Tag: Michigan Cannabis Industry Association

January Update: Legal, Legislative and Regulatory Developments Impacting the Michigan Cannabis Industry

Despite some bumps in the road—which are to be expected for any nascent industry—the year 2021 was a remarkable and record-breaking one for the legal cannabis industry in Michigan. As we gear up for what’s ahead in 2022, here are a few recent, noteworthy developments that those competing in the industry should be aware of.

Governor Signs Legislation Easing Financial Reporting Requirements for Medical Marijuana Growers

Medical marijuana growers in Michigan previously were required to submit financial statements to the Michigan Regulatory Agency (“MRA”) and the municipality in which they operate every state fiscal year. That requirement was eased with Governor Whitmer’s signing of Michigan House Bill 4921, which amends the Michigan Medical Marijuana Licensing Act to allow medical marijuana growers to submit financial statements every three years. A copy of the bill, which became effective as of December 7, 2021, can be viewed here.

The MRA issued a bulletin on January 3, 2022, explaining that, based on the legislation, the MRA will revise the AFS report forms and combine the AFS requirements for medical and adult-use licensees into a consolidated report.

The MRA also explained that in the interim, the requirements for annual financial statements are as follows:

  • An annual financial statement will not be required for fiscal year 2022, unless a licensee is required to file a fiscal year 2022 report as a condition of a final order.
  • Licensees must file an annual financial statement for fiscal year 2020 and fiscal year 2021.

Most Recent Sales Numbers Show that Industry is Strong

The MRA’s most recent financial numbers for Michigan’s adult-use marijuana market show strong sales in November of 2021 (the most recent data available from the MRA at the time this was published). Combined medical and recreational sales were approximately $153 million in November. In addition, a recent report by the Marijuana Policy Project estimates that Michigan will collect nearly $350 million in taxes related to recreational marijuana sales in 2021, which includes $80 million in sales tax and $270 million in excise tax.

Massive Marijuana Recall Cut in Half, MRA Asks Judge to Reconsider

In mid-November, the MRA issued a massive recall affecting more than $200 million in marijuana products tested by Viridis Laboratories and Viridis North over a three-month period. Viridis filed a lawsuit, and the Michigan Court of Claims, on December 3, partially granted Viridis’ request for a preliminary injunction that halted the recall for Viridis North but not Viridis Laboratories.

On December 15, the MRA requested that the judge reconsider his decision that limited the scope of the recall to just Viridis Laboratories. The MRA asserted that it had gathered more testing data since the judge’s initial decision and found 26 percent of Viridis North recalled and retested source packages failed microbial retesting for total yeast and mold.

On December 20, 2021, the Court of Claims denied the MRA’s motion for reconsideration.

We will continue to keep you apprised of these and other important developments in the Michigan legal cannabis industry. If you have any questions, please contact Paul Mallon or your Fraser Trebilcock attorney.

mallon-paulPaul C. Mallon, Jr.  is Shareholder and Chair of Fraser Trebilcock’s cannabis law practice. You can reach him at pmallon@fraserlawfirm.com or (313) 965-9043. 

Governor Whitmer Signs Law Regulating Delta-8 THC Manufacturing and Sales Starting October 11, 2021

House Bill 4517 is part of a package of legislation that will regulate the manufacturing, sale, and distribution of delta-8 THC products much like other legal marijuana products in Michigan

Governor Whitmer has signed a law allowing only regulated delta-8 THC products to be manufactured and sold in Michigan, effective October 11, 2021. The move to regulate, rather than ban, the delta-8 THC strand was supported by the cannabis industry.

Starting this fall it will be illegal for businesses in Michigan to sell delta-8 products without proper licensing from the Michigan Marijuana Regulatory Agency (“MMRA”). As we detailed in a previous blog, there are currently no standards for selling or distributing delta-8 THC products, which has led to a number of Michigan-based retailers like gas stations and convenience stores selling unregulated delta-8 items.

These products have not undergone the testing and tracking that is required for other legalized recreational marijuana products in Michigan, including those derived from the more common delta-9 THC strand.

The legislation categorizes all THC isomers of the cannabis plant as marijuana, giving the MMRA oversight capabilities. As of mid-July, the sale of delta-8 products is banned in 14 states (Alaska, Arizona, Arkansas, Colorado, Delaware, Idaho, Iowa, Kentucky, Mississippi, Montana, New York, Rhode Island, Vermont and Utah). Delta-8 status is currently under review in four additional states.

The differences between delta-8 and delta-9

Delta-8 THC is a synthetic substance derived from hemp with the only difference being the inclusion of a double bond. The science behind the two compounds is still being researched but the consensus is that due to the location of its double bond, delta-8 binds to the body’s cannabinoid receptors in a slightly different manner than delta-9 THC, resulting in less of a high.

However, there is little research and no reliable clinical trials on delta-8 THC. Delta-9 marijuana products are strictly regulated and subject to stringent testing standards, whereas delta-8 products have typically been produced using unregulated, chemically synthesized cannabinoids that can include additives and byproducts that have not been researched and could be harmful to some consumers.

Impact on businesses

Unlicensed commercial production or sale of delta-8 in Michigan will be punishable by fines starting October 11, 2021. Any retailer operating in Michigan must obtain a state license to sell or distribute delta-8 THC products, which includes mandatory tracking and testing. Only adults 21 and older can legally have or use the compound in the state. The MMRA created a flyer that provides further details.

The Michigan Cannabis Industry Association and the Michigan Cannabis Manufacturers Association both expressed support for the regulation of delta-8 rather than a full ban. The MCMA’s Board Chair Shelly Edgerton told MLive in a July 14 article that the law “takes a giant step toward enforcing the same strict high testing, health and safety guidelines for any product that mimics a cannabis high that is either inhaled or ingested followed by our state’s licensed growers and processors.”

We will continue to provide additional updates on additional developments regarding delta-8 THC, and other issues affecting the marijuana industry in Michigan. If you have any questions, please contact Paul Mallon or your Fraser Trebilcock attorney.

mallon-paulPaul C. Mallon, Jr.  is Shareholder and Chair of Fraser Trebilcock’s cannabis law practice. You can reach him at pmallon@fraserlawfirm.com or (313) 965-9043.