LEGALIZATION
WHAT DOES PROPOSAL 1 MEAN
FOR MICHIGAN BUSINESSES?
BY: DOUGLAS E. MAINES
ON DECEMBER 6, 2018, the Michigan Regulation and Taxation
of Marihuana Act (MRTMA) went into effect, making the personal
cultivation, possession, and use of marijuana legal for Michigan
adults who are 21 years of age or older. The State has 12 months to
begin accepting applications for businesses who want to be involved
in the new recreational cannabis industry. However, it would not be
surprising if the State attempts to expedite this timeframe.
As a consequence of Proposal 1 passing, the three percent excise
tax on medical marijuana will be eliminated on March 6, 2019. As a
result, the state and municipalities that have enacted ordinances
under the Medical Marihuana Facilities Licensing Act (MMFLA) will
not realize the revenues projected under that law, giving the State
an incentive to license commercial adult use businesses as soon as
possible.
Additionally, for at least the first year after the State begins
accepting applications, the only individuals or entities who can apply
for most of the commercial licenses under the MRTMA are those
who already have a facility license under the MMFLA. This should
help expedite the licensing process, as each of these individuals or
entities has already undergone a rigorous background check.
Finally, it can be assumed that any emergency or administrative
rules issued by the State will be very similar to what is already in
place for medical marijuana. In other words, the State does not have
to reinvent the wheel with regard to expectations and restrictions
concerning advertising, packaging, security, and testing.
Regardless of when the new commercial system goes into effect,
how the MRTMA will impact the cannabis industry in Michigan
is still anyone’s guess. Because of its large patient population,
Michigan has been an attractive market for cannabis companies
throughout the United States. Once such companies have access to
the approximately seven million Michiganders over 21 years of age,
the market becomes even more appealing, particularly as Michigan
is the first state in the Midwest to enact an adult-use cannabis law.
Moreover, as of now, smaller businesses have an advantage in the
state. While a number of larger cannabis companies are currently
listing on a Canadian stock exchange, under the MMFLA, anyone
with any direct or indirect ownership interest in a facility applicant
must undergo the extensive licensing process. Practically speaking,
this makes it impossible for publicly traded companies to directly
enter the marketplace. As a license under the MMFLA is generally
a prerequisite to receiving a license under the MRTMA, smaller
companies have a potential early advantage in Michigan. However,
that advantage may be fleeting, as the Legislature is currently
considering a bill that would effectively allow publicly listed
companies to receive MMFLA licenses.
So what does all of this mean for your business? If you are hoping
to enter the recreational market, now is the time to act. If you have
not begun the process already, you should be actively pursuing
a license under the MMFLA, particularly since it is likely that the
recreational system will become operational much sooner than
many anticipate.
Douglas E. Mains
Douglas E. Mains specializes in government relations
and regulatory law, with a particular emphasis on
providing strategic advice to clients regarding public
policy, legislation, and regulatory issues. After
serving as a Senior Policy Advisor and Deputy Legal
Counsel to the Speaker of the Michigan House of
Representatives, Mr. Mains has extensive contacts
throughout the Capitol and is particularly adept at
helping clients positively interact with state agencies,
elected officials, and executive and legislative
staff. Mr. Mains also has extensive experience as
a litigation attorney, representing a wide array
of clients in state and federal courts, as well as in
administrative proceedings. Moreover, Mr. Mains is
also at the forefront of Michigan’s evolving medical
marijuana law, and is frequently asked to speak on
legislative and legal developments in that industry.
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