensed provisioning centers should remain open as the state has stalled on processing applications, and also whether caregivers should continue supplying the licensed market.

Among the latest developments, Michigan Court of Claims Judge Stephen Borrello on April 30 issued an opinion saying the state could no longer set compliance deadlines for unlicensed dispensaries. For months, the state has set deadlines for when unlicensed shops had to close, and those timelines were repeatedly rejected in court. Borrello criticized the state’s regulatory approach until now, calling it “freakish” and “whimsical.”

On the same day, a state Senate committee advanced H.B. 4440 to amend the Medical Marihuana Facilities Licensing Act, specifying that anyone operating a medical cannabis facility without a license after June 1 would be ineligible for a license for a year. The bill could be moot, though, if the state decides quickly on issuing outstanding licenses or if court appeals persist.

In response to Borrello’s ruling, the newly created Cannabis Regulatory Agency said on May 2 it would streamline applications to “ensure access to safe cannabis products.” However, the agency also said licensed provisioning centers could no longer buy product from caregivers, only from licensed growers and processors. Caregivers are still able to sell to licensed growers and processors, who would effectively enter the product in the state’s tracking system.

The state’s largest cannabis trade group, however, has raised concerns about whether this approach will work.

Activists describe it as a confusing time for Michigan’s cannabis industry that may not be resolved for up to a year.

“What we’re seeing is an industry in its infancy and some of the growing pains that come with starting a new industry from scratch,” said Josh Hovey, spokesperson for the Michigan Cannabis Industry Association. “There’s a lot of debate on how to ensure we have a fully regulated, licensed market.”


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