Administrative & Regulatory

Five Stories that Matter in Michigan This Week – October 21, 2022

IRS Establishes New Income Tax Brackets for 2023

The IRS this week announced higher federal income tax brackets and standard deductions for 2023, which will apply to tax year 2023 for returns filed in 2024. The standard deduction for 2023 will rise to $27,700 for married couples filing jointly, up from $25,900 in 2022, and $13,850 for single filers, an increase from $12,950.

Why it Matters: These increases are in response to soaring inflation, which continue to impact the economy and government policy. Last week, it was announced that Social Security and Supplemental Security Income benefits will increase 8.7% in 2023.

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Final Rule Issued for Corporate Transparency Act: What Businesses Need to Know

On September 29, 2022, FinCEN issued its Final Rule, and a corresponding Fact Sheet. These rules set forth the requirements for certain businesses to disclose information regarding the individuals who own or control the business.

Why it Matters: The Corporate Transparency Act is intended to deter activity such as money laundering, financing terrorism, and tax fraud, among other things. Failure to disclose the necessary information may subject businesses to significant civil and criminal penalties. Learn more on the subject.

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Scholarship Program Poised to Assist Michigan’s Middle Class

The new Michigan Achievement Scholarship program will help Michigan families reduce the costs of attending various post-high school education programs. Public university students who are selected will receive up to $5,500 a year for five years, independent university students will be able to get up to $4,000 a year for five years, private trade school students $2,000 a year for two years and community college students $2,750 a year for up to three years.

Why it Matters: The Michigan Achievement Scholarship program is projected to double the number of the recipients who receive financial aid through the state’s various programs. And the new program seeks to reduce or eliminate the need for student loans for families across the state.

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Records Cannabis Sales in September Reports CRA

Cannabis sales in Michigan drew in $212 million in September, setting a record in terms of cannabis sales per month. The Cannabis Regulatory Agency has reported that more than 90% of sales came from adult-use recreational cannabis purchases.

Why it Matters: Michigan breaks another record, set earlier this year, in cannabis sales per month. As product continues to enter the market causing prices to drop, many licensees are asking the Cannabis Regulatory Agency to stop issuing licenses in fear of profit losses.

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House Bill Proposes to Establish a Version of the Telephone Consumer Protection Act in Michigan

The federal Telephone Consumer Protection Act seeks to stop unwanted telephone solicitation. Michigan House Bill 6307, the Michigan Telephone Solicitation Act (the “MTSA”), would enact similar restrictions on a state level.

Why it Matters: If enacted, Michigan would follow in the footsteps of other states, such as Florida, Oklahoma, and Washington, who have implemented similar protections for residents. The MTSA would exempt certain solicitation calls, such as those made with express authorization and those to existing customers. Violations, especially knowing violations and those impacting vulnerable individuals, would be subject to stiff civil penalties. The bill also proposes to establish a private cause of action for impacted individuals.

Related Practice Groups and Professionals

Business & Tax | Paul McCord
Business & Tax | Robert Burgee
Cannabis Law | Sean Gallagher
Energy, Utilities & Telecommunication | Michael Ashton

Five Stories that Matter in Michigan This Week – September 30, 2022

House Bill Proposes to Establish a Version of the Telephone Consumer Protection Act in Michigan

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October 14 Deadline: Medicare Part D Notice of Creditable (or Non-Creditable) Coverage

The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 requires entities who offer prescription drug coverage to notify Medicare Part D eligible individuals whether their prescription coverage is creditable coverage. These notices of either creditable or non-creditable coverage are due for distribution prior to October 15 of each year.

Why it Matters: Failure to provide notice can result in a late enrollment penalty to those persons who go 63 days or longer without creditable coverage. Learn more here.

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FDA Appoints Birenbaum as Senior Public Health Advisor on Cannabis Research and Regulatory Actions

The U.S. Food and Drug Administration (the “FDA”) recently hired Norman Birenbaum, former cannabis program director for the state of New York, to serve as its senior public health advisor on cannabis research and regulatory actions.

Why it Matters: The appointment of Norman Birenbaum signals a turn for cannabis and cannabis-based products on the federal level. He brings experience in policy analysis as a founding president of a national cannabis regulatory association, and is anticipated to expand the FDA’s relationship with the healthcare community and patient advocate groups, as they look to gather more data on cannabis.

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General Motors Co. Reverses Return to Office Plan Following Backlash

Top executives from GM reportedly reversed course from last week’s reported plan to require salaried employees to return to company offices for at least three days a week, which would go into effect later this year.

Why it Matters: Following the outcry from employees who felt the plan was ushered in too quickly, executives have backed off the three-day in-office requirement this calendar year and instead continued to practice the “Work Appropriately” philosophy first adopted in 2020.

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Michigan Car Insurance Rates Drop Nationally

With the introduction of new out-of-state car insurance companies into Michigan, the state has dropped from the nation’s top spot in cost of car insurance, to fourth. The 2019 auto insurance reform bill that passed is believed to be the major factor in reducing costs.

Why it Matters: Reduced costs for automobile owners is a positive sign for Michiganders. Elected officials are working towards providing consumers with a choice for their automobile insurance, which will help reduce costs for citizens.

Related Practice Groups and Professionals

Five Stories that Matter in Michigan This Week – September 23, 2022

CRA’s Fines Eight Cannabis Businesses Over Late Financial Reports

The Cannabis Regulatory Agency recently published their monthly disciplinary reports and eight cannabis businesses across the state have been fined for failing to submit annual financial reports by the required deadline.

Why it Matters: What comes with the territory of operating a business in a highly regulated arena, business owners both medical and recreational will need to be aware of deadlines for required financial reporting of their cannabis business operations.

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Majority of Legislators Could Run Again If Prop 1 Passes

A new analysis from the Citizens Research Council says that a majority of legislators, 89% of the 737 Michigan legislators, could run again for a seat if the Prop 1 (term limits and financial disclosures) ballot proposal passes.

Why it Matters: If this ballot proposal passes, the majority of past legislators have the option of running again for a legislative seat. Fraser Trebilcock election law attorneys will continue to follow and update news surrounding this ballot proposal.

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Importance of Signing an Operating Agreement for Your LLC

It happens more often than individuals think and something small businesses should heed is the need to adopt an operating agreement at the start of your LLC. It may seem like an unnecessary step when you’re starting out but waiting until the time is right or until you get big enough, can often lead to forgetting about it completely.

Why it Matters: Failure to sign an operating agreement for your LLC may lead to issues for your small business that would otherwise be avoided. Learn more from a Fraser Trebilcock attorney on this topic.

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Whitmer Names New Head of Cannabis Regulatory Agency

Brian Hanna, formerly an analyst in the Lansing Computer Crimes unit at the Michigan State Police, and deputy for the Kalamazoo County Sheriff’s Office, was tapped by Governor Whitmer to lead Michigan’s Cannabis Regulatory Agency (“CRA”). Immediately prior to his interim appointment, which took effect September 19, Hanna was the CRA’s manager of field operations, inspections and investigations.

Why it Matters: Hanna replaces former CRA executive director Andrew Brisbo, who will now lead the state’s Bureau of Construction Codes. In a statement, Hanna said “I look forward to reconnecting with stakeholders to ensure we have a clear and concise regulatory framework for oversight of this industry to promote continued growth in Michigan.”

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Will Electric Vehicle Incentives Under Inflation Reduction Act Actually Hurt Sales?

The Inflation Reduction Act includes billions in incentives for electric vehicle adoption, including $7,500 tax credits for EV purchases. However, many automotive manufacturers are not happy with the rules the bill imposes for vehicles to qualify for the credits.

Why it Matters: The opposition argue that the manufacturing, sourcing, and pricing rules, which require significant domestic sourcing of raw materials and manufacturing, are too aggressive and could result in most EV’s not qualifying for the federal incentives – therefore stifling sales for many manufacturers.

Related Practice Groups and Professionals

Energy, Utilities & Telecommunication | Michael Ashton

Business & Tax | Robert Burgee

Cannabis Law | Sean Gallagher

Election Law | Garett Koger

Five Stories that Matter in Michigan This Week – September 16, 2022

Small Michigan Cannabis Growers Ask State to Stop Issuing Grow Licenses

Small cannabis businesses “overwhelmingly” asked the Michigan Cannabis Regulatory Agency to stop issuing new grow licenses (at least temporarily) at the CRA’s recent public quarterly meeting, according to MLive.com. They also requested that the number of plants any business can grow be capped at 10,000, and that there be better enforcement of black-market sales.

Why it Matters: Despite sales of recreational marijuana growing 126% over the last year, recreational marijuana flower prices have sunk 47% over the last period. Accordingly, while there is clearly demand, many businesses will struggle to be profitable if prices continue to tumble.

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U of M Study Finds that Wind and Solar Industries Could Fully Replace Jobs Lost at U.S. Coal-Fired Power Plants

A recent University of Michigan study found that the wind and solar industries could fully replace the number of lost jobs at U.S. coal-fired power plants that are expected to close to meet emission-reduction targets.

Why it Matters: The recently enacted Inflation Reduction Act includes substantial funding for wind and solar energy tax incentives. The bill is intended to spur growth and investment in clean energy projects across the country. Michigan has recently seen growth in jobs in the energy sector. In fact, the state ranked first in the nation for energy job growth in a recent U.S. Department of Energy report. Michigan added more than 35,000 energy-sector jobs from 2020 to 2021.

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Automotive Edge Talking Point at Auto Show

On Wednesday, Governor Whitmer and other elected officials spoke at the 2022 North American International Auto Show in Detroit, highlighting key investments in the automotive industry aimed to keep Michigan maintaining its automotive edge.

Why it Matters: Governor Whitmer focused on recently secured investments such as the $7 billion investment with GM to build batteries in the state, and a $3.2 billion investment from Ford that adds 3,200 jobs across Southeast Michigan in advanced mobility.

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Brian Hanna Named CRA’s Acting Executive Director

On Thursday, September 15, Governor Whitmer appointed Brian Hanna as acting Executive Director of the state’s Cannabis Regulatory Agency while a nationwide search for a permanent executive director ensues.

Why it Matters: Following the departure of Andrew Brisbo last month who accepted a position as Director of Michigan’s Bureau of Construction Codes, Brian Hanna fills the role until a permanent hire takes place. The state is seeing prices of marijuana continue to drop, calling for changes to occur in the market as businesses struggle to maintain profits.

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Michigan Plans Statewide Electric Vehicle Charging Network

Michigan submitted a plan to deploy $110 million over the next five years to install quick-charging stations for electric vehicles across the state. The plan was required to receive funds under last year’s federal Infrastructure Investment and Jobs Act.

Why it Matters: Given the credits available for the purchase of electric vehicles under the federal Inflation Reduction Act, there are likely to be even more electric vehicles on the road, and a new charging infrastructure will likely help Michigan attract more of those drivers to its roads for tourism and other purposes.

Related Practice Groups and Professionals

Energy, Utilities & Telecommunication | Michael Ashton
Business & Tax | Ed Castellani
Cannabis Law | Sean Gallagher

Five Stories that Matter in Michigan This Week – August 26, 2022

Michigan Sees Unemployment Decrease as Jobs Increase

According to recent data released by the Michigan Department of Technology, Management, and Budget, the unemployment rate in the state dropped from 6.2% to 4.2% over a twelve-month period. Michigan also saw a bump in jobs last month, with 3,000 in July.

Why it Matters: Officials point to the increase in job growth and lower unemployment rates as a reflection of the hard work that the government, people, and businesses have put into the economy to shift to a more positive outlook.

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Michigan to Deploy $72M in Federally Funded Small Business Loans and Investments

$72 million of funding Michigan received from the federal Small Business Credit Initiative 2.0 is being deployed for loans to small businesses through Michigan Economic Development Corporation capital and lending programs. The MEDC will also invest up to $75 million in early-stage, technology-based businesses in Michigan through the Small Business Venture Capital Program.

Why it Matters: Michigan’s venture capital and startup ecosystem continues to grow. The amount of venture capital invested in Michigan reached an all-time high in 2021. According to the Michigan Venture Capital Association’s 2022 Impact Report, a record $1.38 billion into 155 companies last year through 161 deals.

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MDOT Seeks to Install Automated Cameras in Work Zones

Michigan HB 5750 would allow the Michigan Department of Transportation (MDOT) to install automated cameras in work zones to capture speeders. While the bill sits on the House floor, the road construction industry is getting behind the bill.

Why it Matters: If this bill passes, drivers will need to be aware of the resulting penalties for exceeding the posted speed by 10 mph or greater, which would range from a written warning to a $300 fine.

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Gas Prices Continue to Decrease Since Record June 2022 Highs

The American Automobile Association (AAA) reports that the average Michigander is paying just under $4 for a gallon of gas, down from the record high average of $5.22 in June.

Why it Matters: While gas prices continue to decrease, Michiganders are still paying more per gallon when compared to 2021. Citizens and officials alike will look to continue seeing the downward trend. Spending less at the pump can increase spending in other areas of the economy.

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U of M Study Finds that Wind and Solar Industries Could Fully Replace Jobs Lost at U.S. Coal-Fired Power Plants

Related Practice Groups and Professionals

Business & Tax| Ed Castellani

Labor & Employment | Aaron Davis

Energy, Utilities & Telecommunication | Michael Ashton

Insurance Defense | Emily Vanderlaan

Five Stories that Matter in Michigan This Week – August 19, 2022

Insurance Agents Who Make a Material Error on Policy Application Now May be Liable after Michigan Court of Appeals Ruling

On August 4, 2022, the Michigan Court of Appeals ruled in Holman v. Farm Bureau Gen. Ins. Co. of Michigan, No. 357473, that an insurance agent who makes a material error on a policy application may be liable.

Why it Matters: This case concerns the scope of an agent’s duty in preparing a policy application for a customer, and makes clear that an agent can be held liable for mistakes. While the court noted that a plaintiff’s duty to review the application could be taken into account when assessing fault, that does not bar a negligence claim against a defendant/agent.

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Will Electric Vehicle Incentives Under Inflation Reduction Act Actually Hurt Sales?

The Inflation Reduction Act, which President Biden signed into law on Tuesday, August 16, includes billions in incentives for electric vehicle adoption, including $7,500 tax credits for EV purchases. However, many automotive manufacturers are not happy with the rules the bill imposes for vehicles to qualify for the credits.

Why it Matters: Opponents of the new guidelines argue that pricing, sourcing and manufacturing rules, which require significant domestic sourcing of raw materials and manufacturing, are too aggressive and could result in most EVs not qualifying for the federal incentives—therefore stifling sales for many manufacturers.

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Court Ruling Prohibits Discrimination on the Basis of Sexual Orientation and Gender Identity Under Michigan Law

The Michigan Supreme Court recently ruled that discrimination on the basis of sexual orientation and gender identity is discrimination prohibited by the Michigan Elliott-Larsen Civil Rights Act (the “ELCRA”) in the case of Rouch World, LLC, v. Department of Civil Rights.

Why it Matters: Employers with 15 or more employees were already prohibited by federal law from discriminating on the basis of gender identity or sexual orientation under Title VII. However, small employers in Michigan are now also subject to the same rules.

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Citizens for Better Social Equality Ballot Initiative Struck Down By Detroit Election Commission

A ballot initiative aimed at replacing the City of Detroit’s current marijuana ordinance was struck down by the Detroit Election Commission after it was determined the initiative did not have enough signatures required to secure a ballot spot under the Michigan Regulation and Taxation of Marijuana Act.

Why it Matters: The group behind the proposed initiative, Citizens for Better Equality, were fighting an uphill battle as the Detroit City Council vehemently opposed the initiative and the city’s Law Department had stated that the group does not have enough valid signatures. This is the latest development in a turbulent time for the city as they have yet to establish and begin selling recreational cannabis. Fraser Trebilcock cannabis attorneys will continue to monitor the situation for updates.

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Michigan Job Growth Projected Through 2030

Earlier this week, the Michigan Department of Technology, Management & Budget projected that Michigan’s job growth through 2030 would be 8.8%, or an estimated 374,930 jobs.

Why it Matters: Officials looking at industries who are seeing the highest growth rates are ones that are the result of the recovery from the pandemic. While it is observed that leisure and hospitality industries will lead the pack in terms of growth, other industries such as farming, fishing, and forestry, are at projected to decline.

Related Practice Groups and Professionals

Insurance Law | Emily Vanderlaan

Energy, Utilities & Telecommunication | Michael Ashton

Labor & Employment | Aaron Davis

Cannabis Law | Sean Gallagher

Business & Tax | Ed Castellani

Five Stories that Matter in Michigan This Week – August 12, 2022

Court Ruling to Raise Minimum Wage, Paid Sick Leave Stayed Until February 2023

The recent Michigan Court of Claims ruling that the legislature’s “adopt and amend” strategy used in 2018 to limit the impact of ballot initiatives was unconstitutional has been stayed until February 2023.

Why it Matters: Had it not been stayed, the ruling would have required Michigan businesses to, within 21 days, significantly increase minimum wages and paid sick leave for employees. This would have posed a big challenge for many Michigan businesses, particularly in the hospitality industry.

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Michigan Plans Statewide Electric Vehicle Charging Network

Why it Matters: Given the significant credits expected to be available for the purchase of electric vehicles under the federal Inflation Reduction Act (pending passage), there are likely to be even more electric vehicles on the road, and a new charging infrastructure will likely help Michigan attract more of those drivers to its roads for tourism and other purposes.

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Inflation Reduction Act Includes New Minimum Corporate Tax

The U.S. Senate recently passed the Inflation Reduction Act of 2022 (the “IRA”). At present, the IRA is only a draft bill and has not been passed by the U.S. House of Representatives nor signed by the President (although its eventual passage and enactment is anticipated). One of the provisions in the proposed bill is a new 15% corporate alternative minimum tax that would be imposed on the adjusted financial statement income of certain large corporations for tax years beginning after December 31, 2022.

Why it Matters: The proposed corporate alternative minimum tax would apply only to certain very large corporations, like Amazon, that have, or are part of, certain related groups that have considerable financial statement income. The Congressional Research Service also indicates that the corporate alternative minimum tax would raise an additional $313 billion in corporate revenue over the 10-year budget window, about half of which would be collected from manufacturing businesses.

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Citizens for Better Social Equality Initiative Heads to Detroit Election Commission

A ballot initiative aimed at replacing the City of Detroit’s current marijuana ordinance is heading to the Detroit Election Commission to determine whether or not there are enough valid signatures to place the issue on the upcoming November 2022 ballot.

Why it Matters: The group is facing an uphill battle, as the Detroit City Council vehemently opposes the initiative and the city’s Law Department has stated that the group does not have enough valid signatures. This is the latest development in a turbulent time for the city as they have yet to establish and begin selling recreational cannabis. Fraser Trebilcock cannabis attorneys will continue to monitor the situation for updates.

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Michigan GDP Increases Slightly While Nation’s GDP Decreases

According to data from the U.S. Bureau of Economic Analysis, Michigan was one of a number of select states to have a positive increase to their overall GDP, compared to the nation’s GDP decrease of 1.6%.

Why it Matters: While federal officials have been in a deadlock over whether to declare that the country is in a recession, jobs available have declined by 1.5 million, and overall, the national unemployment rate has decreased to 3.5%. The upcoming November elections can be pivotal as voters will almost certainly be focused on electing candidates they perceive as best equipped to bolster economic growth.

Related Practice Groups and Professionals

Business & Tax | Paul McCord

Labor & Employment | Aaron Davis

Energy, Utilities & Telecommunication | Michael Ashton

Cannabis Law | Sean Gallagher

Five Stories that Matter in Michigan This Week – July 15, 2022

Supreme Court Ruling Shouldn’t Affect Michigan’s Healthy Climate Plan

The Supreme Court’s recent ruling limiting the EPA’s ability to regulate carbon emissions from power plants should not affect Michigan’s course of following through with the MI Healthy Climate Plan, which was first released in April 2021. The MI Healthy Climate plan seeks interim reductions of 28% by 2025 and 52% by 2030.

Why it Matters: Businesses should continue to plan for the implementation of the MI Healthy Climate plan and other regulations as the state continues to shift towards the goal of net-zero greenhouse gas emissions no later than 2050. If you have environmental issues with state and/or federal agencies, contact our environmental attorneys.

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Several Groups Send Letter to LARA Seeking Adoption of International Energy Standards

Several groups have sent the department of Licensing and Regulatory Affairs seeking them to adopt a set of international energy standards for residential and commercial buildings in preparation of electric vehicle charging and to help reduce climate impact.

Why it Matters: Including reducing climate impact, the groups have touted hundreds of dollars in energy cost savings for Michigan residents with the adoption of the new standards. “These provisions will lower costs for Michigan residents and businesses, increase household resilience from extreme weather events, and help reduce climate impacts from the building sector,” the groups wrote.

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Tax Reform Goals Priority for New “Fund MI Future” Coalition

A collection of 20 organizations have formed a newly created coalition with the aim of better funding Michigan’s public services with changes to the state’s tax policy. Following the release of Michigan’s next annual budget, the group plans to revise the state’s tax system and close tax loopholes so that wealthy individuals and organizations will now “pay what they owe” to support clean water access, job funding, and school support.

Why it Matters: If the new coalition’s plans for altering the state’s tax policy succeeds, organizations and wealthy individuals are expected to have higher tax bills.

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Mixed Signals in Michigan Marijuana Sales Data

One the one hand, the Michigan legal marijuana industry is booming. Sales in Michigan hit $1.03 billion in the first half of 2022, up by 26.9% from the same period last year, according to the Michigan Marijuana Regulatory Agency (“MMRA”). A Detroit News article reported that Michigan has become the third largest marijuana market in the country. On the other hand, not all news is rosy in the industry. There are now more than 1,000 licensed marijuana retailers in Michigan, and while sales numbers are at all-time highs, the competition in the state is driving down prices. MMRA reported that the average price for flower at $1959 per pound in June, down 41.6% from the same period in 2021.

Why it Matters: With inflation surging across the economy, falling prices in the marijuana industry mean that profits may be hard to come by. This may lead to more consolidation within the industry as operators and investors seek to achieve economies of scale.

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Bipartisan Bills Would Allow Alcohol Sales at Some College Sporting Events in Michigan

New bipartisan bills in the Michigan Legislature would allow alcohol sales at college basketball, football and hockey games. House Bill 6289 and Senate Bill 1125 would allow the Michigan Liquor Control Commission to issue licenses to be used for events within the public areas of university football, basketball and hockey stadiums. Sales would be permitted two hours before and after each game.

Why it Matters: Sponsors of the bills point to data showing that allowing alcoholic beverages in venues during sporting events lowers the probability of excessive alcohol consumption that might otherwise happen during tailgating before a game or if alcohol is snuck into a stadium.

Related Practice Groups and Professionals

Environmental Law | Michael Perry

Business & Tax| Ed Castellani

Taxation | Paul McCord

Cannabis | Klint Kesto

Energy, Utilities & Telecommunication | Michael Ashton

Five Stories that Matter in Michigan This Week – July 8, 2022

Michigan Adopts Version of the Uniform Assignment of Rents Act

Michigan recently adopted its version of the Uniform Assignment of Rents Act (the “UARA”), which establishes a comprehensive statutory model for the creation, perfection, and enforcement of security interests in rent. It is the sixth state to adopt the UARA.

Why it Matters: An assignment of rents allows a lender to collect income from rents derived from mortgaged property after the mortgage has been defaulted on. It protects a lender against scenarios in which a borrower (typically a commercial landlord) is continuing to collect rent from a property but is no longer making mortgage payments. The Michigan UARA codifies rules related to assignments of rents, bringing clarity to both lenders and borrowers.

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Michigan’s November 2022 Ballot to Include Fair Lending Proposal Capping Payday Loan Interest Rates

Supporters of the Payday Loan Interest Rate Cap ballot initiative in Michigan secured sufficient signatures to put the initiative on the November 2022 ballot.

Why it Matters: Once the petition is validated by Michigan’s Board of State Canvassers, the Michigan legislature will have 40 days to approve the initiative, as submitted. If the legislature rejects the initiative or fails to act by the deadline, the proposal will be placed on the November 2022 ballot for voters to decide. If passed, payday loan rates will be capped at 36% APR or less.

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Michigan Property Taxes are Set to Jump

Gas, groceries, and now summer property tax bills are spiking in Michigan. The inflation rate adjustment for this year’s property taxes in Michigan is 3.3%.

Why it Matters: Under Proposal A, there is a maximum 5% inflation rate adjustment allowed. While this year’s increase is less than the cap, it is the highest it has been since 2007. And many expect next year’s increase to hit the 5% cap. In a Detroit Free Press article, Patrick Anderson, CEO of the Anderson Economic Group said: “Basically, we’re baked in at 5% next year.”

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Michigan Leads the Nation in Energy-Sector Job Growth

According to an annual report recently issued by the U.S. Department of Energy, Michigan added 35,463 energy-sector jobs from 2020—more than any other state in 2021, boosted primarily by the automotive industry and its increased focus on hybrid and electric vehicle models.

Why it Matters: With soaring inflation and increased expectations of an economic recession, Michigan’s strength in energy-sector jobs bodes well for Michigan workers and businesses. The energy sector in Michigan represents 9.5 percent of state employment, with 393,207 jobs total.

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Michigan Bill Would Cut Taxes for Small Distillers, Provide Boost to Local Farmers

The Michigan legislature recently approved legislation that would cut the state Liquor Control Commission markup on small distillery alcohol from 65% to 32.5% if more than 40% of the grains and other crops used to distill the liquor are grown in Michigan.

Why it Matters: If signed into law by Governor Whitmer, this tax cut would result in large savings for small Michigan distillers and help them compete with larger national producers. Because the tax savings are tied to the purchase of grains and other crops grown in Michigan, local farmers would also benefit.

Related Practice Groups and Professionals

Business & Tax| Ed Castellani

Real Estate | Jared Roberts

Election Law | Garett Koger

Energy, Utilities & Telecommunication | Michael Ashton

Five Stories that Matter in Michigan This Week – June 10, 2022

Five Stories that Matter in Michigan This Week – June 10, 2022; Legal, Legislative, and Regulatory Insights

Wayne County Announces $54 Million Fund for Small Businesses

A new $54 million fund to support small businesses, called the Wayne County Small Business Hub, was announced at last week’s Detroit Regional Chamber’s Mackinac Policy Conference (“Mackinac Conference”). It will provide support to new and existing businesses, with a specific focus on minority- or women-owned businesses, and micro businesses with 10 or fewer employees with a focus on technical assistance.

Why it Matters: Small businesses are often the first to be hit when the economy slows, and with credit markets tightening there are likely to be fewer sources of liquidity for small business owners to tap. This new fund, a collaboration between the Wayne County Executive’s Office and New Economy Initiative, will provide needed resources for historically disadvantaged businesses.

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Ford and Pfizer to Make Significant Investments in Michigan

Also at the Mackinac Conference, Ford Motor Company and Pfizer announced significant investments in Michigan. Ford reportedly will spend $2 billion across the company’s Michigan plants, and intends to create more than 3,000 jobs. Pfizer will make a $120 million investment at its Kalamazoo facility.

Why it Matters: With a great deal of economic doom and gloom in the headlines, these announcements are bright spots showing that large companies are still making investments in their businesses—and in Michigan, in particular.

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Concerns Expressed About Losing Another EV Investment in Michigan

But it’s not all good news on the economic front in Michigan. At the Mackinac Conference, John Rakolta Jr., chairman of Walbridge, pointed out that Michigan is missing out on major opportunities in the electric vehicle industry. For example, Stellantis announced last week that it was bypassing Michigan and locating its new electric vehicle battery manufacturing plant in Kokomo, Indiana.

Why it Matters: According to a study by Fortune Business Insights, the global electric vehicle market is expected to grow from approximately $287 billion in 2021, to $1.3 trillion by 2028. To take advantage of this opportunity, Michigan must make itself attractive to companies in the electric vehicle market. As Rakolta points out, this involves more than designing tax incentives. It requires a more comprehensive approach to utilities, zoning and other important business, financial, legal and regulatory issues.

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Unemployment Claimants Get to Keep Pandemic Overpayments

Michigan sought to claw back Pandemic Unemployment Assistance benefits paid to many Michigan residents who were accused of misreporting their income. Michigan argued that claimants were liable because they entered their gross pay from prior years to determine their weekly benefit amount when they should have entered their net pay. Michigan reversed course and announced that it would no longer seek to claw back the funds after media reports revealed that at least some claimants were asked during the application process to provide total pay—not net pay—which resulted in confusion and overpayments.

Why it Matters: This announcement surely came as a relief to many Michigan residents who were embroiled in disputes with the Michigan Unemployment Insurance Agency. More broadly, this situation demonstrates the importance of using precise, accurate language in contracts and other important documents. The alternative is to invite confusion, dispute and litigation.

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Michigan Cannabis Company Files for Chapter 11 Bankruptcy

A Kalamazoo cannabis company, Master Equity Group, recently filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court in the Western District of Michigan.

Why it Matters: This case will be closely watched by the cannabis industry, as well as by corporate restructuring professionals. Bankruptcy courts have historically prevented cannabis companies from filing for protection under the United States Bankruptcy Code because, while marijuana is legal in Michigan, it remains illegal under the federal Controlled Substances Act. And because bankruptcy courts are federal courts, similar attempts by cannabis companies to file for bankruptcy protection have been disallowed.

Related Practice Groups and Professionals

Administrative & Regulatory | Michael Ashton
Business & Tax | Mark Kellogg
Labor, Employment & Civil Rights | Aaron Davis
Cannabis | Klint Kesto