THE NEW GILDED AGE (Part 2)
THE NEW GILDED AGE (Part 2)
Republican-dominated legislature launches historic “tax & regulate” dispensary system
22nd September, 2016 1
Michigan lawmakers have overwhelmingly passed omnibus legislation to formally license, tax, and regulate the commercial sale, cultivation, processing, transportation, and testing of medical marijuana. One Republican Senator went so far as to say these new laws are part of a plan to legalize marijuana altogether. “Make no mistake that the end game of this legislation,” said Senator Patrick Colbeck, R-Canton), “is eventually the full legalization of marijuana in our state."
Voters enacted the Michigan Medical Marijuana Act in a landslide 2008 election. The so-called MMMA legitimized the use of cannabis as medicine, but did not establish a commercial distribution system. Instead, the MMMA created a registry ID system where qualified patients with a doctor’s approval could grow their own marijuana or obtain it from their own non-commercial caregiver. Caregivers grow and provide marijuana to up to 5 specified patients each. More than 200,000 Michiganders have signed up for medical marijuana cards, and there are almost 40,000 official caregivers.
In the intervening years since the 2008 initiative legislation was approved by Michigan voters, marijuana has been more or less mainstream in Michigan. Despite the lack of legal authority to sell retail cannabis to the general public, marijuana “dispensaries” and “compassion clubs” sprang up all over Michigan. These dispensaries operate in a grey area, treated much like the “speakeasy” of the alcohol prohibition era, which were often tolerated and sometimes even patronized by law enforcement persons. In the end days of prohibition, most alcohol users carried notes from a doctor, and they openly obtained alcohol from illegal bootleggers. Eight years after passage of the MMMA most pot dispensaries in Michigan have proved to be a risky proposition for serious business owners; many have now been shuttered, their owners arrested and assets seized for selling marijuana outside the strict non-commercial limits of the MMMA.
The newly amended Medical Marijuana law promises to bring cannabis stores out of the closet and into the mainstream of legitimate commerce within the next year or so. In broad strokes, the new laws provide that:
• Pot stores will be taxed and regulated much like alcohol is today under the familiar rules of the Michigan Liquor Control Commission. A new 3% state tax will be paid on Marijuana sales on top of the fees.
• A financial incentive system will encourage the adoption of marijuana dispensary ordinances by local governments; the new tax revenues will be split between municipalities and counties that allow dispensaries. The state will get 30%, 30% goes to counties with marijuana facilities; 25% goes to cities or townships with facilities; 5% goes to the Michigan State Police; 5% goes to county sheriffs; and 5% to a law enforcement standards commission.
• Local governments will play a major role in whether, and how many, dispensaries will be allowed in an area. No cannabis license can be granted to a business unless a municipality has a local ordinance allowing it. Naturally, fees and taxes have been introduced into the new system. Local governments will provide initial approval for license applications and may charge application fees up to $5,000. The state will also charge license fees and annual renewal fees.
• As with alcohol, cannabis businesses will be regulated under a so-called “tiered system” where the various marijuana businesses are separated and each player is restricted to a single aspect of it. For example, sellers can’t be commercial growers, and growers cannot own dispensaries, testing facilities, or transport companies.
• Cannabis-infused products (medibles) will be specifically allowed under the new laws, subject to labeling and testing regulation, so “patients” will be able to obtain retail cannabis tinctures, drinks, brownies, pills, and hash oils.
• Cannabis products will all be subject to safety testing, transport restrictions. and a seed-to-sale tracking system.
The new laws are intended to make the marijuana business viable and reliable for responsible business owners, who have heretofore faced the prospect of business interruption due to arrest, seizure, and forfeiture of business assets. Expect to see these marijuana businesses pop up all over Michigan starting in 2018. In the meantime, local governments will be developing local ordinances for cannabis businesses, and another state bureaucracy will be put in place to regulate the new industry.
It is becoming obvious that full legalization of cannabis for recreational purposes will follow soon after the kinks are worked out of the new retail cannabis distribution system. Clearly government and private concerns are preparing the groundwork for a lucrative and heavily-regulated cannabis trade, in which big brother and big business can supplant bootleggers and profit handsomely at the expense of consumers, in much the same way as the state liquor control system did after alcohol prohibition ended.
Some fear this result, while others simply want to end marijuana prohibition and could care less who gets rich off it. Careful what you wish for too; new laws and policing techniques are being developed to catch people who drive under the influence of marijuana, so cannabis users are cautioned not to drive after using marijuana.
Qualified patients will still maintain the legal right to grow their own marijuana under the new regulatory system, without paying the new taxes. Each patient can grow 12 plants, and possess up to 2.5 ounces (70 grams) of dried usable cannabis. Non-commercial caregivers can still provide patients with marijuana under the current restriction of 5 patients for each single caregiver, but these caregivers will have to obey some labeling requirements when they transport quantities of infused cannabis products. A caregiver who grows for herself and provides cannabis for 5 other patients can now grow up to 72 plants and possess up to 15 ounces (420 grams) of cannabis. This non-commercial distribution system established under the original MMMA will continue despite the new regulations.
Further, the MMMA currently provides an affirmative defense to those patients and caregivers who choose not to participate in the formal Medical marijuana registry ID system. So long a person has a statement from their doctor attesting to a serious medical condition for which marijuana could provide therapeutic or palliative relief, that person can grow and possess reasonable amounts of marijuana for their own medical use despite their choice not to participate in the state registration system. This affirmative defense will remain in place under the new regulatory scheme, and will operate much like non-commercial "home brew" laws for beer enthusiasts.
To read a complete fiscal analysis of these changes from the Legislative Drafting Bureau please visit http://www.legislature.mi.gov/documents/2015-2016/billanalysis/House/pdf/2015-HLA-4209-7B3E6E68.pdf
This following link will take you to a new practical guide to the new legislation that you can download. https://drive.google.com/file/d/0B_aIk-TUh8sEWHY0N0hWMHVkaU0/view
Author Greg Schmid is a Saginaw attorney who has advocated for reformed marijuana laws for three decades. He can be reached at (989) 799-4641.
Editor’s Note: Jamie Lowell, Board member of MILegalize and co-founder of 3rd Coast Dispensary in Ypsilanti takes a differing view and says there is ‘little in these bills to celebrate’. What follows is his assessment of the new measures:
“These bills represent an unworkable mess that will result in very little recognized commerce because the ensuing costs and quality will not compete with the soon to be thriving illegal markets. These bills demonstrate no real recognition of the nature of cannabis and how it generally works to produce and distribute. Cannabis is erroneously being compared to alcohol then assigned to a system even more ludicrous than the alcohol three tiered model,” he asserts.
“The law makers and big money interest have been gunning to eliminate home grows and gain control of the market since the passage of the MMMA. This is just a step in that direction. There are so many restrictions being implemented under the guise and unsubstantiated concern for public health and safety – the ruse being developed is obvious. A major red flag, for those politically astute, is the mere fact that this particular law making body actually passed the bills in the first place. Who believes that this was done for the purposes of helping patients and caregivers?”
“A summary of some of the major issues include: caregivers are cut out of commerce, medicine is taxed, there are several layers of unnecessary and costly components including an expensive transportation and a costly unnecessary tracking system that will add significant cost for the end patient user. Look out for subsequent amendments further alienating home cultivation and caregivers, increasing plant counts for large commercial gardens and a sharp increase in police action against cannabis users.”
“Under language included in 4209, a diverse board of seventeen members must be empaneled to make rules - that are still unknown - and a five-member panel appointed by the governor will process state applicants after they have already been approved through a local process. The panel will be exempt from normal administrative rules per SB1014 and not be held accountable for shenanigans or public concerns. Emergency rule making powers are included, as well, and how or when that those special powers get used – is still unknown.”
“Nothing in any of the bills alleviates incentive for police involvement. In fact, government is further expanded under this plan and money from the MMM Program will be appropriated to facilitate the funding and inclusion of more police officers, more lawyers in the AG office and a hoard of inspectors.”
“What has already been working fine for seven plus years was just completely ignored by the lawmakers and those in support of this new excessively restrictive approach. No representation or input of patients and caregivers appear to have been considered.”
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THE NEW GILDED AGE (Part 2)