Last month, Michigan closed 40 unlicensed dispensaries and promised to shut a hundred more. Since then, the Michigan Department of Licensing and Regulatory Affairs has sent out hundreds of cease and desist letters to unlicensed medical marijuana operations. Now, over 200 Michigan medical marijuana dispensaries forced to close are no longer in the running for official licensing. Here’s a closer look at Michigan’s medical marijuana program, and the Great Lakes State’s many off-the-books businesses.

Dispensaries Are Closing Across Michigan. Here’s Why.

Michigan legalized medical marijuana in 2008. Only when a Republican majority took over the state legislature in 2016 did they implement thorough laws for regulation, taxation and licensing. By these new legal standards, many of Michigan’s operational marijuana dispensaries are illegal.

Per these new regulations, marijuana dispensaries require state-issued business licenses. As this process can be difficult and expensive, the State offered medical marijuana businesses a grace period lasting until February 15th.

David Harns, Public Information Officer for the Michigan Department of Licensing and Regulatory Affairs, explained to High Times, “In Michigan, there were facilities that were operating before the law was passed and before the implementation started […]. So an emergency rule was written that allowed temporary operation with local authorization.”

With a city clerk’s signature, guaranteeing that a dispensary is abiding by local laws, some businesses remain open. In these cases, “it was not going to be considered an impediment to your licensure if you stayed open,” said Harns.

Many of the dispensaries catering to Michigan’s 277,000 medical marijuana card holders did submit their application by the deadline with local approval. Others, however, did not but remained open. The state is now shutting down these businesses, just as we’ve seen in California.

These dispensaries that are not in compliance with new regulations will, potentially, never qualify for another license. They could even face federal prosecution.

40 Michigan Dispensaries Already Closed In March

“Last month we delivered cease and desist letters to facilities that had not applied for state licensure and were not operating with local approval,” said Mr. Harns.

The first wave of closures occurred early last month with 40 dispensary closures. Upon delivering these letters, law enforcement did not, however, seize any of the dispensaries’ supply.

The Second Wave of Marijuana Dispensary Was Far-Reaching

Over 200 Michigan medical marijuana dispensaries forced to close also received cease and desist letters. Out of these 213 businesses, 150 were in Detroit, 8 were in Flint and 8 were in Lansing, Michigan. The others dispensaries that did not apply for licenses were located in less populated areas.

As the state considers submitted business license applications, dispensaries that met the February 15th deadline are staying open, for now. Though businesses with local approval can operate without hurting their chances at a license, they haven’t received official paperwork.

Both new and existing businesses are in the running for business licenses. And since most places are setting caps for how many dispensaries can open, competition can be steep.

No one is getting licensing priority at the Michigan Department of Licensing and Regulatory Affairs. “We’re just going in the order that the application was received, and the order that folks are getting back to us, letting them know if they have deficiencies in their applications,” Harns said.

In the upcoming months, Michigan will send out licenses. These decisions will have huge consequences for medical marijuana entrepreneurs and patients across the state.