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

Kathleen Gray | Detroit Free Press

Show Caption Hide Caption Marijuana edibles in Michigan Companies are ramping up production of marijuana-infused edibles to fuel both the medical marijuana market and the upcoming recreational pot business.

LANSING – Sales of recreational marijuana to anyone over the age of 21 could begin on Dec. 1, months earlier than previously expected.

The change came when the Marijuana Regulatory Agency on Wednesday told medical marijuana businesses, including growers and processors, that they can transfer 50% of their inventory to the recreational market beginning on Dec. 1 as long as they've received a recreational license from the state.

To ensure that medical marijuana patients continue to have an adequate supply of product, dispensaries will be able to transfer only 50% of the inventory that has been sitting on their shelves for at least 30 days to the recreational side of the business.

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That means that marijuana flower, which is the best-selling product at dispensaries and has been in limited supply for months, may not be available when a recreational marijuana retailer begins sales. Products that could be readily available include marijuana-infused edibles and lotions, vapes and other forms of marijuana concentrates.

The availability of recreational marijuana won’t be widespread and the inventory might be limited, said Andrew Brisbo, director of the agency.

“I can’t image that we’ll have more than a dozen or so” retailers licensed by Dec. 1, he said. “As we’ve seen in the medical market, it’s a slow build-out as inventory and production of plants and products increases. We want to provide an environment where businesses can supply the market as quickly as possible.”

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

More: Michigan gets its first applications for recreational marijuana businesses

Omar Hishmeh, CEO of Exclusive Brands, which has a grow operation, processing plant and retail store in Ann Arbor, said he has a long list of customers waiting for the call that recreational marijuana is for sale.

"We’re stoked and we’ve gotten so many phone calls from people," he said.

Exclusive Brands was the first business to file an application for a recreational license and has been pre-qualified by the state. Hishmeh said he also wants to log the first sale of recreational marijuana.

Rush Hasan, one of the operators of the Reef dispensary in Detroit, said he feels at a distinct disadvantage with the Dec. 1 start of recreational marijuana sales. The Detroit City Council voted unanimously last week to opt out of the recreational business until Jan. 31 in order to give city attorneys more time to draft a recreational marijuana ordinance.

That means that no dispensaries in Detroit will be able to start selling recreational marijuana until at least February.

"We want to be aligned for our medical marijuana patients. We don’t have enough product on our shelves for them," he said. "I really see this benefiting the bigger growers, who have been setting aside products for their own dispensaries. This doesn’t help dispensaries that aren’t vertically integrated."

Vertically integrated businesses generally start out as large grow operations that then feed into processing facilities and, ultimately, their own retail stores.

For Derek Norman, co-owner of Humblebee Products, which has a dispensary and processing facility in the northern Michigan town of Frederic, the Dec. 1 date doesn't mean much.

"We're still having problems sourcing products," he said. "I know a lot of the big growers, and first and foremost, they have to supply their own stores. I think it’s going to be slow going."

Another concern is a backlog of getting products tested at the state's six licensed testing facilities.

"Some of them are backed up for a month," Norman said. "We can have product ready on Dec. 1, but we've got to get it tested, too."

The state began accepting applications on Nov. 1 for recreational licenses. And because most of the initial licenses will go to people who already have medical marijuana licenses and have gone through financial and criminal background checks, the recreational licenses should be awarded quickly, Brisbo said, perhaps by Thanksgiving.

Currently, 41 medical marijuana businesses have been pre-qualified to get a recreational license and the state is doing final inspections on their facilities now.

The action comes as the MRA is trying to put a crimp in black market sales of unregulated and untested marijuana.

“There’s definitely demand in both (the medical and recreational) markets and we want to provide a mechanism for businesses to provide products where the demand exists,” Brisbo said, and at the same time limit the appeal of black market marijuana.

Previously, Brisbo had said that there was a possibility that no marijuana could be transferred from the medical to the recreational side and that marijuana might not be available until the first harvest of the recreational weed crop. That would have delayed the start of recreational sales until March or April.

"But we continued to look at how the supplies were looking and what was the best way to gain access to the adult-use market," he said. "We'll see businesses making decisions to move products where the demand exists. And it's the non-flower products that they have in abundance."

Complicating the advent of the recreational market is the small number of communities that have actually said they'll welcome legal weed businesses into their towns.

According to the MRA, only 22 communities have adopted ordinances to allow in recreational marijuana businesses, while 1,393 municipalities have said no to pot businesses. Of the 22, only one is in Wayne County — in Westland — and one is in Oakland County — in Orion Township, which isn't allowing any retail stores. Other metro Detroit communities, including Ferndale, Hazel Park, Walled Lake, Madison Heights, Warren, River Rouge and Inkster, are expected to allow recreational businesses in their towns.

The recreational marijuana market, which became possible after voters approved legalizing the use, possession, growth and sale of marijuana in November 2018 by a 56% to 44% margin, is expected to eventually become a billion-dollar enterprise in Michigan.

Medical marijuana sales have exceeded $229 million in the past year. Those numbers are expected to skyrocket to near $1 billion once legal sales of marijuana for adult recreational use begin.

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