On Monday, September 27, Michigan’s Marijuana Regulatory Agency will hold a public hearing on draft administrative rules updating all of the State’s current cannabis-related rules other than for hemp. The deadline to provide written public comments is that Monday at 5:00 PM.

In a six-part series, we outline the substantive proposed changes in each of ten draft rule sets and then will conclude with coverage of next week’s hearing. Today, we cover the rule sets for Marihuana Hearings (Rules 420.701 to 420.709), Marihuana Disciplinary Hearings (Rules 420.801 to 420.808a), and the brand new proposed set for Marihuana Declaratory Rulings (Rules 420.821 to 420.823). Rules without substantive changes are not included.

Marihuana Hearings

  • R 420.702 Hearing procedures; scope and construction of rules. The proposed change would state that hearings are available for “Formal complaints against a licensee,” a change from the broad and ambiguous term of “Licensing actions.” The proposed change also would make clear that a licensee has the opportunity to request a hearing if the renewal of its license is denied.
  • R 420.703 Public investigative hearing.
    • Would eliminate required components of hearing notices issued by the MRA, most of which are established by the Administrative Law Judge (ALJ).
    • Would clarify that an ALJ’s ability to administer oaths includes the ability to subpoena witnesses. This should be a welcome change, as this has been a matter of dispute in hearings to date.
  • R 420.704a Hearing on exclusion of individuals or employees. This proposed new rule would work in tandem with the newly proposed R 420.808a. An individual who has been notified of the MRA’s intention to place the person on the excluded list could request a hearing in front of an ALJ. The MRA would have the burden of proving by a preponderance of the evidence that sufficient grounds exist to exclude the individual from being employed by or a supplemental applicant of a licensee.

Marihuana Disciplinary Proceedings

  •  R 420.801 Definitions.
    • A definition would be added to specifically reference the Administrative Procedures Act.
    • “Contested case hearing” would be a new term defined as a hearing before an ALJ pursuant to the marijuana acts and rules.
  • R 420.802(3) Notification and reporting.
    • Would add a definition for “proposed material changes to the marihuana business,” which would be an action that results in changes that would effectuate the outcome of a material change. This is unclear.
    • Would require notification to MRA of a municipal violation within 10 business days. Proposed R 420.14 would set this at 10 calendar days.
    • Would add appointment of court-appointed personal representative, guardian, conservator, receiver, etc. to the list of material changes.
    • Would remove requirement to notify MRA of adverse reactions, which would now be contained in proposed R 420.214b.
    • Would add a reporting requirement for licensees to report actual or alleged violations of the MMFLA, MRTMA, or the rules by another party. “Another party” is defined as the party to a licensing or management contract with an MRA licensee; it does not mean other licensed operators.
    • Would extend reporting timeline for a licensee to report initiation or conclusion of legal proceedings or government investigations from 10 days to 10 business days, again inconsistent with R 420.14.
    • Would require licensees to report to the MRA within 10 business days of terminating a licensing, management, or other agreement.
    • Would requires licensee to report a fire to the MRA and BFS within 1 business day.
  • R 420.803 Changes to licensed marihuana business. Proposes deleting subsection that requires licensees to provide written confirmation from the municipality that changes to the proposed new marijuana business location are approved and consistent with local ordinance.
  • R 420.805 Persons subject to penalty; violations.
    • Proposes deleting subsection that states that MRA can issue warnings, citations, formal complaints, and penalties. Authority for warnings and formal complaints would be elsewhere in the rules, but there would no longer be any proviso for citations.
    • Would permit the agency to take action against a licensee for employing a person who has been excluded by the MRA from being able to hold employment at a licensee.
    • Would permit the agency to take action against a licensee for failing to remove or attempting to add a person who has been placed on the exclusion list.
  • R 420.806 Penalties. Would add denial of license renewal to the list of available disciplinary sanctions.
  • R 420.807   Would make the language more concise by indicating that non-compliance may result in the issuance of a formal complaint.
  • R 420.808(1) Formal complaint.
    • Would be modified to indicate that the disciplinary process is commenced by the issuance of a formal complaint against the licensee.
    • Would extend the time for licensee to request a compliance conference or contested case hearing from 21 days to 21 business days.
  • R 420.808a
    • Under this newly proposed rule, MRA would be able to exclude persons from holding employment at a marijuana business if certain findings are made. These include finding that the person has (a) previous convictions for theft, fraud, or dishonesty; (b) engaged in conduct involving theft, fraud, or dishonesty—regardless of whether a conviction has occurred; (c) been found ineligible for licensure under the MMFLA, MRTMA, or the rules; (d) engaged in conduct that could negatively impact public health, safety, and welfare; (e) been included on any valid and current exclusion list in any other jurisdiction; or (f) a conviction for distribution of a controlled substance to a minor.
    • A potentially excluded person would need to be given notice that includes the reasons for exclusion, and could request a hearing pursuant to R 420.705. Any individual on the exclusion list or served with a notice of exclusion would be prohibited from being employed by a licensee or holding an interest in a licensee until a determination by the MRA or a court to the contrary.
    • A person excluded based on conduct could be excluded temporarily for a period of at least 6 months, if MRA chooses. Other exclusions would be permanent—meaning that someone who goes on the excluded list because MRA denied them a license would stay on the list.

Marihuana Declaratory Rulings

  • This new rule set would allow any interested person to request a declaratory ruling from the MRA as to the applicability to an actual state of facts of a statute, rule, final order, or other decision administered or promulgated by the MRA. Requests on hypothetical facts would not be allowed.  The MRA would create a form for requesting a declaratory ruling that must include the identification of the legal issue, the applicable facts, and should include analysis, legal brief, and the issues presented.
  • The MRA would be required to decide whether to issue a declaratory ruling within 60 days of receiving the request and provide notice to the requestor.
  • If the MRA decided to issue a declaratory ruling, it would need to do so within 90 days of sending the notification.
  • The MRA could consult with internal and external experts, legal counsel, and government officials and agencies in preparing its declaratory ruling.
  • The MRA would only issue a declaratory ruling if it has the complete factual record necessary to make a ruling.
  • The denial or adverse decision of a declaratory ruling would not entitle the requestor to a contested case hearing.
  • Requests regarding enforcement issues would not be a proper subject for a declaratory ruling.
  • If a declaratory ruling were issued, it would be binding on the MRA and the requestor unless it is altered or set aside by a court.
  • The MRA could not retroactively change the declaratory ruling, but it could do so prospectively in its discretion.

Next Monday should be an eventful day! Check back next week for a recap of the hearing on these proposed rules.