In November last year, 57% of voters in Michigan opted to legalize marijuana and hemp for recreational purposes. The drug was already available for medicinal use for a wide variety of medical conditions. However, the new law ensured that the drug could be legally bought, used and sold for recreational purposes by anyone over the age of 21. Since then, there have been several developments which will help sellers understand how the new laws and regulations will impact the sale of medical marijuana.
A New Licensing System
In March, an executive order was signed by Governor Gretchen Whitmer to abolish the Medical Marijuana Licensing Board. This effectively created a brand new marijuana regulatory agency that would exist within the Department of Licensing and Regulatory Affairs. The board is now abolished and licensing will be taken over by the agency.
This is significant as there have been numerous problems with the Medical Marijuana Licensing Board since it’s conception in 2016. This was established after laws were passed to regulate the medical marijuana industry. The five appointed board members were political appointees that were recommended by the former Speaker of the house, a former government and Senate majority leader.
Evidence that the Licensing board had failed came when it was revealed that 599 applications were submitted. By March 2019, only 121 had been approved by the board. Of those, only 105 had actually received their licenses to operate legally.
This has lead to issues with shortages of the product. It has made it difficult for people to get the medicine that they need and that’s crucial. Particularly, when you take into consideration how many different conditions the drug is used for. This includes:
- Chronic Pain
Critics have also suggested that other businesses such as liquor stores do not need a review board and typically gain their license within 30 days. There have even been some critics who believe the delays are politically motivated. It is hoped and strongly believed that the new licensing agency, while will be used for both recreational and medical marijuana licenses, will remove issues with the older board. Indeed, the aim is to eliminate issues with an efficiency that were impacting patients in Michigan who needed the drug.
According to Governor Gretchen Whitmer, the new system has been designed to protect residents of Michigan and there is a strong effort throughout state departments to ensure that no more shortages occur.
How Does The New System Work?
Generally speaking, the new Michigan rec marijuana system is designed to imitate the system that was already in place for the medical marijuana market. However, it is intended for there to be fewer issues that need to be overcome by businesses and more opportunities for buyers.
How Will This Change Things?
The law to legalize marijuana for recreational purposes came into effect on December 2018. This means that anyone over the age of 21 could legally possess and consume the drug. However, they weren’t able to buy it because businesses were only able to sell to patients carrying medical cards.
Now, things are going to change because the Marijuana Regulatory Agency will start accepting business applications on November 1st. Theoretically, this could mean that regulators will allow medicinal marijuana to be sold as recreational products. However, this is unlikely to occur as in the past the medical program has struggled with issues with licensed supply. Despite this, it’s expected that sales will begin within the first quarter of 2020. At the latest, they suggest products will be sold for recreational purposes in March.
Will It Be Easier To Start A Recreational Business?
It will be easier to start a business to sell recreational marijuana compared with medical products. This is due to the fact that regulators have opted to not force applicants to show they have the necessary funds. In contrast, medical companies needed to show they had been $200,000 and $500,000 in assets with 25% of this being liquid funding.
Fees for licensing are also going to be lower with the entry cost being $4000 compared to $10,000 in the medical industry. Furthermore, licensing a retail store costs nearly 50% less than the $66,000 for a medical business.
Under current state law, the large-scale grow licenses for a business have a cap that’s marked at 5. This basically means that a commercial grower can get 10,000 plants. Large scale businesses find this isn’t enough. That’s why there’s a new license type available for medical companies and recreational companies. Labeled as excess grow, this allows for more plants than the current cap that is under state law.
Selling Both Products
It is possible for a company to sell both marijuana for medical purposes and marijuana for recreation. However, it’s important to note that these are not the same products. As such, while they can be sold by the same company, they must remain separate and be advertised or promoted as such. Similarly, the products will likely have different potency limits. While medical marijuana has a potency limit of 50 milligrams THC, there is evidence to suggest the limit for recreational marijuana will be significantly lower. Recreational marijuana will also be sold with a 10% excise tax which is not relevant to the sale of the medical drug.
It’s also important to note that while recreational marijuana can only be sold to people over the age of 21, medical products can be sold to anyone carrying a card. This may include children and particularly those who could be suffering from certain medical conditions where marijuana has been shown in studies to be beneficial.
Righting Past Wrongs
Finally, there is also a new social equity plan on the horizon. According to state officials, plans are being developed that will help communities that have been negatively impacted by the past prohibition of the drug. This could include places where supplies have dwindled for patients who needed the drug for treatment. Based on the emergency rule set proposed, this might include reducing application fees or even waving them altogether. This could impact certain applicants that qualify.