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

  1. 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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  1. 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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  1. 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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  1. 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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  1. 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 – September 9, 2022

  1. Report Shows Decline in Health Care Employment

The Michigan Health & Hospital Association, Michigan State Medical Society, and Michigan Osteopathic Association jointly issued a report showing that the number of health care jobs in Michigan declined in the first year of the COVID-19 pandemic, due in large part to burnout associated with the pandemic.

Why it Matters: If these trends aren’t reversed, access to care could ultimately be affected. And the health care industry is one of the largest employers in Michigan, so the economy could be impacted as well. There are steps being taken in Lansing to help address these issues. In February, legislation was passed allocating $300 million to help relieve the health care worker shortage.

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  1. Gilbert Foundation Commits $10 Million to Detroit Startups

The Gilbert Family Foundation recently announced the launch of Venture 313, a three-year, $10 million commitment to Detroit area startups and entrepreneurs.

Why it Matters: Venture 313 will, through various partners invest $500 to $250,000 into Detroit businesses, depending on the circumstances of each business. This is just the latest development in the story of robust growth for Michigan’s startup and venture capital environment, which is among the fastest growing in the country.

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  1. City of Detroit Moving Forward with Adult-Use Recreational Licenses

Following the news that Wayne County Circuit Court Judge Leslie Kim Smith dismissed the two lawsuits from House of Dank and JARS, respectively, the City of Detroit will start processing applications for adult-use recreational licenses.

Why it Matters: This is the latest development in a turbulent time for the city as they have yet to establish and begin selling recreational cannabis. However this appears to be the last roadblock for the city and they can begin processing applications. Fraser Trebilcock cannabis attorneys will continue to monitor the situation for updates.

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  1. NHTSA Compliance and Suspensions

The National Highway Traffic Safety Administration (“NHTSA”) has recently taken enforcement action against a number of Registered Importers (RI) whose import documentation does not strictly comply with NHTSA laws and Regulations. This enforcement action may include lengthy RI registration suspension or termination.

Why it Matters: RI’s are advised that all certifications to NHTSA must be completely accurate and not false or misleading. Critically, the dates of entry must be accurate and not false or misleading. RI’s are responsible for the actions of their employees, so employees must be trained on NHTSA laws and Regulations.

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  1. 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.

Related Practice Groups and Professionals

Labor, Employment & Civil Rights | Aaron Davis
Business & Tax | Ed Castellani
Cannabis Law | Sean Gallagher
Insurance Defense | Emily Vanderlaan

NHTSA Compliance and Suspensions

The National Highway Traffic Safety Administration (“NHTSA”) has recently taken enforcement action against a number of Registered Importers (RI) whose import documentation does not strictly comply with NHTSA laws and Regulations. This enforcement action may include lengthy RI registration suspension or termination.

RI’s are advised that all certifications to NHTSA must be completely accurate and not false or misleading. Critically, the dates of entry must be accurate and not false or misleading. RI’s are responsible for the actions of their employees, so employees must be trained on NHTSA laws and Regulations.

This is a brief summary and does not constitute legal advice. If you have any questions on NHTSA laws or Regulations you may contact Ed Castellani or Bob Burgee.

Fraser Trebilcock Business Tax Attorney Edward J. CastellaniEdward J. Castellani is an attorney and CPA with Fraser Trebilcock with over three decades of experience handling business transactions. He may be contacted at ecast@fraserlawfirm.com or 517-377-0845.

Robert D. Burgee is an attorney at Fraser Trebilcock with over a decade of experience counseling clients with a focus on corporate structures and compliance, licensing, contracts, regulatory compliance, mergers and acquisitions, and a host of other matters related to the operation of small and medium-sized businesses and non-profits. You can reach him at 517.377.0848 or at bburgee@fraserlawfirm.com.

Five Stories that Matter in Michigan This Week – September 2, 2022

  1. President Biden Announces Student Loan Forgiveness

On Wednesday, August 24, President Biden announced the federal government will extend the current pause on monthly student loan payments. President Biden also stated that the federal government plans to forgive up to $20,000 worth of student loan debt for those who qualify.

Why it Matters: President Biden is relying on the HEROES Act of 2003 [20USC 1098bb] to extend the pause on student payments as well as forgive certain amounts of student loans for qualifying individuals. There may be challenges to the President’s reliance on this statute to forgive student loan debt in the future. Learn more here from our attorney covering the news.

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  1. How Michigan Car Insurance Rates Stack Up Nationally

Following an influx of new car insurance companies into the state, Michigan has dropped from being the nation’s leader in cost of car insurance to fourth. The major effort in reducing costs is attributed to the 2019 auto insurance reform, which saw prices for automobile premiums drop considerably.

Why it Matters: Reduced costs for automobile owners is a positive sign for Michiganders. Elected officials are working towards providing consumers a choice for their automobile insurance, which in turn will reduce costs across the board.

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  1. Term Limits Will Be Prop 1 on November Ballot

It was recently announced that changes to Michigan’s term limits and financial disclosure requirements will be on November’s ballot as Prop 1. In 1992, Michigan voters voted in favor of a constitutional amendment for term limits. Since then, Michigan House members have been limited to three two-year terms and Michigan Senate members to two four-year terms— a maximum of 14 years between the two chambers.

Why it Matters: If Prop 1 passes, it would permit lawmakers to serve 12 years in Lansing, and all of that time could be spent in the House or Senate, or it could be divided between the two chambers. Additionally, elected officials would have to disclose their assets, income and liabilities, and their involvement in any businesses, nonprofits, labor organizations or educational institutions. Learn more here.

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  1. Voting Rights Proposal Fails to Make November Ballot

A voting rights proposal that would make changes to Michigan’s elections—including establishing early voting—failed to make this fall’s ballot. Michigan’s Board of State Canvassers deadlocked on whether to certify the Promote the Vote amendment for the ballot.

Why it Matters: The amendment would have increased absentee ballot access and preempted efforts to enact stricter voter ID rules for those casting ballots in person and for absentee voters. Promote the Vote indicated it would challenge the decision in court.

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  1. Michigan to Receive $50 Million from Federal Government for Historic 2020 Flooding

The Federal Highway Administration said Wednesday it will provide $50 million in emergency relief funds to Michigan to reimburse the state for repairs it made to roadways and bridges following severe flooding that took place in mid-Michigan in 2020.

Why it Matters: The money comes as part of a $513 million package the federal government is distributing across different states and territories. Only California and Puerto Rico will receive more than Michigan.

Related Practice Groups and Professionals

Insurance Defense | Emily Vanderlaan

Election Law | Garett Koger

Trusts & Estates | Elizabeth Siefker

President Biden Announces Student Loan Forgiveness

On Wednesday, August 24, President Biden announced that the federal government will extend the current pause on monthly student loan payments, which means that borrowers will not have to resume making payments until at least January. President Biden also stated that the federal government plans to forgive up to $20,000 worth of student loan debt, for those who qualify.

First, in order to qualify for loan forgiveness, student loan debt must be through the federal government, meaning that individuals who have private loans will not be eligible. Second, unmarried individuals must earn less than $125,000 per year to be eligible for up to $10,000 in student loan forgiveness. If you are married and file joint tax returns, or are a head of household, you will qualify for up to $10,000 in student loan forgiveness if your annual income is less than $250,000. Finally, if you meet these income requirements, and received a Pell Grant while in school, you could be eligible for $20,000 in forgiveness.

President Biden is relying on the HEROES Act of 2003 [20USC 1098bb], in order to extend the pause on student payments as well as forgive certain amounts of student loans for qualifying individuals. There may be challenges to the President’s reliance on this statute in order to forgive student loan debt in the future. For more information, please go to https://studentaid.gov/manage-loans/forgiveness-cancellation.

Elizabeth M. Siefker is an attorney at Fraser Trebilcock in the trusts and estates practice group focusing on estate planning, elder law, and business planning. You can reach her at esiefker@fraserlawfirm.com, or at 517.377.0801.

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

  1. 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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  1. 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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  1. 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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  1. 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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  1. 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.

Related Practice Groups and Professionals

Business & Tax| Ed Castellani

Labor & Employment | Aaron Davis

Energy, Utilities & Telecommunication | Michael Ashton

Insurance Defense | Emily Vanderlaan

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 recreational marijuana ordinance was recently struck down by the Detroit Election Commission after a determination the initiative did not have enough signatures required to secure a ballot spot under the Michigan Regulation and Taxation of Marijuana Act.

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’s marihuana licensing regime as it has yet to issue licenses to begin allowing retail sales of recreational cannabis. In June, following the City Council’s vote on the revised ordinance to allow adult-use recreational cannabis sales, multiple medical marijuana companies filed suit against the City over the licensing program, claiming that the new law would signal the end for existing medical marijuana facilities already in the area. The companies pointed to a provision in the revised ordinance that prevents existing medical facilities in the area from getting a recreational license until 2027.

Our attorneys are actively monitoring the situation and will provide updates. At Fraser Trebilcock, we have handled multiple lawsuits in the cannabis field and can assist you. Please contact Sean Gallagher or your Fraser Trebilcock attorney.

Gallagher, SeanSean P. Gallagher is an attorney at Fraser Trebilcock with experience in the highly regulated cannabis industry, working with local and state officials to advance client interests and to help mitigate risks involved and increase opportunities. You can reach him at 517.377.0820 or at sgallagher@fraserlawfirm.com.

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

  1. 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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  1. 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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  1. 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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  1. 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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  1. 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

  1. 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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  1. 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 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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  1. 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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  1. 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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  1. 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

The Proposed New Corporate Minimum Tax

Recently the Senate reached an agreement on the Inflation Reduction Act of 2022 (the “IRA”). At present, the IRA is only a draft bill and has not been passed by Congress nor signed by the President (although its eventual passage and enactment is anticipated). One of the provisions in the proposed bill includes a new 15% corporate alternative minimum tax (Corporate AMT) that would be imposed on the “adjusted financial statement income” (AFSI) of certain large corporations (very generally, and described in greater detail below, corporations reporting at least $1 billion average adjusted pre-tax net income on their consolidated financial statements), for tax years beginning after December 31, 2022.

Many of our clients will be unaffected by this proposal. The proposed Corporate AMT 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. In a report released August 1, 2022, the Congressional Research Service (CRS), suggests that “[r]elatively few corporations would be affected by the tax.” According to the CRS, citing an analysis by the Joint Committee of Taxation, only about 150 taxpayers would be subject to the Corporate AMT each year. The CRS also indicates that the Corporate AMT 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.

If you have any questions regarding this proposed bill, we will continue to monitor the situation. This alert serves as a general summary, and does not constitute legal guidance. Please contact us with any specific questions.

Fraser Trebilcock attorney Paul V. McCord has more than 20 years of tax litigation experience, including serving as a clerk on the U.S. Tax Court and as a judge of the Michigan Tax Tribunal. Paul has represented clients before the IRS, Michigan Department of Treasury, other state revenue departments and local units of government. He can be contacted at 517.377.0861 or pmccord@fraserlawfirm.com.