The Medical Marijuana Facilities Licensing Act (MMFLA; PA 281 of 2016) establishes a regulatory framework around medicinal marihuana, treating it like the commodity it is. The regulatory framework draws on elements of the regulatory structures in place for alcohol under the Michigan Liquor Control Code and for gaming under the Michigan Gaming Control and Revenue Act. Under the MMFLA, businesses can grow, transport, test, process, and sell medical marihuana, as long as they are sited in and permitted by an approving municipality, obtain a state license, and follow the legal requirements set forth in the Act.
Beginning December 15, 2017, the State of Michigan will begin accepting applications for the following state licenses:
Key information about the MMFLA:
Municipal Approval – Growers, Processors, Secure Transporters, Safety Compliance Centers, and Provisioning Centers can only be located in municipalities that “opt in” and enact an ordinance permitting and regulating these facilities. While the state is not accepting applications until December 15, 2017, municipalities can accept applications for land use permits at any time, as long as the municipality has enacted an ordinance allowing the facility.
A municipality (a city, township, or village) may enact an ordinance to authorize one or more types of marihuana facilities, and limit the number of each type of facility; charge an annual local fee up to $5,000 on licensees; and enact other ordinances related to marihuana facilities such as zoning ordinances. However, regulations regarding the purity or pricing of marihuana or regulations interfering or conflicting with state statutory regulations for licensing marihuana facilities could not be imposed. Many municipalities are considering whether to opt in and have drafted ordinances. So far, those that have enacted an opt-in ordinance, or that have officially expressed an intent to do so, are:
State License Application – An applicant for a state grower, processor, secure transporter, safety compliance center, or provisioning center license must provide information including:
The identity of every person having an ownership interest in the application;
Applicant’s criminal history;
Applicant’s financial history;
Applicant’s commercial license or certification history;
Any history of complaints or notices filed against applicant by a public body for delinquency in payment of any federal, state, or local tax;
The type of facility, number of employees, and projected gross receipts;
Confirmation that applicant has informed the municipality of its intent to apply;
Application fee as determined by the Medical Marihuana Licensing Board; and
Proof of financial responsibility – Applicants must file proof of financial responsibility in an amount not less than $100,000.00 This financial responsibility is set aside for potential liability for bodily injury for harm resulting from the manufacture, distribution, transportation, or sale of marihuana.
Things that make an applicant ineligible for a state license include:
Conviction of a felony or released from incarceration for a felony within the past 10 years;
Conviction of a misdemeanor or found responsible for violating a local ordinance involving controlled substances, theft, dishonesty, or fraud within the past 5 years;
Knowingly submitting false information;
Applicant is an elected officer or employee of a governmental unit
This restriction does not apply to elected officers or employees of federally recognized Indian tribes; and
If Applicant is an individual, applicant must have been a resident of Michigan for at least 2 years
This restriction lasts until June 30, 2018
This restriction does not apply to corporate entities;
The Board may also base its decision to grant a license on:
Integrity, moral character, and reputation;
Financial ability and experience;
Outside control, directly or indirectly, over the applicant;
Pending indictments, charges, or arrests, and any relevant criminal history regardless of whether the expense has been expunged, pardoned, or reversed on appeal;
A history of bankruptcy within the past 7 years;
Applicant’s tax history;
Applicant’s history of noncompliance with regulatory requirements; and
Applicant’s history of litigation involving business practices
Employee restrictions – Licensee employers are required to perform a background check on prospective employees. If this check indicates that a prospective employee has a pending charge or conviction for a controlled substance-related felony within the past 10 years, the licensee must obtain permission from the Board before hiring the prospective employee
Transfer of license ownership – A license is a revocable privilege granted by the State of Michigan, not a property right. Licenses are exclusive to the licensee. Attempted transfer, sale, or conveyance of an interest of more than 1% must be approved by the Board.
License Term and Renewal – Licenses are issued for a 1-year period, renewed annually.
Allows for the sale of marihuana and marihuana-infused products to patients and caregivers. A Provisioning Center is a licensed commercial entity that purchases marihuana from a grower or processor and sells, supplies, or provides marihuana to patients, directly or through the patient’s caregiver. The term includes any commercial property where marihuana is sold at retail to patients or caregivers.
Assessed a 3% state excise tax on gross sales receipts
Provisioning Center License Requirements
Applicant, and each investor in the Provisioning Center must not have an interest in a secure transporter or safety compliance facility.
Before all sales, must identify whether the patient or caregiver holds a valid, current, unexpired, and unrevoked registry identification card and that the sale will not exceed the daily purchasing limit and the maximum THC levels for medical edibles.
No sale of alcohol or tobacco on the premises.
Not allow a physician to conduct medical examinations or issue medical certification documents on the premises for purposes of obtaining a registry identification card.
Allows for the storage and transportation of marijuana between licensed facilities. A Secure Transporter is a licensed commercial entity that stores, transfers, and transports marihuana between separate marihuana facilities for a fee. Only these entities can transport marihuana in the regulated system. A transporter does not transport marihuana to a patient or caregiver.
Secure Transporter License Requirements
Cannot have an interest in any other type of license
Cannot be a qualifying patient or primary caregiver
Each driver must have a chauffeur’s license
Must not employ anyone who has a felony conviction or has been released from incarceration for a felony within the past 5 years
Must not employ anyone who has a misdemeanor conviction involving controlled substances within the past 5 years
Safety Compliance Centers
A Safety Compliance Center is a licensed commercial entity that receives marihuana from a marihuana facility or a registered primary caregiver, tests it for contaminants and for tetrahydrocannabinol and other cannabinoids, returns the test results, and may return the marihuana to the marihuana facility.
Safety Compliance Center License Requirements
Must be accredited by an entity approved by the Board
Cannot have an interest in any other type of license
Equipped to perform necessary tests
Have a secure laboratory space
Employ at least 1 staff member with a relevant advanced degree in medical or laboratory science
A Processor is a licensed commercial facility that purchases marihuana from a grower and extracts resin from the marihuana or creates a marihuana-infused product for sale and transfer in packaged form to a provisioning center.
Processor License Requirements
A processor cannot be a registered caregiver or employ someone who is registered caregiver
A processor cannot have an interest in a secure transporter or a safety compliance facility.
A Grower is licensed to cultivate, dry, trim, or cure and package marihuana for sale to a processor or provisioning center. A Grower cannot be a registered primary caregiver. There are three levels of Grower license based on the amount of product grown.
Class A – 500 plants
Class B – 1,000 plants
Class C – 1,500 plants
Grower License Requirements
Applicant, and each investor in the grower, must not have an interest in a secure transporter or safety compliance facility
Must employ an individual with a minimum of 2 years’ experience as a caregiver (This restriction ends after December 31, 2021)
The licensee must not be an active caregiver and must not employ an active caregiver
Cultivation must occur in industrial or agricultural zoned areas, or in unzoned areas that meet local ordinance requirements
Taxes and Fees
An excise tax, imposed at the provisioning centers, is assessed at the rate of 3% of gross retail receipts.
The 3% tax, and fines, fees, and penalties not otherwise assigned are deposited into the Medical Marihuana Excise Fund. The excise fund is allocated accordingly:
25% to municipalities, allocated in proportion to the number of facilities in that municipality
30% to counties, allocated in proportion to the number of facilities in that county
An additional 5% to counties, allocated in proportion to the number of facilities in that county, allocated specifically to support county sheriffs
30% to the State
5% to the Michigan commission on law enforcement standards
5% to the department of state police
Retail sales will presumably be subject to the state’s 6% general sales tax, although no mention of this is made in the legislation.
Regulatory Assessment – The Act creates a regulatory assessment, collected annually from all licensees except safety compliance facilities. The assessment is allocated in proportion to all licensees.
Marihuana Regulatory Fund – The Act creates a regulatory fund to be used to support the implementation, administration, and enforcement of the MMFLA.
Reporting– Licensees must submit financial statements, reviewed by a certified public accountant, to the Medical Marihuana Board each fiscal year.
Monitoring– The Act requires the creation of a Statewide Monitoring System, which is designed for law enforcement and state personnel to do the following on a 24 hour basis:
Verify the validity of MMMA cards
Track marihuana transfers and transportation between licensees
Verify that a transfer will not exceed the limit that a patient or caregiver is authorized to receive under the MMMA.
The Act requires all licensees to adopt and use a Third-Party Inventory Control and Tracking System capable of interfacing with the statewide monitoring system to allow the licensee to enter or access information in the system as required in the act and rules. The tracking system must have the capability to track:
Patient and Primary Caregiver Purchase Totals
Sales and Returns
Adverse patient responses or dose-related efficacy issues
Patient purchase limits and flag purchases in excess of authorized limits
Protected Activities – In general, a person granted a state operating license who is operating within the scope of the license, and the licensee’s agents, will not be subject to state or local criminal penalties regulating marihuana; state or local criminal or civil prosecution for marihuana-related offenses; certain searches or inspections; seizure of marihuana, real or personal property, or anything of value based on a marihuana-related offense; or license or other sanctions by a business, occupational, or professional licensing board or bureau based on a marihuana-related offense. However, a marihuana facility, and all articles of property within it, are subject to examination at any time by a local police agency or the Michigan State Police.
Marihuana Advisory Panel – The Act creates a 17-member Marihuana Advisory Panel within the Department of Licensing and Regulatory Affairs (LARA) to make recommendations concerning rules and the administration of the act. Appointed members serve for a term of 3 years.
Medical Marihuana Licensing Board – The Act creates a 5-member Medical Marihuana Licensing Board within LARA. The Board is responsible for granting and denying applications, conducting meetings, working with LARA to promulgate rules, oversee facilities, investigate issues, disciplinary action against licensees, and determining the application fees and regulatory assessments. The Board cannot cap the number of licenses issued by the State.
On May 26, 2017, Governor Snyder made the first appointments to the Board:
Nichole Cover (I), Mattawan (Term expires 12/31/18)
Rick Johnson (R), LeRoy -Chair (Nominee of the Senate Majority Leader- Term expires 12/31/19)
David LaMontaine (R), Monroe (Nominee of the Speaker of the House-Term expires 12/31/19)
Donald Bailey (R), Traverse City (Term expires 12/31/20)
Vivian Pickard (I), Bloomfield Hills (Term expires 12/31/20)
Effect of MMFLA on Current Framework of Patients and Caregivers under the MMMA
Patients and caregivers operating under the scope of the Michigan Medical Marihuana Act, MCL 333.26421 et seq. (the “MMMA”), will be protected under the same rights and privileges that existed before the MMFLA was enacted. A patient or primary caregiver can continue to cultivate medical marihuana under the protections of the MMMA without any additional rules, burdens, or constraints.
The MMFLA does not interfere with the existing MMMA framework. The MMFLA only expands a registered patient’s access to medical marihuana.
Soon, under the MMFLA, registered patients will be allowed to purchase medical marihuana from licensed provisioning centers. And, primary caregivers can still assist patients with the medical use of marihuana, and can still maintain the right to cultivate medical marihuana on a patient’s behalf. But, under the MMFLA, a primary caregiver who is unable to provide adequate medical marihuana to his or her registered patient will now be able to obtain medical marihuana from a licensed provisioning center on behalf of that patient.
There has been a lot of confusion surrounding the MMFLA, leaving many current caregivers wondering how they are going to comply with the new laws. Rest assured, caregivers operating lawfully under the requirements of the MMMA are not affected by the MMFLA. If you have any questions regarding the scope of the MMMA’s protections or are interested in pursuing a commercial license under the MMFLA, please do not hesitate to contact our office. We provide monthly talks to discuss rights and privileges of patients and caregivers under the MMMA, and we have started a series of CannaBiz seminars designed to assist clients in preparing to pursue licenses under the MMFLA.