Some medical cannabis dispensaries in Michigan will have to close and some will get to stay in business until December. This is pursuant to Michigan’s new emergency rules, which extend the deadline for dispensaries to receive permanent licenses.
According to the new regulations, 108 medical cannabis dispensaries that are currently operating will get to stay open until December 15 while they are waiting for their license applications to be considered by the Medical Marijuana Licensing Board. These are the dispensaries that were able to:
- submit their initial applications by the initial February 15 deadline
- obtain approval from the local community where they are operating
- comply with the second step of the application process by June 15
This December 15 deadline is an extension of the previous one set for Sept. 15.
Over the past year, the deadlines for existing cannabis businesses to apply and receive their licenses have already been extended several times. In December 2017, the state gave them until February 15 to submit their initial applications and until June 15 to receive their license. However, this June deadline has been extended twice already — at least for some of the applicants.
Cease and desist order
Meanwhile, there are 98 dispensaries that were able to submit initial applications by February 15 but were not able to meet the June 15 deadline for the second step of the application. These dispensaries will be given a cease and desist orders next week and will be obligated to close shop.
If they continue to do business, the owners of these dispensaries face the risk of not being able to get a license at all.
Just this March, the state already sent cease and desist letters to over 200 operating dispensaries that were not able to submit license applications.
$48k assessment fee
Another emergency rule requires cannabis businesses whose license applications have been approved to pay a regulatory assessment fee of $48,000 within 10 days. Businesses that fail to pay will be forced to stop their operations until they come up with the amount.
Currently, there are 38 cannabis businesses that have been approved for licenses. However, only 10 of them have paid their regulatory assessment dues.
The regulatory assessment fee covers the cost of administering and enforcing the medical cannabis market. The $48,000 fee will increase to $66,000 on Oct. 1. The costs are spread over the Departments of Licensing and Regulatory Affairs, Michigan State Police, the Treasury, Attorney General, and Health and Human Services.
Transitioning to a regulated cannabis industry
Michigan’s strict license application process is intended to separate the cannabis dispensary owners who are serious about obtaining a license from those who just want to cash in on the legal cannabis market and to operate with minimum government oversight.
The state’s guidelines come as it transitions from the old medical cannabis market that was born after voters legalized the drug for medical use in 2008 to a regulated and taxed industry. This old market had the caregiver model, where caregivers could grow up to 12 cannabis plants for five patients and for themselves. Under this model, there was little to no state oversight.
On the other hand, the new regulated market is composed of business owners and has five classes of licenses for dispensaries, processors, growers, testing facilities, and transporters. Once they have obtained their license, the owners have to pay regulatory assessment, pay city fees, pay a 3% tax on the dispensary’s gross receipts, pay the 6% sales tax, and get their cannabis products tested under the stringent state guidelines.
Cannabis in Michigan
Voters approved legalizing medical cannabis in Michigan in 2008 and will vote on recreational cannabis legalization on Nov. 6.
Since Dec. 15, the state received 702 license applications, including 401 applicants that have submitted full applications. However, the review of these applications and the granting of licenses have been tedious and slow.