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The adult-use marijuana market in Michigan has seen a plunge in the price of marijuana. According to the Cannabis Regulatory Agency, the average price of one ounce of marijuana in December 2020 was $350.88. In contrast, the average price fell to $109.22 in September 2022. This rapid price compression puts tremendous pressure on many marijuana businesses as they face greater competition with ever-slimming margins. For some, these market forces may present a financial or existential crisis.

Often, financially-distressed companies seek the protection afforded by federal bankruptcy courts to restructure their finances. There are several benefits to an overwhelmed debtor going through the bankruptcy process. As just one example, once a debtor files for bankruptcy, an automatic stay on actions prevents creditors from collecting against a debtor until the bankruptcy case is resolved or the Court allows the stay to be lifted. In addition, bankruptcy provides an orderly process that provides the debtor with the means of resolving creditor claims simultaneously.
Continue Reading Legal Options for Investors and Owners of a Financially Struggling Marijuana Business

On March 24, 2022, the Michigan Marijuana Regulatory Agency (MRA) announced record-breaking sales numbers in Michigan’s adult-use industry for the previous year. In just the second full year of licensed adult-use marijuana operations, the MRA reported that sales of adult-use marijuana exceeded $1.1 billion for fiscal year 2021.

Local governments are set to receive tens of millions of dollars thanks to the revenue-sharing provisions in the Michigan Regulation and Taxation of Marihuana Act (“MRTMA”). The MRTMA establishes a 10% excise tax on the retail sale of adult-use marijuana. Excise tax revenues are dedicated to Michigan schools and roads, and a significant portion is distributed to local municipalities and counties that have adult-use marijuana retailers and microbusinesses in their jurisdictions.
Continue Reading Michigan Adult-Use Marijuana Sales Exceed $1B in 2021, Creating Millions of Dollars for Schools, Municipalities, and Roads

On February 15, 2022, the Michigan House Committee on Regulatory Reform considered HB 5706. The Michigan Regulation and Taxation of Marihuana Act (“MRTMA”) does not address how Michigan’s Native American tribes participate in Michigan’s adult-use marijuana industry. HB 5706 creates a pathway for state-licensed and tribally licensed establishments to purchase from and sell to one another.
Continue Reading Michigan Legislature Addresses Native American Tribes in New Marijuana Legislation

When it comes to cannabis licenses, every state has its own statutory and regulatory quirks that create traps for the unwary.  In Michigan, one is the Marijuana Regulatory Agency’s (“MRA’s”) strained interpretation of the limit on the number of grower licenses a person may hold under the Michigan Regulation and Taxation of Marihuana Act (“MRTMA”).

Section 9 of MRTMA prohibits the MRA from issuing a license if doing so would mean that “a person who holds an ownership interest in the marihuana [business] . . . will hold an ownership interest in more than 5 marihuana growers.” MRTMA defines the term “marihuana grower” as “a person [or entity] licensed to cultivate marihuana.”  But in applying Section 9’s limitation, MRA interprets the term “grower” to mean a singular grow license.
Continue Reading Michigan Regulator’s Odd Limit on Grow Licenses

In the past few years, recreational marijuana legalization has increased, with New York becoming the most recent state to enact legislation. The growth has created substantial revenue opportunities for companies that have invested in preparing to participate in these new regulatory frameworks. Along with that nationwide expansion, though, comes greater government scrutiny. All current and future marijuana industry participants must stay aware of specific areas where the government is focusing its enforcement efforts and develop appropriate compliance procedures.
Continue Reading Growing Cannabis Industry Attracts Increased Government Enforcement