opinion

Battle is on for control of Michigan's marijuana market

Nearly eight years after Michigan voters overwhelmingly concluded that marijuana should be available to patients whose doctors prescribe it, state lawmakers are finally addressing some of the most egregious defects in Michigan's Medical Marihuana Act.

A package of bills that won lopsided approval in the state House of Representatives last week would establish a rational (if unnecessarily complicated) regulatory scheme for licensing growers, processors, retailers and even those who transport marijuana from one facility to another. The House-approved plan also imposes a 3% tax on retailers’ gross income and authorizes doctors to prescribe non-smokable forms of the drug that the Michigan Supreme Court says remain prohibited under the 2008 law.

But the new regulations, which are likely to come to a vote in the state Senate later this fall, are more than a belated fix for medical marijuana. They also reflects Lansing’s grudging acknowledgment that Michigan will soon join the growing list of states whose voters have decriminalized the recreational use of marijuana, and must start preparing now to manage the profound disruptions legalized pot will create here.

East Lansing lawyer Jeff Hank, who leads one of two organizations spearheading initiatives to put the legalization question before Michigan voters in November 2016, says even conservative Republicans recognize that marijuana is on the threshold of becoming a legitimate and lucrative industry.

“Now it’s just a matter of how, and who’s going to control the process,” Hank says.

What follows are answers to some of the most pressing questions confronting the state as it confronts legalization and referees the contest among those seeking a piece of Michigan’s pot pie.

Question. How can Michiganders whose doctors have prescribed medical marijuana get it now?

Answer: That depends, practically speaking, on where they live.

Under the 2008 law, licensed medical marijuana users can obtain limited amounts of the drug, in smokable form only, from a licensed caregiver, who may cultivate no more than 72 plants to supply no more than five other patients.

Unauthorized dispensaries serving a larger number of patients have cropped up, with the tacit consent of local authorities, in Detroit, Lansing, Ann Arbor and Jackson, among other cities. But entrepreneurs who’ve opened similar dispensaries elsewhere in the state have been shut down, and in some cases prosecuted, by law enforcement officials.

Q. Why didn’t the 2008 law allow medical marijuana patients to buy pot the same way they buy any other prescription drug?

A. The campaign to legalize medical marijuana in Michigan took place at a time when federal law enforcement authorities under then-President George W. Bush were still committed to enforcing federal laws that prohibit any use of the drug. Those who drafted the initiative Michigan voters adopted in 2008 sought to create a mom-and-pop distribution scheme whose decentralization and scale would make it difficult for federal authorities eager to strangle the medical marijuana industry in its infancy.

Q. How would the legislation adopted by the Michigan House make medical marijuana easier to get?

A. House Bill 4209 would create a mechanism for awarding three classes of growers’ licenses (permitting the cultivation of up to 500, 1,000, or 1,500 plants), as well as licenses to process, test, transport and sell marijuana. In addition to obtaining marijuana from their own caregiver, medical marijuana patients would be able to purchase their prescriptions from one of the larger “provisioning centers” licensed by the state.

Q. So someone could open a medical marijuana dispensary in my neighborhood even if I don’t live in Detroit or Lansing?

A. Not necessarily. Anyone seeking a state license to operate a dispensary would need written permission from the municipality in which the licensee hoped to do business. So cities and townships could still decide where within their own borders dispensaries were allowed to operate, or bar them altogether.

Q. How much money would the 3% tax on retailers’ gross income generate, and who would get it?

A. The House Fiscal Agency says it’s impossible to forecast how much the state would collect, or even “whether the market envisioned under the bill could bear the regulatory costs" associated with the new licensing scheme.

But anything left over would be split according to the following formula: 40% to the state general fund, 27.5% to counties in which any marijuana facility is located, 27.5% to municipalities in which any facility is located, and 5% to county sheriffs with one or more facilities in their jurisdiction. The distribution of funds to localities would be proportional to the number of facilities within their borders.

Q. How expensive could regulating medical marijuana be?

A. The state estimates that it would cost $726,000 to set up the seed-to-sale tracking system ordained by House Bill 4827, and a whopping $21.1 million a year to maintain it. Most of the expense would pay for the 151 people the Department of Licensing and Regulatory Affairs says would be required to administer the system, including 34 dedicated Michigan State Police employees and four dedicated members of the state Attorney General’s Office.

Q. That seems like a lot of bureaucrats for a Republican legislative majority dedicated to streamlining state government.

A. That’s a complaint echoed by medical marijuana advocates and some legislative critics, who wonder whether the House’s regulatory scheme serves the needs of would-be vendors more than those of patients and caregivers. Among other things, the House plan would require the state to assign unique ID numbers to “all plants, products, packages, patient and primary caregiver purchase totals, waste, transfers, conversions, sales and returns” for the purpose of “real-time tracking and analytics.”

Q. Is the 3% tax the only source of new revenue?

A. Nope. The state also would collect an annual fee from every licensee, and municipalities could charge each dispensary an additional fee of up to $1,000 a year. And the state and municipalities would split revenues from the 6% sales tax, which would apply to sales of medical marijuana (but not other prescription drugs).

Q. The state doesn’t collect sales tax on purchases of Valium and other prescription drugs. Why should prescription marijuana be treated differently?

A. Good question, and one to which medical marijuana users have received no reasonable answer. Mostly, the disparate tax treatment reflects the Republican legislative majority’s abiding suspicion that many medical marijuana prescriptions are unjustified.

Q. Why do some people think the House plan to regulate medical marijuana is actually a prototype for a broader regulatory scheme to regulate all marijuana sales, including purchases for recreational use if Michigan voters ultimately legalize them?

A. Because both the legislation’s sponsor, state Rep. Mike Callton, R-Nashville, and the leading champions of legalization have explicitly said so.

Callton insists he’s “not on board” with either of the organizations seeking to put marijuana legalization initiatives on the ballot next year. But he adds the regulatory scheme he and his House colleagues adopted last week could serve as “an umbrella” for nonmedical transactions if they’re ever decriminalized, and that he was impressed by how much tax revenues generated by Colorado’s legalization effort have shored up the Rocky Mountain state’s budget.

MI Legalize and the Michigan Cannabis Coalition, who are collecting signatures to put rival legalization initiatives on the ballot in 2016, say Callton’s package is a transparent attempt to preempt the simpler and less intrusive regulatory protocols they propose, even though the House plan ostensibly concerns only the prescription marijuana market.

A third potential player is the Michigan Responsibility Council, chaired by longtime Republican operative Paul Welday and bankrolled by a still-unidentified group of GOP donors. MRC hasn’t decided whether to field its own legalization initiative, but says it’s generally comfortable with the regulatory framework the House adopted for medical marijuana.

Tim Beck, an architect of the successful 2008 initiative who’s working with the MRC, says the “micromanaged system” adopted by the House would “prevent seepage” of tax revenues that could quickly reach hundreds of millions of dollars if Michigan voters legalize recreational sales in 2016 or 2018.

Q: So what happens next?

A. State Sen. Rick Jones, R-Grand Ledge, says his Senate Judiciary Committee could take up the House’s medical marijuana bills this month setting the stage for a vote by the full Senate before the end of 2016.

A previous version of the House reform package died in the Senate last year, but Jones and others have suggested the prospects for the package of bills Callton and his colleagues adopted last week are much brighter.

As in the House, any amendment to the medical marijuana law voters adopted in 2008 would require the support of two-thirds of Michigan’s 38 state senators to advance.

Q: Any chance the Legislature will move to decriminalize marijuana for all users?

A. Not now. But December is also the deadline for MI Legalize and the Michigan Cannabis Coalition to collect the signatures needed to put their respective initiatives on the ballot. If either group succeeds, or if the Michigan Responsibility Council decides to mount its own legalization campaign, legislators would face more pressure to field their own legalization plan.

Q. What are the prospects that neighboring states will beat Michigan to the punch?

A. Proposals to legalize marijuana could appear on the ballot in as many as a dozen states next year. But the first test will come in next-door Ohio, where voters cast ballots next month on an initiative that would authorize purchases for recreational use but establish strict limits on who could lawfully sell the product. A Quinnipiac University poll released Thursday showed the Ohio pro-legalization initiative winning by a 53%-44% margin.

None of Michigan’s other neighboring states have an initiative process that would allow voters to legalize marijuana over the objection of state legislators. But a victory for legalization in Ohio would likely fuel efforts to decriminalize the drug here.

Q. Besides establishing mechanisms to regulate sales and capture tax revenue, what does Michigan need to do to prepare for legal pot?

A. The list is long.

People on both sides of the legalization debate worry about policing drivers under the influence of a drug whose impairing effects are difficult to measure chemically. Current state law permits licensed medical marijuana patients to drive with any amount of active THC in their bloodstreams, while even a trace amount earns recreational users an automatic DUI charge.

Law enforcement officials broadly favor a universal chemical threshold, while clinicians tend to favor reliance on field sobriety tests that measure a driver’s capacity to perform prescribed tasks rather than his or her blood chemistry.

Critics of legalization also worry about limiting children’s access to marijuana if their parents and older siblings can obtain it without a prescription.

Of course, it has taken state lawmakers almost eight years to squarely confront the practical challenges posed by the advent of medical marijuana. Even nonusers will pay a heavy price if Lansing adopts a similarly passive posture toward the prospect of broad legalization.

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MARIJUANA MILESTONES IN MICHIGAN

November 2008: Voters approve Michigan Medical Marihuana Act by a 63%-37% margin

April 2009: Michigan begins issuing identity cards to patients and caregivers, but says it’s having trouble processing applications in the 20-day limit prescribed by law

May 2012: In a unanimous ruling, Michigan Supreme Court says state can’t prosecute medical marijuana patients arrested after they’ve obtained a doctor’s prescription

November 2012: Detroiters vote to decriminalize possession of small amounts of marijuana

January 2013: In a ruling that puts about 100 businesses at risk of criminal prosecution, the state Supreme Court rules that the MMMA doesn’t authorize dispensaries to provide medical marijuana to registered patients or caregivers

February 2013: A bipartisan group of state legislators led by Rep. Mike Callton introduces a bill to legalize and regulate medical marijuana dispensaries

February 2014: In a ruling that overturns local ordinances in cities including Livonia, Birmingham and Bloomfield Hills, state Supreme Court rules that Michigan municipalities may not ban the use of medical marijuana within their boundaries.

September 2013: Michigan Court of Appeals rules that MMMA doesn’t authorize medical marijuana patients to use non-smokable forms of marijuana

November 2014: Voters in Saginaw and five other cities approve measures legalizing the possession of small amounts of marijuana, bringing to more than a dozen the number of municipalities that have moved to decriminalize possession or de-emphasize enforcement efforts

December 2014: After years of debate, Michigan House adopts legislation authorizing the licensure of medical marijuana dispensaries, but the bills fail to reach a vote in the state Senate.

July 2015: In their ninth medical marijuana ruling since the MMMA’s adoption, state Supreme Court justices complain that “the many inconsistencies in the law have caused confusion for medical marijuana caregivers and patients, law enforcement, attorneys, and judges, and have consumed valuable public and private resources.”

Fall 2015: The Michigan Cannabis Coalition and MI Legalize announce campaigns to put legalization on Michigan’s 2016 ballot. The House again passes legislation authorizing medical marijuana dispensaries and allowing doctors to prescribe non-smokable forms of the drug.