What Do Michigan’s New Emergency Recreational Marijuana Rules Mean for Businesses?

Wednesday, August 21st, 2019

By Koral C. Fritz

On July 3, 2019, the Marijuana Regulatory Agency (MRA) issued emergency administrative rules to implement the Michigan Regulation and Taxation of Marijuana Act (MRTMA). MRTMA, as passed by Michigan voters in 2018, authorizes individuals of twenty-one years of age or more to:

  • Use, posses, and grow recreational marijuana (subject to limitations)
  • Travel with up to 2.5 ounces of cannabis flower or 15 grams of concentrate anywhere except on school property or in correctional institutions
  • Possess up to 10 ounces of cannabis flower in their homes so long as anything over 2.5 ounces is placed in a locked location
  • Grow up to 12 marijuana plants per household

While recreational use has been legal in Michigan since December 6, 2018, there still are not any legal recreational dispensaries in the state. Up until recently, the state did not have any rules or regulations in place to permit the growth, manufacturing, or sale of recreational marijuana.  However, MRA’s recently released Emergency Rules change that.

Now, the MRA is set up to start accepting and processing adult-use licensing applications in November. That means that cities and townships have until November 1st to opt out of having recreational sales establishments. As of June, nearly 600 Michigan communities had already banned adult-use marijuana businesses. This number is likely to increase between now and November as local governments make final decisions.

Recreational marijuana businesses will not be able to set up shop in areas that have already or choose to opt out before November 1st. For areas that do not opt out, adult-use marijuana businesses will need to comply with the MRA’s two-step application process. The first step, pre-qualification, allows applicants to determine if they have state approval before they invest in property, buildings, or equipment. The second step, license application, will allow applicants to indicate which type of adult-use marijuana establishment license is being sought and must include plans for a marijuana establishment located in a municipality that does not have an ordinance in place which would preclude the business.

Here are a few key take-aways from the Emergency Rules:

  • Businesses that sell medical marijuana will be allowed to also sell recreational marijuana at the same location so long as the inventories are separated
  • There are no capitalization requirements for recreational marijuana establishments like there are to obtain a medical marijuana facility grower’s license
  • Current medical marijuana licensees who apply for adult-use licenses will be expedited through the application process if there are no changes in ownership
  • All adult-use applicants are required to submit a social equity plan. The social equity plan must detail a strategy to promote and encourage participation in the marijuana industry by people from communities that have been disproportionately impacted by marijuana prohibition and enforcement and to positively impact those communities

New license options include:

  • Temporary Marijuana Event Licenses – This license allows for a marijuana event organizer to host an event at a specific location where the sale and/or consumption of marijuana can take place for a limited time
  • Designated Consumption Establishment Licenses – This license permits the operation of commercial space and authorizes the allowance of adults twenty-one and older to consume marijuana on the premises
  • Excess Grower Licenses – This allows individuals who already have five adult-use Class C grower licenses to expand their plant count

Businesses should take great care to follow the new licensing requirements. The Emergency Rules will be in effect for at least six months. If you need assistance with your business ventures in this new market, please contact us.

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