The Hard Work Of Creating A Marijuana Business Cartel

The Michigan House of Representatives passed a bill on April 17 to essentially prohibit any extensions of a key deadline for businesses that operate in the medical marijuana industry, effective June 1. The recreational marijuana ballot initiative Michigan voters approved in 2018 imposes a comprehensive and costly licensing regime on marijuana businesses, including retail shops. But the transition from a less regulated system of so-called medical marijuana dispensaries to a new regime has not been smooth.

Specifically, only recently have licensing authorities caught up on processing a backlog of license applicants, with delays due to what those in the cannabis industry say are overbearing licensing requirements.

“The creation of the medical marijuana business program was a highly politicized legislative battle that took several two-year legislative sessions to complete,” said Rick Thompson, an industry advocate with the Michigan chapter of the National Organization for the Reform of Marijuana Laws.

“Special interests from business and law enforcement groups gained the inclusion of many unnecessary requirements and regulations in the program,” Thompson continued. “These extensive financial and background checks, exhaustive cannabis testing and transport procedures, seed-to-sale tracking and compliance protocols have extended the time needed to approve candidates for one of these businesses.”

Many people have pointed to a previous medical marijuana licensing board as a major source of the problem. The board was created as part of a “seed to sale” regulatory regime originally created for medical marijuana by a 2016 law, one of the legislative battles referred to by Thompson. Lawmakers were aware then that a recreational marijuana initiative was in the works, so the law they enacted included provisions to include it. Voters approved that initiative in November 2018, and it imposes its own comprehensive licensure regime.

In March, Gov. Gretchen Whitmer issued an executive order abolishing the medical marijuana board and transferring its license processing duties to a new agency that has regulatory oversight over both medical and recreational marijuana. The agency will be housed within the state Department of Licensing and Regulatory Affairs and staffed by its employees.

In a phone conversation, Dave Harns, a spokesperson at the licensing agency, pointed to the reforms as a step in the right direction for streamlining policy and approvals. “We were once months behind, then weeks behind. Currently, we are not behind. We are now opening applications as they come in,” Harns said, crediting the improvement to process changes the department developed internally.

Thompson said he expects the process of licensing adult-use (recreational) cannabis businesses to go a lot smoother when the agency issues “emergency guidance” by this summer.

The bill that recently passed the House was sponsored by Rep. Jim Lilly, R-Park Township, and it would establish that unlicensed medical cannabis businesses still in operation would be barred from getting a license for one year starting June 1.

Thompson, despite many challenges ahead, says he is still optimistic.

“Michigan has evolved away from questioning the medical necessity of cannabis, yet still struggles to accept cannabis-based businesses in many communities.” He added, “The future looks very bright for our industry.”