Michigan’s Cannabis Regulatory Agency (CRA) just began publishing monthly disciplinary action reports issued against the state cannabis industry for violating agency rules. The first publicized report for August was recently shared, and eight businesses must pay up a collective $116,000 for failure to submit proper financial reports by the deadline, MLive reports.
There were no other targeted violations reported.
Certified public accountant and Gumma Acho President Simon M. Gumma told the publication that CRA is “filing complaints and assessing fines,” adding, “I think they can even suspend or revoke a license for not being compliant. I don’t know that it’s gotten to that point.”
Cannabis businesses must submit annual financial reports, like audits, conducted by outside accounting companies, where they are asked to document and justify their finances. One example is company verification that all point-of-sale tills match the sales data in the statewide monitoring Marijuana Enforcement Tracking Reporting and Compliance system, also known as METRC.
Gumma nodded to another example: If a cannabis business reports facility upgrades, it must have the receipts to prove it.
For each overdue statement, the CRA fined businesses between $8,000 and $10,000. According to formal complaints on the state website, statements were usually in excess of a month late. Some businesses had overdue statements for multiple licenses, and others were fined for violations from up to 10 months ago, related to statements from 2020, according to the report.
Gumma said that it generally takes between 30 and 60 hours—depending on the size of the business, amount of sales and accuracy of record keeping—to complete an annual financial statement. He added that he believes businesses are either not fully aware of the requirements or could be struggling and unable to hire a certified public accountant to prepare the report.
David Egerton, the director of Infinite Chemical Analysis Lab, spoke out about the company’s $20,000 fine, due to two late statements. He told MLive that the CRA made the requirement in 2021 but amended them in 2022, which ultimately “caught many facilities off guard” and led to the business’s late filing.
The following other Michigan firms were also fined by the CRA:
? Bella Sol Wellness, Muskegon — $10,000 fine, failure to file annual financial statements for fiscal year 2021 in relation to its medical cannabis retail center license
? The ReLeaf Center of Lapeer — $10,000 fine, failure to file annual financial statements for fiscal year 2021 in relation to its medical cannabis retail license
? The ReLeaf Center of Nile — $20,000 fine, failure to file annual financial statements for fiscal year 2021 in relation to its medical cannabis retail licenses in Niles and Chesaning
? Essence Provisioning, Pinconning — $28,500 fine, failure to file annual financial statements for fiscal year 2020 in relation to its medical cannabis retail license; failure to file annual financial statements for fiscal year 2021 related to its medical and adult-use retail licenses
? Green Koi, Douglas — $9,500 fine, failure to file annual financial statements for fiscal year 2021 in relation to its adult-use retail license
? The Sweet Leaf, Flint — $8,000 fine, failure to file annual financial statements for fiscal year 2020 in relation to its medical cannabis retail license.
? Cannamazoo, Kalamazoo — $10,000 fine, failure to file annual financial statements for fiscal year 2020 in relation to its medical cannabis retail license.
The CRA has also published instructions to inform the public on how to check for complaints and disciplinary action taken against cannabis businesses.
In July, according to the monthly statistical report, the Michigan CRA issued 70 formal complaints against recreational cannabis companies and three against medical licensees.
