The passage of the Medical Marihuana Facilities Licensing Act (MMFLA), which created a commercial licensing structure for Michigan Medical Marijuana businesses, required support from both Republicans and Democrats to pass. On the one side, Democrats favored a more open, less regulated market similar to Oregon’s medical marijuana law, which would allow all but the most unsavory characters to obtain a license. On the other side, Republicans wanted a highly regulated system with only a few large, licensed players—similar to the Ohio ballot initiative that was voted down in 2015.
It is clear that political parties in each state see the problem of medical marijuana business licensing through very different and opposing lenses. Democrats want to open up the process to give as many people as possible a chance to fairly qualify for a license; while Republicans want an intensive application process that screened out all but the most upstanding (and politically well-connected) applicants, similar to the casino licensing process a couple decades ago.
Republicans, both through their control of the state’s Department of Licensing and Regulatory Affairs (LARA) and the appointment of the Medical Marihuana Licensing Board members, have been able to set forth Michigan medical marijuana rules and regulations that restrict who can apply for a license. As an example, the Michigan medical marijuana regulations enacted by LARA require an applicant demonstrate between a capitalization of $150,000.00 and $500,000.00 in assets, depending on license type, to even be able to apply for a Michigan medical marijuana license. These sort of capitalization requirements are the exact type of obstacles republicans want in place to keep small/local entrepreneurs from entering this industry, instead attempting to preserve it for the high value multi-state operators able to pay these higher fees.
In essence, the MMFLA is a compromise between these two competing viewpoints—there is an intensive background check and pre-qualification process—but there are no official limits on the number of medical marijuana licenses that are given out at the state level. Despite there being no state limits, however, doesn’t mean there are unlimited medical marijuana licenses. The Republicans built in an additional check on the licensing process that limits the amount of commercial cannabis licenses given out—the Medical Marihuana Licensing Board. The Licensing Board is made up of 5 political appointees chosen by the governor, who at the time of this article is a Republican. There is a requirement that no more than 3 appointees can be from the same party, but with only 3 votes needed to deny a license, there is the ability to shut off the licensing pipeline at any time.
So what does this all mean? It means that not everyone is getting an MMFLA license. At the time of this article, there has only been a handful of denials—all for them for failure to disclose required items on the application, mainly leaving out criminal charges from the owner’s supplemental applications. However, as more and more licenses are given out, the process may become tougher and slower as the Republican-appointed board works to “unofficially” limit or restrict the number of licenses being given out.
This also means that getting your license application in on time—and properly structured with the right supporting material—is more important than people realize. For instance, if a group has a partner with several issues in his or her background check, it may be best to take that partner off the application and instead have them hold the real estate or do an equipment lease-back to stay involved. This allows the partner to participate in some of the return without being involved in running the business and risk the business license. It may also be possible to provide the Licensing Board with additional explanations that lessen the effect of certain disclosures if there were mitigating circumstances.
There is another option for prospective medical marijuana business owners as well—wait for the passage of the Michigan ballot initiative, or the RMLA (“Regulate Marijuana Like Alcohol”), which takes the decision-making power away from the Licensing Board and puts it back with LARA. Similar to the MMFLA, the RMLA does require a background check, but there are no disqualifying criminal convictions in the ballot language. The RMLA is almost certain to pass if allowed on the ballot, and it may even be passed beforehand by Republicans looking to lessen turnout among liberal voters and make legislative changes they could not if the initiative passes on a referendum. But Republicans also have the ability to change the provisions with certain legislative and judicial maneuvers. There is also the possibility that Democrats and Republicans work together to balance their two competing viewpoints and pass a law that melds the two regulatory structures together into one coherent law.
While there is a lot of uncertainty in the current Michigan medical marijuana laws and regulations, what is clear is that this is a political as well as legal process, and knowing the underlying politics behind licensing, or having an attorney to consult with who does, can help position your Company to succeed in the Michigan Marijuana industry.
Scott F. Roberts is a Detroit-based Marijuana business attorney. Cedric Jackson is the principal at Jackson Consulting Group, which works with Scott F. Roberts Law to help medical marijuana clients navigate the politics of state and municipal commercial cannabis licensing. If you are in need of a marijuana business lawyer or marijuana political consultant to help navigate the tangled web created by the MMMA, MMFLA and RMLA, give the commercial cannabis attorneys at Scott F. Roberts Law a call today at 248-234-4060.