Medical Marijuana Facilities Licensing Act

 

Medical Marijuana Facilities Licensing Act

What is MMFLA?

The world of medical marijuana rules and regulations can be difficult to navigate. As a budding industry dependent upon varying state legislations, remaining properly informed can be a daunting task. As leading experts in the field of medical marijuana in Michigan, we want to ensure that you have access to the proper information so that you can navigate all of the components related to licensing as easily and comprehensively as possible.

Here’s what you need to know first:

As of December 15, 2017, the State of Michigan began accepting applications for various state medical marijuana licenses. The regulatory framework for this process has been established by the Medical Marihuana Facilities Licensing Act (MMFLA; PA 281 of 2016 and subsequent emergency rules published by LARA). While the recent growth of the medical marijuana industry is exciting and seemingly innovative- the actual structure for a regulatory framework is comparable and closely related to the regulatory structures in place for alcohol under the Michigan Liquor Control Code, as well as for gaming under the Michigan Gaming Control and Revenue Act.

Simply put, under the MMFLA, businesses can grow, transport, test, process, and sell medical marijuana, 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. Considering applying or simply want to learn more? Take a look at the links below for additional useful information.

One of the most common questions and concerns we receive from prospective applicants is “I’m really not sure if I’m eligible for a state license, and I don’t want to waste my time applying if I have no chance. What should I do?

There are no guarantees that anyone will get a license, however, our firm can provide confidence and clarity about the current regulations and discuss your chances as well as potential pitfalls. We suggest a thorough reading of the list of both eligibility and ineligible factors prior to any consultation to facilitate a meaningful conversation.

What you need to apply for State License:

  • The identity of every person having an ownership interest in the application;
  • All applicant’s criminal history;
  • All applicant’s financial history;
  • All applicant’s commercial license or certification history;
  • Any history of complaints or notices filed against all applicant’s 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 for the endeavor;
  • Confirmation that all applicants have informed the municipality of their intent to apply;
  • Application fee as determined by the Medical Marijuana Licensing Board; and
  • Proof of financial responsibility – All 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 marijuana.

Things that make any and all joint 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
  • 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

Key Terms 

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.

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.

Marijuana 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 marijuana Board each fiscal year.

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 marijuana; state or local criminal or civil prosecution for marijuana-related offenses; certain searches or inspections; seizure of marijuana, real or personal property, or anything of value based on a marijuana-related offense; or license or other sanctions by a business, occupational, or professional licensing board or bureau based on a marijuana-related offense. However, a marijuana 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.

Marijuana Advisory Panel – The Act creates a 17-member marijuana 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.

Initial Appointments to Advisory Panel

Medical Marijuana Licensing Board – The Act creates a 5-member Medical Marijuana 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)

TYPES OF LICENSES

Growers

A Grower is licensed to cultivate, dry, trim, or cure and package marijuana 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

Processors

A Processor is a licensed commercial facility that purchases marijuana from a grower and extracts resin from the marijuana or creates a marijuana-infused product for sale and transfer in packaged form to a provisioning center.

  • A processor cannot be a registered caregiver or employ someone who is a registered caregiver
  • Must employ an individual with a minimum of 2 years’ experience as a caregiver (this restriction ends after December 31, 2021)
  • A processor cannot have an interest in a secure transporter or a safety compliance facility.

Provisioning Center

Allows for the sale of marijuana and marijuana-infused products to patients and caregivers. A Provisioning Center is a licensed commercial entity that purchases marijuana from a grower or processor and sells, supplies, or provides marijuana to patients, directly or through the patient’s caregiver. The term includes any commercial property where marijuana 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.

Safety Compliance Centers

A Safety Compliance Center is a licensed commercial entity that receives marijuana from a marijuana facility or a registered primary caregiver, tests it for contaminants and for tetrahydrocannabinol and other cannabinoids, returns the test results, and may return the marijuana to the marijuana 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

Secure Transporter

Allows for the storage and transportation of marijuana between licensed facilities. A Secure Transporter is a licensed commercial entity that stores, transfers, and transports marijuana between separate marijuana facilities for a fee. Only these entities can transport marijuana in the regulated system. A transporter does not transport marijuana 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

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 marijuana 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 sheriff’s
    • 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.

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 marijuana 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:

  • Adverse patient responses or dose-related efficacy issues
  • marijuana Plants
  • Patient and Primary Caregiver Purchase Totals
  • Patient purchase limits and flag purchases in excess of authorized limits
  • Products
  • Sales and Returns
  • Transfers
  • Waste

Effect of MMFLA on Current Framework of Patients and Caregivers under the MMMA

  • Patients and caregivers operating under the scope of the Michigan Medical Marijuana 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 marijuana 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 marijuana.
  • Soon, under the MMFLA, registered patients will be allowed to purchase medical marijuana from licensed provisioning centers. And, primary caregivers can still assist patients with the medical use of marijuana, and can still maintain the right to cultivate medical marijuana on a patient’s behalf. But, under the MMFLA, a primary caregiver who is unable to provide adequate medical marijuana to his or her registered patient will now be able to obtain medical marijuana 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.