BY Kathleen Gray, Detroit Free Press
The state issued long-awaited rules Wednesday that will govern the recreational marijuana market, allow for things like public social clubs where people can partake in a bowl or an edible and do away with the asset requirements that have left many potential business owners out of the cannabis industry.
"Presuming we get applications on the day we start accepting applications, I would expect we would probably issue licenses in November," said Andrew Brisbo, director of the state Marijuana Regulatory Agency, noting that the state will begin accepting applications on Nov. 1.
Under the new rules, three new categories of licenses will be available. They will allow people to become marijuana-themed event planners; hold marijuana events, such as Cannabis Cup competitions, which have been held in recent years but not sanctioned by the state and where pot can be sold and consumed, and open social clubs, where people can gather to use marijuana, but where nothing else can be sold, such as coffee or snacks. Those categories will need to get local approval.
Another big difference between recreational and medical marijuana licenses will be that there will be no capitalization requirements for the recreational license, which could result in opening up the market to more people.
"This will create an environment that’s inclusive in nature for businesses of all sizes," Brisbo said.
Currently, state law requires that medical marijuana license applicants show that they have assets worth between $150,000 to $500,000 in order to qualify for a license. Those high numbers have left many people unable to get a license. The ballot proposal that legalized marijuana did not include language on capitalization requirements, so the MRA did not include them in the rules.
The Michigan Cannabis Industry Association, which represents marijuana business owners, applauded the MRA for doing away with asset requirements.
“We particularly like that there are no capitalization requirements, which should help make licenses more accessible to small-business owners," said Josh Hovey, spokesman for the organization. "And there is a strong demand for on-site consumption and cannabis-friendly special events, so we also are thankful that there will be licensing available for businesses that cater to this need."
Other differences between the medical and recreational license requirements:
Marijuana retail shops will be able to deliver products to homes and to social consumption clubs, while medical marijuana cardholders can only get the product delivered to their homes.
License renewal fees will be designated in three tiers with the largest businesses charged a bigger fee, while smaller businesses are charged less. The state will set the cost for those three tiers later this year. The currently license regulatory assessment for all medical marijuana businesses is $66,000.
Recreational license applications will be expedited for people who already hold medical marijuana licenses. Growers and processors of marijuana will be allowed to offer employees free samples of products that can be used off-site to ensure the quality and potency of the products. They can also offer free samples to retail establishment owners who want to try the product before deciding whether they want to purchase it.
Potency guidelines for recreational marijuana will be set at a future date and will most likely be lower than the 50 milligram per serving dose that is allowed for medical marijuana-infused products such as gummies and mints.
The development of a social equity plan — designed to benefit communities that have been disproportionately affected by marijuana enforcement laws — was required under the ballot proposal and while the rules don't include specifics about the state's intentions, the plan will encourage and promote the participation of people in the business who come from communities disproportionately affected.
And that also will extend to business owners, who will be required to submit social equity plans with their license applications.
Other communities and states that have legalized marijuana have set up grant or loan programs, expedited license reviews for businesses in the affected communities, or created training opportunities for people who want to get into the business as owners or employees.
The first licenses for legal growing, processing, testing, transportation and retail sales shops are expected to be awarded before the end of the year. Another new category of the license will also be available for small growers, who can grow up to 150 plants, process the product and sell it from the same business site.
And large growers, who under the ballot proposal can get five licenses to grow up to 2,000 plants per license, can also apply for additional grow licenses under a new category of excess marijuana grower license. So growers who already have multiple medical marijuana grow licenses — one company has been approved for 19, for example — can get an equal number of recreational to grow licenses.
While the state has 90 days to review applications and award or deny licenses, it may not take that long because for at least the first year, the people who will get licenses are the businesses that have already gone through all the criminal and financial background checks and received a medical marijuana business license.
The four-month lag time between issuing the rules and accepting applications is meant to give cities, villages, and townships the time to decide whether they want to allow marijuana businesses in their communities. If a municipality doesn't have an ordinance in place that prohibits such businesses, the MRA is obligated to give a license to a qualifying business that applies for a marijuana business license..
Currently, 506 communities have said that they don't want marijuana businesses in their towns, but some of those towns have said that they wanted to wait until the state came out with its rules before making a final determination.
Michigan was the 10th state in the nation to legalize recreational marijuana. Voters approved the ballot proposal — which allows for anyone 21 to use and possess pot, as well as grow up to 12 marijuana plants for personal use — by a 56%-44% margin in November.
The MRA was given one year to come up with the rules for the market and begin accepting applications. The agency got the rules done in about seven months and is expected to meet the deadline for accepting applications.
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