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In Michigan, 98 medical marijuana dispensaries forced to close while hundreds more await application review

In accordance with an emergency regulation adopted on September 11 by the Michigan Department of Licensing and Regulatory Affairs, 98 medical marijuana dispensaries that did not complete their state application before June 15 must close their doors on September 15.

The emergency regulation ensures that 108 medical marijuana dispensaries that are currently operating while waiting for the Medical Marijuana Licensing Board to approve their complete application will be able to stay open until December 15 of this year.

“On Sept. 11—after hearing from patients and patient advocates from across the state—LARA offered relief to 108 businesses who had turned in their complete [license] application, steps 1 and 2, by June 15, 2018. These 108 businesses may stay open until December 15, 2018, and their continued operation will not be considered an impediment to their licensure,” wrote David Harns, LARA Public Information Officer.

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Unfortunately, the licensing process for medical marijuana dispensaries has been a bit muddled in Michigan. Plagued with changing deadlines, long waits for application approvals, and hefty application fees, this latest news is another bureaucratic buzzkill for the medicinal marijuana program.

Michigan’s medical marijuana program

In 2008, Michigan voters approved legalizing medical marijuana. In 2016, Gov. Rick Snyder signed three bills into law, which created the licensing and regulatory foundations for the medical marijuana program, including establishing LARA.

In December of last year, LARA began accepting online or paper application forms, utilizing a two-step application process for medical marijuana facility licensing.

The two-step process, Pre-Qualification and License Qualification, was meant to allow applicants to start the qualification process, even if they hadn’t secured a location for their medical marijuana facility.

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Pre-Qualification required a full-background check of the applicant as well as all “supplemental” applicants (individuals/businesses with ownership interests in the applicant). Applicants had to submit a $6,000 fee before the Bureau of Medical Marihuana Regulation could review the application.

License Qualification required applicants to submit information about the actual location of the business, as well as the type of facility license for which the applicants were applying. Michigan requires medicinal marijuana facilities to operate in municipalities which authorize medical marijuana programs.

Michigan is forcing nearly 100 medical cannabis dispensaries to close their doors pic.twitter.com/oftu8UBrLC

— NowThis (@nowthisnews) September 14, 2018


Dispensaries receive final approval and a state license once the two qualification steps are approved, and the dispensary pays a regulatory assessment fee for each license. Once the regulatory assessment and the attached fee are received, the dispensary will receive their license.

The regulatory assessment fee is $48,000; it can be less depending on the type of license for which an applicant is applying. The five different licenses are for growers, processors, testing facilities, transporters, and, dispensaries.

The fees for regulatory assessments cover the cost of administering Michigan’s medical marijuana market and is expected to increase from $48,000 to $66,000 on October 1 of this year. Once licensed, owners of dispensaries will be required to pay city fees (dependent on the municipality in question), have their products tested, pay a 3 percent tax on gross receipts, and the partridge in the fee-tree: a 6 percent sales tax.

The costs of implementing the medical marijuana program have been shared by the Michigan state departments of Licensing and Regulatory Affairs, Attorney General, Michigan State Police, Treasury, and Health and Human Services.

With so many agencies involved, the fees, and ever-revolving deadline, it’s easy to understand why applicants have had a hard time finding their way through the red tape maze.

Why did so many dispensaries miss the deadline?

It’s a great question, and it depends on whom one asks.

There are several reasons as to why dispensaries may have missed the deadline to turn in the second portion of the state-license application. While there is no definitive answer, the evidence points to the main culprit being the multiple extensions of previously set-in-stone deadlines.

It isn’t the first time that Michigan extended the deadline for dispensaries in terms of turning in applications. In fact, the state extended the deadline three times already.

Originally, dispensaries were to supposed to apply for a state operating license by February 15 of this year. Approximately 243 locations were hand-delivered cease and desist letters for failing to comply with the Medical Marihuana Facilities Licensing Act and the Administrative Emergency Rules. Specifically, they hadn’t applied for a state operating license.

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After the first round of cease and desist orders, the state offered an extension to dispensaries. Business owners were given until June 15 to file both portions of their application or be forced to shut their doors on September 15.

This latest extension, announced on September 11 would allow those dispensaries that completed and turned in both portions of the application to the BMMR by June 15 to stay open and in business until December 15.

“[It’s been] widely known—since LARA’s announcement on May 30, 2018—that all unlicensed medical marihuana businesses would have to cease operations if they were not licensed by Sept. 15, 2018,” according to LARA’s communication team. “Applicants have had 3.5 months to prepare for this deadline. BMMR Director Andrew Brisbo and LARA communications staff discussed this deadline numerous times at multiple MMLB meetings and in dozens of media interviews in July and August.”

If dispensaries, businesses, or representatives of cannabis dispensaries are uncertain as to the status of their application or whether they turned in their complete application by June 15, they may call the BMMR at 517-284-8599 to find out.

If the application was turned in on time, why is an extension necessary?

If a cannabis business turned in their first application by February 15, and then turned in their second application, thus completing the whole application, by June 15, why do they need an extension to operate until December 15?

It turns out that the state received a lot of applications for medical marijuana dispensaries. There were 702 applications, to be exact, since last year. Of those, only 401 applicants submitted a complete application. From there, the numbers become much smaller.

Of the 401 applications, preliminary approval for a state license has been given to 72 applicants, and another 53 have been denied. 37 full licenses have been awarded, and another eight have been denied. That means that less than 50 percent of submitted applications have been reviewed

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So who really needed the extension? The applicants? Or the state? 401 applications is a large number, especially when the state has to complete a thorough review process. Then again, they have had since June 15.

The bureaucratic process is a slow one, sometimes slower than businesses or even bureaucrats themselves would like. For those businesses that failed to turn in a completed application by that same deadline, they will have to close their businesses and liquidate or dispose of their current cannabis supply.

There is at least a silver, or in this case, green lining to this gray cloud. Even though 98 dispensaries had to close their doors by Saturday, they can continue their application process.

For those 108 dispensaries that did their homework, completed their applications, turned them in on time and are therefore are allowed to operate until December 15, let’s hope that there are no more emergency amendments bringing along further unexpected deadline extensions.

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