Michigan Officials Close 40 Medical Marijuana Dispensaries

By Paul Gaita 03/20/18

A prominent licensing issue could drastically impact the state's projected revenue from marijuana businesses.

Store Owner Turning Closed Sign In Shop Doorway

Forty medical marijuana businesses were closed on March 15, and hundreds more are expected to receive similar cease and desist letters from state officials and law enforcement over alleged violations of licensing rules.

Businesses that did not file an application for a license by the February 15 deadline, established by a set of emergency rules signed into law by Governor Rick Snyder to keep such establishments open, were considered to be operating illegally, and were shuttered.

The closures appear to place another roadblock in the path of Michigan's already complicated medical marijuana industry, which has been projected to draw more than $700 million in revenue per year.

According to the Detroit Free Press, cease and desist letters were given to business owners by representatives of the state Department of Licensing and Regulatory Affairs and police. No products were confiscated, according to David Harns, a spokesperson for the department, who did not specify which businesses were given the letters, though the Free Press speculated that these were most likely dispensaries operating outside of state medical marijuana laws.

Voters passed the Michigan Medical Marihuana Act in 2008, which granted caregivers the right to grow up to 12 marijuana plants for each of five patients with valid medical marijuana cards. As the Free Press noted, some caregivers established dispensaries that formed the foundation of the state's medical marijuana industry, which the legislature decided to tax and regulate in 2016. 

However, an array of conflicting bills muddied the path to streamlined regulations, resulting in a proposed shutdown of all existing dispensaries on December 15, 2017.

Governor Snyder signed an emergency bill that allowed the state to accept license applications and allowed the established dispensaries to remain open while seeking a license, as long as they operated with the approval of their community and applied for the license by the February 15 deadline. 

The state began accepting license applications in December, and according to the Free Press, more than 350 filed to pre-qualify for a license, which will require both a state background check and the approval of a town that has passed an ordinance allowing their business to operate within its borders. Another 117 have already been turned in with community approval. Applications will be considered on March 22, and will be issued in April 2018.

Hundreds more, however, did not apply for the license, and these are the businesses that find themselves in the crosshairs of the licensing department.

As High Times noted, the reasons for their failure to file may not be as simple as missing the deadline or flaunting the rules. The process is both time-consuming and expensive, and while larger establishments may hire lawyers to help them through the process, smaller businesses may find themselves struggling with the paperwork and the fees. 

The issue over licensing could have an impact on the projected revenue for the state from marijuana businesses—a number that could rise significantly if voters approve legalization for recreational use in November 2018.

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Paul Gaita lives in Los Angeles. He has contributed to the Los Angeles Times, Variety, LA Weekly, Amazon.com and The Los Angeles Beat, among many other publications and websites.