On November 6, 2018, Michigan residents voted to pass into law the Michigan Regulation and Taxation of Marihuana Act (“MRTMA”), which took effect December 6, 2018. On a very basic level, the MRTMA allows Michigan residents to lawfully possess up to 2.5 ounces of marihuana and grow up to 12 marihuana plants. Additionally, it establishes the framework for the cultivation and distribution of recreational marihuana by marihuana establishments. It is no longer a question that Michigan’s public policy regarding marihuana is shifting, as with many other states, and Michigan is now recognizing marihuana’s benefits and is attempting to decrease the illegal markets and arrests that come from marihuana. The MRTMA will now be the fourth marihuana related act passed into Michigan law since 2008, the others being: the Michigan Medical Marihuana Act, the Medical Marihuana Facilities Licensing Act, and the Marihuana Tracking Act. Since 2008, the medical marihuana industry in Michigan has begun to boom. With the passing of the MRTMA, the sale of marihuana is only going to increase. Looking to Colorado as the example, which most states now do, within the next couple of years, the marihuana industry in Michigan will likely be the next billion-dollar market.[1] As with all other new markets, the best time generally to get involved and make the most profit is at the beginning. So, for the new recreational marihuana industry that is to come, when is the best time to enter that market? NOW!
Under the MRTMA, there are six marihuana establishments that can be formed: (1) marihuana grower, (2) marihuana safety compliance facility, (3) marihuana processor, (4) marihuana microbusiness, (5) marihuana retailer, or (6) marihuana secure transporter.[2] Each of these establishments play a critical role in the marihuana industry and each have specific functions they are allowed to perform:
- Marihuana grower: a person licensed to cultivate marihuana and sell or otherwise transfer marihuana to marihuana establishments (not individuals), which is split into three types of growing classifications:[3]
- Class A: allows the cultivation of not more than 100 marihuana plants;
- Class B: allows the cultivation of not more than 500 marihuana plants;
- Class C: allows the cultivation of not more than 2,000 marihuana plants;[4]
- Marihuana safety compliance facility: a person licensed to test marihuana, including certification for potency and the presence of contaminants;[5]
- Marihuana processor: a person licensed to obtain marihuana from marihuana establishments, process and package marihuana, and sell of otherwise transfer marihuana to marihuana establishments;[6]
- Marihuana microbusiness: a person licensed to cultivate not more than 150 marihuana plants, process and package marihuana, and sell or otherwise transfer marihuana (including concentrates and marihuana-infused products) to individuals who are 21 years of age or older or to a marihuana safety compliance facility, but not to other marihuana establishments;[7]
- Marihuana retailer: a person licensed to obtain marihuana from marihuana establishments and to sell or otherwise transfer marihuana (including concentrates and marihuana-infused products) to marihuana establishments and to individuals who are 21 years of age or older;[8]
- Marihuana secure transporter: a person licensed to obtain marihuana from marihuana establishments in order to transport marihuana to marihuana establishments.[9]
In order to operate one of these establishments, however, you must first obtain both a state and municipal license to operate the establishment. Michigan’s Department of Licensing and Regulatory Affairs (“LARA”) with be the department responsible for implementing the MRTMA, and it will have the powers and duties necessary to control the commercial production and distribution of marihuana, including the responsibility of processing applications with the State to obtain a state license to operate a marihuana establishment and implementing rules and regulations related to the implementation, administration, and enforcement of the MRTMA.[10]
The question becomes, then: when can I apply for a state license to distribute recreational marihuana? Unfortunately for the savvy entrepreneur, not as soon as you would hope. The MRTMA essentially gives LARA one year to create its rules and regulations, and then it will be required to start accepting applications.[11] However, the MRTMA does not allow everyone to start applying for licenses at this time; LARA may only accept applications for the following licenses for 24 months after it begins accepting applications:
- For a Class A marihuana grower or for a marihuana microbusiness, from persons who are residents of Michigan;
- For a marihuana safety compliance facility from any applicant; and
- For a marihuana retailer, marihuana processor, class B marihuana grower, class C marihuana grower, or a marihuana secure transporter, from persons holding a state operating license pursuant to the MMFLA. [12]
Hence, for the next 2-3 years, those that wish to enter this market will be very limited by the MRTMA itself, not including any limitations imposed by municipalities.
Given these limitations, what is the best way to get into the market as soon as possible? Of course, you can apply to be a Class A marihuana grower, a microbusiness, or a marihuana safety compliance facility when LARA does start accepting applications; but those in the industry know that these establishments are not where the large profits are made. Hence, the key to entering this market as quickly as possible and making the largest amount of profits is to enter into the medical marihuana industry now, as this is already established, thriving, and is the one exception to allow you to sell recreational marihuana once LARA starts accepting applications rather than wait another two years.
As one might expect, the process of obtaining a state and municipal license to sell medical marihuana can be a regulatory nightmare. Additionally, because marihuana is still illegal on a federal level, there are still many risks (both criminal and civil) to the entrepreneur that wants to dive into this market. Having an attorney that is well versed in this area of law and can walk you through the regulatory mess and advise you of the biggest risks you will face is essential to making it in this new market. Here at Cooper & Riesterer, we are capable of assisting you with just that. So, looking to enter into the medical marihuana or recreational marihuana industry? Feel free to give us a call at (810) 227-3103 or email our marihuana attorney, Scott H. Brock at scott@crlaw.biz. It’s time to make some green!
[1] Since 2014, sales of marihuana in Colorado has exceeded $5.5 billion, with over a billion dollars in sales already between January and September, 2018. https://www.colorado.gov/pacific/revenue/colorado-marijuana-sales-reports.
[2] MCL 333.27953(h).
[3] MCL 333.27953(i).
[4] MCL 333.27959(2).
[5] MCL 333.27953(o).
[6] MCL 333.27953(l).
[7] MCL 333.27953(k).
[8] MCL 333.27953(m).
[9] MCL 333.27953(n).
[10] MCL 333.27957(1); MCL 333.27953(t); MCL 333.27958.
[11] Compare MCL 333.27958; MCL 333.27959; and MCL 333.279516.
[12] MCL 333.27959(6).
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