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September 12 Michigan Medical Marihuana Board Meeting: December Closure Date for Existing Businesses Likely

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September 12 Michigan Medical Marihuana Board Meeting: December Closure Date for Existing Businesses Likely

A few hours before September 12’s widely anticipated Michigan Medical Marihuana Licensing Board meeting, the State’s Department of Licensing and Regulatory Affairs (LARA) released its intended approach to currently operating dispensaries. As we reported, LARA announced that its forthcoming emergency rules will consider continuing marihuana operations after December 15, 2017, to be “a potential impediment to licensure.”

This issue, of course, dominated the Board meeting. LARA’s Director of the Bureau of Medical Marihuana Regulation, Andrew Brisbo, explained to the Board that the Board cannot act by motion to set policy, or to close dispensaries. Rather, per LARA’s discussions with the Michigan Attorney General’s office, policy must be set by rules. Although LARA must consult with the Board on rules, it is LARA that has rulemaking authority. Director Brisbo further explained that the December 15 date was selected after balancing patient needs with the letter of the law, and that tying the date to the opening of the application period made sense.

Board member Don Bailey, who has been the most vocal in advocating that existing dispensaries are not following the law and therefore should not be licensed, expressed concerns. He disagreed with the December 15 date, and also stated that he believes operating without licensure should be an absolute bar to future licensure, not a “potential impediment.” He moved that the Board request LARA to work with the Board to set an earlier date.

After Board Chairman Rick Johnson seconded Member Bailey’s motion, the other Board members voiced several questions. Board member Vivian Pickard asked who should be setting a closure date, and shared her view that it is the judicial system that should be enforcing current law. Board member Nichole Cover echoed the point that the Board is not an enforcement agency, and that criteria should be set through rules with applicants provided due process. And Board member David LaMontaine asked why the Board was even discussing a rule.

After Director Brisbo further explained the relative roles of the Board and LARA, Chairman Johnson withdrew his support for Member Bailey’s motion. This prompted Mr. Bailey to state that, when it comes to voting for licenses, he will vote against anyone who continues to operate past his own previously proposed date of September 15.

The upshot of all of this activity is that potential applicants are left with LARA’s statement that the emergency rules will provide that operation a marihuana business after December 15 will be a “potential impediment” to licensure. This could leave the Board free to consider evidence an applicant might put forward contending that they have indeed been operating within the limitations of the Michigan Medical Marihuana Act. Importantly, Director Brisbo made clear that LARA’s emergency rule on currently operating facilities will apply across all license classes. It is not just dispensaries that must pay attention to this rule, but growers, processors, and testing labs as well.  

Whether this is the end of the closure issue remains to be seen. Numerous members of the public argued that, under LARA’s approach, there will be many months between December 15 and when licensed product is available, during which patients may have challenges accessing medical marihuana. Board Member LaFontaine zeroed in on this issue, and seemed receptive to notions of temporary or provisional licenses to bridge the gap. Member LaFontaine, though, also recognized that such an approach would require the Legislature to act.

LARA and the Board are in a difficult position. Current law at the State level does not allow for most of the activity taking place today, and other applicants are abiding by the law and waiting to open. It also appears to us likely that even if there is a December 15 “closure” date, there will be dispensary owners who know that they cannot qualify for licenses—and they will stay open as long as law enforcement does not take action against them. We fully expect this controversy to continue for months, and possibly as long as another year.

Apart from the closure issue, there were other important announcements from LARA. Director Brisbo announced that non-refundable application fees will be in the range from $4,000 to $8,000 per license. After a decision is made to award an applicant a license, the regulatory assessment fee in the range of $10,000-$57,000 will need to be paid before the license is issued. Additionally, LARA announced its selections for members of the public workgroups that will advise LARA on final rules for the industry. If today’s Board meeting is any indication, those of us who have been chosen for those workgroups will be hearing from many passionate members of the public.  

Stay tuned to Dykema’s Cannabis Law Blog for further updates.