Michigan Issues Emergency Recreational Marijuana Rules

The state agency charged with overseeing legal cannabis sales in Michigan issued emergency rules in early July designed to bring much-needed clarity to Michigan business owners and local governments ahead of the rapidly approaching launch of the state’s recreational marijuana marketplace.

Effective for six months, the new regulations issued on July 3, 2019, are designed to facilitate the implementation of the Michigan Regulation and Taxation of Marihuana Act (MRTMA). The rules establish license types and application processes for those seeking to participate in retail pot sales and give municipalities guidance as to banning adult-use cannabis sales in their communities before the state’s Marijuana Regulatory Agency (MRA) begins taking business license applications on November 1, 2019.

Much of the adult-use regulatory framework mirrors that established for the state’s medical marijuana program, though there are important distinctions, most notably regarding money and the capital required for obtaining a license. Here is a high-level look at Michigan’s new adult-use cannabis rules.

No Capitalization Requirement.

To advance racial and economic diversity among recreational market participants, the rules eliminate the hefty capitalization requirements ($200,000-$500,000 in assets) that apply to medical marijuana businesses. Additionally, application and license fees are significantly lower than for medical marijuana licensees.

Multiple Marijuana License Types.

The rules establish multiple tiers of licenses for industry participants as well as strict rules regarding how cannabis products may be transferred between different types of licensees. In addition to licenses for growers, processors, transporters, retailers, and microbusinesses, the new rules provide for temporary or special-event licenses that allow onsite sale or consumption of marijuana at a specific location for a limited time. A “Designated Consumption Establishment” licensee can operate a commercial space where adults 21 years of age and older can consume marijuana and cannabis products on-premises.

Application Process.

Only Michigan residents currently licensed under the state’s preexisting medical marijuana laws may apply for an adult-use license on November 1st under the rules. On December 6, 2021, the application process will open up to everyone. That process involves two steps. The first step is pre-qualification, in which applicants are told whether they have state approval, so they make investment decisions sooner. License application is the second step, in which the applicant indicates which type of adult-use marijuana license they are seeking.

The emergency rules span 64 pages and include a plethora of other requirements, limitations, and parameters for Michigan’s nascent recreational marijuana industry and market. Those interested in participating in that market need to be prepared to address a wide range of issues and provide significant documentation to support their applications. Any mistake, however small, could harsh the chances of obtaining a license and risk the loss of a substantial investment of time and money.

Kreis Enderle: Michigan Cannabis Industry Attorneys

At Kreis Enderle, we help participants and those wishing to become part of Michigan’s cannabis industry move forward with their businesses with confidence and clarity. Our cannabis lawyers understand the challenges and complexities of this new and lucrative market, and can shepherd you through every aspect of application, licensing, operations, and compliance.

Please contact one of Kreis Enderle’s marijuana law attorneys at (800) 535-4939 to arrange for a consultation.

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