Pot Price Tumbles, Prompting Moratorium, Enforcement Chat
MIRS WEEKLY REPORT
With prices in Michigan’s marijuana market continuing to fall, the state’s Cannabis Regulatory Agency is talking about a potential moratorium on growers. Meanwhile, growers are complaining about the perceived lack of enforcement on black market sales.
During his final public hearing, CRA Director Andrew Brisbo said the average retail price for flower, better known as bud, is at $116 per ounce, down 47% over the year. Recreational marijuana sales are expected to hit $2.2 billion, even as more growers are trying to jump on board. The number of grower licenses has increased by 65% since July 2021, while the number of retailers has increased by 34%. Adult-use of marijuana is up 126% and the number of plants harvested is up 172% over the year
The glut of growers in Michigan prompted CRA to ask if the industry would support a moratorium on issuing new grower licenses. Another possibility would be limiting the production of micro-businesses.
“The agency has made it a habit of asking questions about issues that have come to our attention at the public meetings, it doesn’t necessarily dictate that there’s going to be a follow up in a certain way,” Brisbo said.
Many industry professionals who chimed in during public comment said they would be in favor of doing away with the excess grow licenses, which would only require a rule change from the CRA.
“The moratorium issue is a slip back because I say the devil is in the details, but I think there are other things that we could be doing before we look at a moratorium,” said Michigan Cannabis Manufacturers Association Chair Shelly Edgerton.
Edgerton said the idea of a moratorium would create all sorts of areas asking for exemptions from the law, such as the social equity portion and those who are already in the process of getting their license. Many of those commenting during the meeting brought up support of the moratorium with exemptions.
Edgerton, along with others who commented, brought up the idea that black market marijuana is still a thriving industry in Michigan, something that Michigan Sheriffs Association Executive Director Matt Saxton said is a real thing.
“After having conversations with sheriffs, since we’ve had recreational marijuana legalized here in Michigan, the black market, or illegal sale of marijuana, has increased from the time that it was illegal,” Saxton said.
Edgerton said the black market is the cause for the glut of marijuana in the legal market and said that untested product was making it to market.
Allison Arnold, a partner with Cannabis Attorneys of Michigan, said CRA should be looking at the data collected from the different businesses and – if something strange was standing out – they should be getting together with law enforcement to start a criminal investigation.
Arnold added that if there are four outdoor growers with the same conditions and number of plants, but one is reporting three or four times more product than the CRA should take notice.
Edgerton said regulators should investigate processors who have more marijuana distillate (purified THC, the active ingredient in marijuana) than what could be theoretically produced by their machines.
She said the CRA is empowered to work with the Michigan State Police. If the CRA doesn’t have the bodies to investigate, law enforcement should be called in.
“We’ve got to start to, pardon the pun, weed out some of this activity and really send a message,” Edgerton said.
She called on the next director of the CRA to step up enforcement on growers, processors and retailers.
Michigan Cannabis Industry Association Executive Director Robin Schneider said the CRA numbers bare out the glut of growers in the state and she is hearing from her members that the CRA has been coming down hard.
“I’m confident that they are taking steps necessary to catch people in the regulated market that are maybe doing illegal things,” Schneider said.
She said she doesn’t want to see people go to jail for marijuana. However, a business should lose its license if it’s found to be dipping into the illegal markets.
Brisbo said the CRA has stepped up enforcement, but everyone was afforded due process before an administrative law judge, which can be a slow process.
“One of the challenges with the truly illicit market has been getting prosecutorial support for those types of actions with those enforcement rules,” he said.
Saxton said it would depend on where the illegal marijuana was coming from. If it was crossing state lines it would be under the jurisdiction of the federal government, not the state law enforcement agencies.
He said anything under the state should be dealt with by the CRA and if anything rose to the level of criminal activity that it could then be referred to the proper authorities.
“I think the marijuana industry itself really owes a lot to help deal with the black market that they said would go away with the legalization of marijuana,” Saxton said.
Edgerton and Schneider both said that at the end of the day, marijuana is a business, but not like any other business, because it doesn’t have the safety nets afforded others.
“Our organization understands that it is a privilege to have a business license to sell cannabis, which just a few years ago was still not legal,” Schneider said. “And the expectation is that those who are given a business license will follow the laws and the rules.”
Reposted form the Michigan Chamber of Commerce MIRS weekly report / Sept 18-24, 2022
Michigan Chamber of Commerce / 600 S. Walnut St. / Lansing, MI 48933 / 1.800.748.0266 / email@example.com