Knowledge is Power Understanding LARA’s emergency administrative rules

At long last, the Michigan Department of Licensing and Regulatory Affairs’ Bureau of Medical Marihuana Regulation has issued emergency rules addressing details of the Michigan Medical Marihuana Facilities Licensing Act.

“The rules are not perfect, and may contain some glitches, but they eventually will be replaced by permanent rules.”

The emergency rules were signed by Gov. Rick Snyder on December 4, 2017, and are in effect for a period of six months, which can and will be extended for another six months to allow time for permanent rules to be promulgated and approved by the Michigan Legislature’s Joint Committee on Administrative Rules.
The new rules provide specifics, including the definition of a “batch” as “all the plants of the same variety . . . that have been grown, harvested and processed together . . . ” Another important definition provided to growers is that of an “immature plant” which is defined as a nonflowering plant up to eight inches tall and eight inches wide in a container no larger than two inches tall and two inches wide.

As expected, the rules allow the stacking of multiple 1,500-plant growing licenses issued to a single licensee at a facility, but Rule 24 provides that multiple facilities may operate at the same location only if the municipality does not limit the type or number of facilities at the same location. Transfer between facilities at the same location would be allowed without the use of a secure transporter, conflicting with the statute which requires that all transfers between licensees occur only with use of a secure transporter. How this will work out in practice (if at all) remains to be seen.

The rules adopt by reference standards of the National Fire Protection Association, American Herbal Pharmacopoeia, Safe Quality Food and the International Organization for Standardization (ISO) on food safety and laboratory testing and calibration.

Applicants may begin the process of vetting the organization and its owners, officers, directors and managerial employees even without having determined an operating location. The rules clarify that all completed applications will need to disclose a business plan, estimated number of employees, projected gross receipts and the security plan for the facility.

The state application fee is set at $6,000, in addition to a maximum local fee of $5,000, plus the statutory assessment, which is set at $10,000 for a 500 plant grow license, and which is likely to be substantially more for all the other licenses, except the safety compliance facilities (testing labs) which are excluded by statute from the assessment requirement. A facility plan is required, which must include a diagram of the facility. An insurance policy will be required for bodily injury, premises liability and casualty in the amount of $100,000. There are substantial capitalization requirements of between $150,000 and $500,000, of which 25 percent must be in cash or liquid assets easily convertible to cash, and those assets must be validated by a Michigan-licensed Certified Public Accountant.

Interestingly, there is provision for a transition period of 30 days from issuance of the license “during which marihuana product can be entered into the statewide monitoring system to ensure statewide tracking” but no provision as to how the facility would be allowed to obtain the product. That might make this rule completely ineffective, as the Supreme Court of Michigan has held that there is no authority for a patient to transfer cannabis, nor is a caregiver allowed to transfer cannabis to anyone other than a patient to whom that caregiver is connected. A legislative fix appears to be needed to make this rule have any effect.
Other details include mentions of mobile facilities and drive-thrus, product testing, edibles packaging requirements, topical volume rules, daily purchase limits and much more.

It would have been helpful if the department had published the draft rules for comment before approval, and perhaps some of the bugs could have been fixed. The rules are not perfect and may contain some glitches, but they eventually will be replaced by permanent rules. Finally there is a starting point to license sales of cannabis products to patients and caregivers, and hopefully the citizens of Michigan will be able to vote for legalization of adult use of cannabis in November 2018, even before the permanent rules are adopted.

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