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Cannabis Law Blog

New Information on the Use Transfers to Feed the New Adult Use Cannabis Market

Cannabis Law Blog

News and analysis focusing on the full spectrum of cannabis-related issues facing businesses, investors, financial institutions and all levels of government throughout the United States

New Information on the Use Transfers to Feed the New Adult Use Cannabis Market

As we have reported in the past (9/27/19 and 10/7/19) Michigan’s Emergency Rules for adult-use marijuana provide for medical products to be transferred to the adult-use market as long as the transfer takes place between equivalent licenses under common ownership. In other words, an adult-use grower can transfer in plants from a medical grower operated by the same entity; a co-located adult-use retailer/medical provisioning center can transfer medical products to the adult-use retail operation. But the Rules also provide that MRA will set a defined start date and end date and may announce other requirements for such transfers. We have been working for some time to get clarity from MRA as to how this rule will work. As recently as last week, MRA had no guidance to offer.

This weekend, at the State Bar Marijuana Law Section conference we learned a number of things regarding MRA’s perspective on adult use and the allowance for transfers between the medical and adult use market. First, and most importantly, Director Brisbo announced that MRA is not going to immediately allow product transfers from medical to adult-use. MRA will revisit this issue in January, but there is at this time no guarantee this will be allowed, and any transfers allowed may be limited to certain license types, products and quantities. Mr. Brisbo explained that the reason MRA is taking a wait-and-see approach on transfers is that MRA’s first responsibility is ensuring adequate patient supply on the medical side. Today, MRA continues to see significant shortages of flower in the medical market.

Given the above, unless MRA changes course, adult-use and medical products will at least initially flow through entirely separate chains. Thus, even though some adult-use facilities could be licensed even yet this year (and no later than the end of January 2020), adult-use product might not make it to the retail marketplace until late spring next year. This issue was highlighted by the Sunday Detroit Free Press article, with Mr. Brisbo suggesting that 4/20/20 may be a good guess on the timing for the first adult-use sales. 

MRA’s approach will obviously have a significant impact on business decisions of operators. Provisioning centers may not wish to immediately obtain licenses (and start paying annual fees), while growers that were adding capacity were doing so on the medical side, based on the belief that their provisioning center/retailer customers could acquire medical product and transfer it for adult-use sale, will almost certainly instead decide to add only adult-use capacity. 

Emergency Rule 40 on Transfers can be found here. With more changes ahead, stay tuned to Dykema’s Cannabis Law Blog for future developments impacting the cannabis industry.