With medical marijuana applications looming, Michigan releases rules for cannabis business

With applications for medical marijuana licenses becoming available in less than two weeks, the state finally released the rules Monday that will govern the newest industry in the state.

Everything from how much medical marijuana a registered patient can buy to how and whether a cannabis business can advertise is covered under the 33 pages of rules from the state Department of Licensing and Regulatory Affairs.

The department has been issuing individual rules since September, but the all-encompassing set of guidelines applying to marijuana business license holders were released a couple of weeks later than anticipated. The state had hoped to released the rules, which are greatly anticipated by people who hope to get a license, before Thanksgiving.

Andrew Brisbo, the director of the Bureau of Medical Marijuana Licensing, said there wasn't anything big or different in the final set of rules.

"I think there’s just a lot more of fleshing out of the details," he said. "There is a lot more procedural details that we included today."

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Some of the rules that have been released since September include capitalization requirements for medical marijuana businesses. They range from $150,000 for the smallest category of grower, which is up to 500 plants; to $300,000 for a dispensary; to $500,000 for the largest category of grower, which is 1,500 plants.

Other rules include allowing dispensaries that are operating with permission from their communities to continue to operate while they're waiting to get a license, and allowing the large growers to "stack" licenses and have as many of the large growing licenses concentrated at one facility as they want and can afford.

Among some of the new items:

All applicants for one of the five categories of licenses — even those with as little as a 1% interest in a marijuana business — will have to be revealed and undergo a thorough background check. The categories are growers, processors, testing facilities, secure transporters and dispensaries.

Any advertising of marijuana products, including billboards, that is visible from the sidewalk, street, park or other public place is prohibited.

A registered patient can buy up 2½ ounces of medical marijuana a day from a dispensary.

A person can do a pre-application for a license and go through background check before getting approval from a municipality or identifying a location for their business. The person won't get a license, though, until those items are supplied.

Each business will have to carry insurance policies with proof of $100,000 in coverage for bodily injury and $100,000 for liability coverage.

A current licensed caregiver — there are 42,359 in the state serving 264,932 patients — can use his or her inventory of up to 72 plants as proof of assets that are required in order to get a license. A marijuana plant can yield anywhere from 3 ounces to a pound depending on the method of growing, and the retail price is roughly $200 to $300 per ounce. So a person with 72 plants that produce 8 ounces each could report assets of $144,000.

People who receive licenses must report any theft or criminal activity at their facility or an adverse reaction to the marijuana within 24 hours of any incident. "We want to make sure we’re made aware of that quickly so we can take quick action," Brisbo said.

Impose civil fines of $5,000 a day for an individual or $10,000 a day, or the amount equal to a day's receipts, whichever is greater, for violations of the act.

Mobile or drive-through medical marijuana operations are prohibited.

A marijuana business must have surveillance cameras at the entrances and exits to all their buildings, both indoors and outdoors.

Marijuana-infused products such as brownies, gummies or oils must comply with guidelines for levels of THC (tetrahydrocannabinol, which is the chemical compound in cannabis responsible for a marijuana high) in the product and package it in such a way that it would not be seen as being marketed to minors under the age of 18. The potency guidelines are 6% maximum concentration of THC for topical applications like lotions or balms; 1,000 mg for tinctures, which are an extract in an alcohol solution, and capsules, suppositories or transdermal patches, and 500 mg for beverages or edible substances.

If an applicant is denied a license, he or she has 21 days to request a hearing on the matter.

The applications will become available from the state on Dec. 15 and the Michigan Medical Marijuana Licensing Board is expected to begin awarding licenses during the first quarter of 2018. The business is expected to explode into an industry with an estimated $711 million in sales and $21 million in tax revenues for the state.

The Coalition to Regulate Marijuana like Alcohol also has turned in more than 365,000 petition signatures to the Secretary of State in an effort to get full legalization of marijuana for adult recreational use on the ballot for November 2018. If that passes, Michigan would become the second largest state behind California to legalize marijuana and sales are expected to exceed $1 billion a year.

Contact Kathleen Gray: 313-223-4430, kgray99@freepress.com or on Twitter @michpoligal.