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Adult-Use Establishment Applications Have Been Released; Can be Filed November 1

Cannabis Law Blog

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Adult-Use Establishment Applications Have Been Released; Can be Filed November 1

The Marijuana Regulatory Agency (MRA) released its adult-use marihuana establishment license application forms last Thursday, along with detailed instructions and checklists. As reported previously, the MRA will begin accepting applications November 1, and those who are already licensed on the medical marihuana side of the industry will face a less rigorous application process to tag on adult-use licenses. As with the existing medical licensing process, the adult-use process will have two steps: (1) prequalification of the main applicant (usually a business entity) and certain associated individuals through background reviews; and (2) establishment licensing, which vets the physical location of the establishment and the business’s operating plans. New applicants who do not hold a medical marihuana facility license—including those who have been prequalified for a medical facility license but are not yet licensed—will have to undergo full prequalification background review and submit an establishment license application. Currently licensed medical facilities need only submit a few notarized attestation forms, a social equity plan, and the “Step 2” establishment application.

For those who have been through the medical marihuana facility licensing process before, the adult-use process will be very familiar, as most requirements are replicated, though some aspects have been simplified and others are new. In addition to the key differences we pointed out in our previous post, here are a few others to be aware of:

Attestations

  • In Attestation 1-E, a current medical marihuana facility licensee must attest that there have not been any changes in ownership since the licensee was approved for its medical license by the MRA. If any changes have occurred, if the entity organizational structure has changed or individual owners have been added or removed, then the licensee must go back to the Medical Marijuana Facilities Licensing Section and get the changes approved before applying for an adult-use establishment license.
  • Attestation 1-F must be signed by a representative from the Michigan Department of Treasury, affirming that the applicant does not have any delinquent sales, excise, or other taxes related to the sale of marijuana and that the applicant is in good standing with Treasury. According to the MRA’s instructions, an authorized designee of the Department of Treasury can be contacted by phone Monday through Friday from 8:00 a.m. to 4:00 p.m. This application requirement is new to the adult-use process and, therefore, the process for obtaining signatures from Treasury has not been worked out in practice.
  • While municipalities had to opt in through an ordinance to allow medical marihuana facilities within their borders, municipalities must “opt out” of the adult-use industry by prohibiting or limiting adult-use establishments. If a municipality takes no action relating to adult-use, adult-use establishments are permitted to operate in the municipality. Nevertheless, Attestation 2-C requires a signature and notarization from the municipality’s clerk, attesting either that the municipality has not adopted an ordinance prohibiting marihuana establishments or that the municipality has adopted an ordinance allowing establishments and the applicant is not in violation of any municipal ordinance or zoning requirements. In municipalities that have taken no action and that may not have yet considered adult-use establishments, signatures on these attestation forms may be more difficult to obtain. Therefore, we advise applicants to reach out to local officials to develop positive working relationships and to ensure that these attestations can be signed.

Social Equity Program

  • Adult-use applicants may qualify for application and license fee reductions if they apply for and are approved for participation in the MRA’s Social Equity Program. Fee reductions range from 25% to 60%. To qualify for the Social Equity Program, an applicant must have resided in a disproportionately impacted community for the last five years and must commit to operate a marihuana establishment in a disproportionately impacted community. The MRA recently expanded the number of eligible communities from 19 to 41. A full list can be found here. Qualifying applicants receive a 25% reduction in the application and annual fees, and may receive an additional 25% off for certain marihuana-related convictions and/or an additional 10% reduction for status as a registered primary caregiver for at least 2 years between 2008 and 2017. Applicants must apply for the Social Equity Program before submitting an adult-use establishment application.

MMFLA State Operating License vs. MRTMA State License

  • Because the medical marihuana industry and the adult-use marihuana industry are governed by two different statutes in Michigan, the two regulatory systems will operate separately from, but along side each other. This means that a license for a medical marihuana facility issued under the Medical Marihuana Facilities Licensing Act (“MMFLA”) cannot be converted into a license for an adult-use establishment, which must be issued separately under the Michigan Regulation and Taxation of Marihuana Act (“MRTMA”). While the fledgling adult-use industry gets up and running, and given that medical marihuana will be transferable to adult-use at the retail level for some period of time (with details yet to be released), existing medical growers will need to strategize just how many adult-use licenses they should apply to operate and when they should submit their adult-use applications. Depending on MRA’s approach to transferring medical product to adult-use, it may be wise for growers in particular to wait until their medical licenses are close to expiring to seek to relinquish any medical licenses in favor of adult-use licenses. Otherwise, growers could essentially end up paying assessments and fees twice to grow the same plants.

Public Contact Information

  • The adult-use establishment application includes a consent form through which a licensee can allow the MRA to publish its public contact information so that other licensees or members of the public can get in touch with the establishment. If a licensee does not want the MRA to publish its contact information, it can withhold consent through the same form.

All application forms, instructions, checklists, and other resources for adult-use establishment licenses can be found on the MRA’s adult-use marijuana webpage. With more changes ahead, stay tuned to Dykema’s Cannabis Blog for future developments impacting the cannabis industry.