Medical Marihuana Update

Michigan municipalities are now authorized to expressly permit various medical marihuana facilities under legislation recently enacted by the legislature and signed into law by the Governor. The legislature adopted a package of three bills that provide for State licensing of medical marihuana facilities, permit the use of “non-smokable” forms of marihuana often referred to as “medibles” or “edibles,” and establish an Internet-based state-wide tracking system to monitor medical marihuana cultivation and sale. The legislation was deemed necessary as a means to clarify whether medical marihuana dispensaries were legally permitted in Michigan following the adoption of the voter-initiated Michigan Medical Marihuana Act (“MMMA”) in 2008 and subsequent Michigan legal decisions determining that dispensaries were not permitted under MMMA.

The MMMA provides immunity from prosecution to qualified patients and registered caregivers identified with those patients who use marihuana for specified medical conditions. Subsequent court opinions interpreting the MMMA clarified that only those persons who were qualified patients and caregivers could exchange or use medical marihuana. Third parties, including persons who produce, provide or sell marihuana to the qualified patients and caregivers, do not enjoy the protection from prosecution conferred by the MMMA.

The enactment of Public Act 281 of 2016, the “Medical Marihuana Facilities Licensing Act,” attempts to remedy this by creating a mechanism to provide State licenses for the following five types of “medical marihuana facilities:”

1. Grower – a commercial entity that cultivates, dries, trims or cures and packages marihuana for sale to a processor or provisioning center.
2. Processor – a commercial entity that purchases marihuana from a grower and then extracts resin from the marihuana or creates a marihuana-infused product for sale in packaged form to a provisioning center.
3. Provisioning Center – a commercial entity that purchases marihuana from a grower or processor and then sells or otherwise provides marihuana to only registered qualifying patients and/or caregivers.
4. Secure Transporter – a commercial entity that stores marihuana and transports marihuana between facilities for a fee, such as between a grower and a processor, between a processor and a provisioning center, or between a grower or provisioning center and a safety compliance facility.
5. Safety Compliance Center – a commercial entity that receives marihuana from one of the above types of facilities or from a registered patient or caregiver, and tests the marihuana for contaminates and for the operative substances in the marihuana and then returns the test results and the marihuana to the facility/patient/caregiver that provided it.

These five types of marihuana facilities generally are treated as separate from one another. Thus, a grower cannot be a secure transporter or a safety compliance facility; only a secure transporter may transport and deliver marihuana from a grower to a provisioning center; a safety compliance facility cannot have any interest in a grower, secure transporter, provisioning center or processor. Therefore, if a community wishes to make all the steps in the process from grower to user possible, it may wish to consider authorizing all of the licensed types of facilities.

Under the new Act, however, none of these facilities can be established or operated without a State license, and significantly, no license will be issued unless the local municipality in which the facility is to be located has authorized such facilities by ordinance. Accordingly, local governments across Michigan will, in fact, determine where and to what extent these marihuana activities will take place.

The adoption of Act 281 does not legalize marihuana or marihuana dispensaries under the MMMA. If a municipality does not want to permit any of the facilities listed above, it should simply do nothing. All such facilities remain illegal unless and until a municipality adopts an ordinance authorizing them. Moreover, all licensed marihuana facilities that are authorized are subject to inspection by local law enforcement agencies at any time.

For a municipality that does desire to permit one or more of the licensed facilities, two ordinances would be required, a general regulatory ordinance and an ordinance amending the zoning ordinance. The general regulatory ordinance, among other things, would authorize one or more of the five types of licensed facilities, indicate the maximum number of each type of facility the municipality will be permitted, and require proof of State licensing. The amendment to the zoning ordinance would specify the zone or zones which would permit the types of marihuana facilities that were authorized in the regulatory ordinance and indicate the type of approval required as well as any specified procedures.

Under Act 281, an ordinance may also establish an annual fee of up to $5,000 to be paid by each licensee to help defray the cost of administration and enforcement. The local license fee is in addition to other fees and taxes that must be paid to the State by a licensed marihuana facility, including a 3% tax on retail gross income of marihuana facilities payable to the State.

Regardless of how a municipality decides to permit or license a marihuana facility, Act 281 states that any “information a municipality obtains from an applicant related to licensure. . . is exempt from disclosure under the Freedom of Information Act.” Thus, for example, a local application form containing “information” that is related to an applicant’s “licensure” may be exempt under FOIA, together with supporting materials and the like.

Pursuant to Act 281, an applicant can apply for any of the above-mentioned State marihuana licenses to the newly created five-person medical marihuana licensing board beginning on December 15, 2017, but not before. As mentioned above, however, no one can apply to the State for a license of any kind under the Act unless the municipality has already adopted an ordinance that authorizes that type of facility. Moreover, the licensing board may suspend, revoke or restrict any license, as a result of failure of compliance with any of the Acts or rules and impose fines of up to $10,000 for each violation. Each license is valid for one year and must be renewed.

Contact us if you have questions about how this new legislation will affect your municipality.