Michigan awards first marijuana licenses, paving way for Dec. 1 sales

Kathleen Gray | Detroit Free Press

Show Caption Hide Caption State awards first marijuana business licenses The first five licenses pave the way for marijuana sales to begin on Dec. 1 although availability will be scarce at first.

The state's Marijuana Regulatory Agency delivered the first five recreational marijuana licenses Tuesday, paving the way for sales of legal weed to anyone 21 or older.

Licenses went to Exclusive Brands in Ann Arbor, which has a grow operation, a processing facility and a medical marijuana dispensary. Another went to PSI Labs, a marijuana testing lab in Ann Arbor, and the fifth went to Real Leaf Solutions, an event organizer from Kalkaska.

Exclusive Brands owner Omar Hishmeh said he'll be ready for the long lines expected on Dec. 1, the first day the state will allow sales of recreational marijuana.

"It feels great to be the first to get a license," he said. "Our waiting list is already a few pages. ... People can expect a long line."

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Benjamin Rosman, CEO of PSI Labs, said the company has been testing products for patients and caregivers since May 2015.

"We were one of the first two testing labs to get a medical license and now we're really excited to be the first testing lab to get a license under adult use," Rosman said, noting the lab is going from 25 to 27 employees to help with an expected uptick in products that are coming in for testing.

The state expects to have a dozen or so licenses issued by Dec. 1, but availability of product will be sparse at first. Marijuana growers and processors can transfer 50% of their inventory from the medical to the recreational side of the business beginning Dec. 1. Medical dispensaries can transfer 50% of their inventory to the recreational side, but only products that have been on their shelves for at least 30 days.

Even though it will be a slow rollout in Michigan for people looking to buy pot, Andrew Brisbo, the executive director of the Michigan Marijuana Regulatory Agency said the market is getting started earlier than expected. Under the ballot proposal that voters passed in November 2018, the state didn't have to get the rules written for the industry until Dec. 6 of this year. Instead the rules were written by early July and the state began accepting applications on Nov. 1.

More: Sales of recreational marijuana could begin as soon as Dec. 1 in Michigan

"This is a historic moment here in Michigan to issue these first adult use licenses," Brisbo said.

The moment almost didn't happen. The state had indicated in October that it wasn't sure whether it would allow any such transfers for fear of feeding the recreational market at the expense of the medical side.

There has been a persistent shortage of marijuana flower, the best-seller for medical marijuana dispensaries, and there isn't expected to be an abundance of that product for the recreational market in the beginning.

"There's been a lot of hard work that's gone into this to ensure that we rolled out this program as efficiently as possible," Brisbo said. "We're excited to allow this process to move forward and move this industry into the regulated space where individuals can have safer access to these products."

One of the newest license holders, event organizer Tom Beller, accepted his license over FaceTime from a hospital bed in Traverse City, where he was recovering from emergency appendectomy surgery.

"I'm honored to have this license and excited to bring cannabis from a private type of use to public events and it seems like the sky is the limit," he said.

Beller, who also has a medical marijuana grow license, said he plans to be involved in everything from private events to big public events such as art and music festivals.

The state had pre-qualified 48 applicants by mid-November.

The businesses that got licenses on Tuesday have already been operating medical marijuana operations and have already gone through extensive background checks and had their facilities inspected by state and fire officials.

But just because a medical business gets a license for recreational marijuana doesn't mean that it will be be able to go into business automatically. Nearly 1,400 of Michigan's 1,771 communities across the state have decided not to allow marijuana businesses in their towns.

More: Sales of recreational marijuana could begin as soon as Dec. 1 in Michigan

More: Voters in 7 Michigan cities opt to keep marijuana businesses out

And the communities that have said yes — the state has received ordinances from 22 communities — may not be ready for marijuana businesses to open for awhile.

Ferndale, for example, has said it will allow several categories of marijuana licenses in the Oakland County city, but those potential businesses have until March to submit applications. Likewise, the Detroit City Council voted to not approve marijuana businesses in town until at least Jan. 31, after it has finished crafting the marijuana ordinances that will govern the businesses.

Those decisions will give a competitive advantage to towns that have embraced marijuana, such as Ann Arbor. The city has 12 licensed medical marijuana dispensaries, according to state records, that will automatically be approved for one of the 28 recreational marijuana permits in the city.

The decision to allow legal weed sales to begin as soon as Dec. 1 has advocates for medical marijuana concerned that patients will suffer from an onslaught of expected recreational users.

"We are opposed to the state’s decision to allow for the transfer from the medical to the recreational market," said Robin Schneider, executive director of the Michigan Cannabis Industry Association. "Patients have had to struggle with supply issues in the medical program and it’s unfair to take that medicine while they’re still waiting for supplies."

But Narmin Jarrous, the executive vice president of business development for Exclusive Brands, said the medical side of the business will take precedence in their retail shop.

"The state's goal is to make sure that the rec market doesn't starve the medical market," she said. "That's a big goal for us to make sure that both sides have sufficient resources. The health of our patients is our No. 1 priority. We think we're well prepared."

State officials said their approach leaves product for both the medical and recreational market and will help put a crimp in the illegal black market that has been thriving since 2018, when voters legalized marijuana use, possession and growing for anyone at least 21.

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