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Since the legislature adopted the Medical Marihuana Facilities Licensing Act (“MMFLA”) establishing commercial medical marihuana facilities for the first time, townships have been discussing locally whether to allow such facilities within their jurisdictions. The State of Michigan has also been busy preparing for the upcoming deadline when applicants can first apply for state licensure to operate a commercial medical marihuana facility. In preparation, the State created the Bureau of Medical Marihuana Regulation (“BMMR”). The BMMR is responsible for effectuating the MMFLA and the 2008 Medical Marihuana Act. In carrying out its responsibility, the BMMR has already released five advisory bulletins that shed light on the rules and regulations that will control growers, processors, transporters, provisioning centers, and safety compliance facilities. This E-Letter discusses those bulletins and explains what potential impact they may have on townships.

Overview of the BMMR

Since the legislature adopted the Medical Marihuana Facilities Licensing Act (“MMFLA”) establishing commercial medical marihuana facilities for the first time, townships have been discussing locally whether to allow such facilities within their jurisdictions. These discussions have persisted since September 2016 with a mix of results. Some townships have been early adopters of local licensing and zoning regulation to allow commercial medical facilities. Other townships continue to search for the appropriate answer in their jurisdiction, and others have already adopted ordinances or resolutions equivocally stating that no commercial medical marihuana facilities will be permitted within their jurisdiction. Regardless of whether a township has or has not permitted commercial medical marihuana facilities within its jurisdiction, staying abreast of the changes in the regulations remain important. Even those that are not authorizing commercial facilities may still have bordering jurisdictions that are doing so.

The newly created BMMR is part of the Department of Licensing and Regulatory Affairs. The goal of the BMMR is to centralize all medical marihuana related licensing and regulating into one bureau. A priority of the BMMR is to comply with the mandate set forth in the MMFLA that licensing applications must be available by December 15, 2017. The BMMR’s oversight includes implementing and monitoring the State’s “seed to sale” tracking system for commercial medical marihuana facilities.

The BMMR has the significant role of establishing rules that will implement the more general provisions provided in the MMFLA. These rules will provide more specific details about the application process, locating of facilities, lawful ownership interest in various facilities, local municipal oversight, collection of the excise tax, and a myriad of various issues that are new to the State due to the adoption of the MMFLA.

In the past month, the BMMR provided a glimpse of what the potential rules will include by issuing advisory bulletins, which address the topics of co-locating facilities, stacking certain facilities, applications, and local municipal authority.

Co-Location of Medical Marihuana Facilities

On September 21, 2017, the BMMR released a bulletin introducing the idea of co-locating grower, processor, and provisioning center facilities at the same location. The bulletin notes that a licensee could apply for and be granted a license to operate as a grower, processor, and provisioning center. Thus, all three facility licenses could be granted to the same licensee. These facilities could operate at the same location of a township, provided the following conditions are met:

• “Each licensed entity remains distinct and separate within different working areas.
• Each licensed entity has separate entrances and exits, point of sale operations (if applicable), and record keeping systems.
• The municipality in which the facility is located does not prohibit co-location of facilities through its local ordinance or zoning regulations.
• Each licensed entity is compliant with local and state public health standards and building inspection and fire safety regulations.
• Each entity’s license is posted on the wall in its distinct working area.
• The Department has authorized the licensees to operate at the same location.”

The BMMR further noted that additional inspections and permits may be required for co-located facilities. The licensee will also be required to file its own separate application, pay a separate regulatory assessment, and obtain a license for each co-located facility.

Significantly, the bulletin indicates that townships may individually choose whether facilities can co-locate within their jurisdiction. Thus, townships that have imposed separation distances between one commercial medical marihuana facility and another facility may maintain their regulations. Townships looking to concentrate medical marihuana facilities may also do so.

The bulletin also indicates that the BMMR may not intend to discount any fees or assessments for those licensees that intend to co-locate their facilities. Likewise, townships would still be entitled to collect application fees and enforcement assessments from individual licensees to the extent the total fees do not exceed $5,000.00.

The bulletin can be reviewed here:

http://www.michigan.gov/documents/lara/BMMR_Advisory_Bulletin_Co-Location_601340_7.pdf.

Stacking of Class C Grow Facilities

On September 28, 2017, the BMMR released a bulletin noting that it approves of “stacking” Class C grow facilities. Under the MMFLA, there are three classes of grow facilities: (1) Class A (not to exceed 500 plants); (2) Class B (not to exceed 1,000 plants); and (3) Class C (not to exceed 1,500 plants). “Stacking” would mean that a Class C license could be “stacked” with another Class C license to allow a facility to grow not more than 3,000 plants. According to the bulletin, a licensee can apply for multiple Class C licenses to “stack” the 1,500 plant threshold in a single location. The BMMR notes that such “stacking” will be subject to the following conditions, as stated in the bulletin:

• “A potential licensee that applies for stacked licenses will be subject to an additional application and regulatory assessment for each license.
• Stacked licenses must be issued to the same applicant/licensee.
• A licensee with stacked licenses must comply with all applicable local ordinances and zoning regulations.
• A licensee with stacked licenses must identify and track all information in the statewide monitoring system under the appropriate license.
• A licensee with stacked licenses is not required to operate each license in a separate, distinct working area.”

This bulletin also highlights that stacking is subject to local municipal regulation. If a township has not authorized stacking or otherwise prohibits it, the BMMR will recognize and restrict state licenses to remain consistent with that township’s desire. The bulletin also indicates that a licensee with stacked Class C licenses “is not required to operate each license in a separate, distinct working area.” This will allow a licensee to construct a single-large facility where all plants up to the stacked maximum can be grown in that facility. For example, if a licensee obtains three Class C licenses that are stacked in a single location, the licensee can operate in a single building where up to 4,500 plants can be grown.

The bulletin can be reviewed here:

 http://www.michigan.gov/documents/lara/BMMR_Advisory_Bulletin_Stacking_602035_7.pdf.

Required Marihuana Testing Points

On October 5, 2017, the BMMR issued a bulletin regarding the testing of marihuana and marihuana-infused products. For townships, this is of significant importance because many public comments center on how much oversight will exist in the growth, distribution and sale of medical marihuana under the MMFLA. According to the BMMR, it intends to test marihuana after it is harvested by a grower. This would be before the grower transfers any harvested marihuana to a processor or a provisioning center. Marihuana and marihuana-infused products will also be tested before they are transferred from a processor to a provisioning center. Licensed provisioning centers will have to place a label on their retail products indicating that testing has occurred. The specific contents or form of that label are not specified.

The bulletin also indicates that the results from these tests will be recorded in the statewide monitoring system by the safety compliance facility. To whom, and how, access is provided to this monitoring system is not yet made clear. A caregiver may also test his or her product, but those results will not be recorded in the statewide monitoring system.

The bulletin can be reviewed here:

 http://www.michigan.gov/documents/lara/BMMR_Advisory_Bulletin_Testing_602773_7.pdf.

Medical Marihuana Facilities License Application Process

On October 12, 2017, the BMMR released a fourth bulletin advising of the intended application process. According to the bulletin, the BMMR will be accepting electronic or paper applications. The application process will have two steps. The first step is “prequalification.” This step includes a full background investigation, including criminal history, financial history, compliance with regulations and laws, and business litigation history.

The second step is identified by the BMMR as the “license application.” This step requires the applicant to identify the specific license requested (i.e., grower, processor, provisioning center, safety compliance facility, or secure transporter). The BMMR expects to request information regarding the local municipality’s ordinance, local approval, business and security plans related to the requested license, site plans of the facility, and proof of adequate insurance.

For townships, the two-step process indicates that some licensees may get “prequalification” from the State of Michigan first. After completing that step, those licensees will then find a suitable local jurisdiction and go through the local approval process. As part of the second step, the bulletin uses the term “municipal approval.” This suggests that licensees must submit to the local process and receive approval for issuance of a local permit before being able to complete the second step. The BMMR will also be reviewing copies of local ordinances. The extent to which the BMMR will be verifying a plan’s compliance with local ordinances is not clear. Since the BMMR is requiring “municipality approval,” it may assume that the local ordinance’s requirements have been satisfied or otherwise no local approval would have been granted. Therefore, it will be important for townships reviewing applications to ensure that applicants have satisfied the conditions and requirements of the local ordinances.

The bulletin can be reviewed here:

http://www.michigan.gov/documents/lara/BMMR_Application_Advisory_Bulletin_603402_7.pdf.

A checklist outline some of the materials that will be reviewed by the BMMR is also available here:

http://www.michigan.gov/documents/lara/MMFL_Document_Checklist__603945_7.pdf.

Municipal Authorization of Medical Marihuana Facilities

On October 26, 2017, the BMMR issued a fifth bulletin addressing municipal approval of medical marihuana facilities. The MMFLA, itself, squarely addressed local approval of marihuana facilities in Section 205 of the Act. Section 205 of the MMFLA granted townships the authority to decide whether commercial medical marihuana facilities would be permitted in their jurisdictions:

“(1) A marihuana facility shall not operate in a municipality unless the municipality has adopted an ordinance that authorizes that type of facility. A municipality may adopt an ordinance to authorize 1 or more types of marihuana facilities within its boundaries and to limit the number of each type of marihuana facility. A municipality may adopt other ordinances relating to marihuana facilities within its jurisdiction, including zoning regulations, but shall not impose regulations regarding the purity or pricing of marihuana or interfering or conflicting with statutory regulations for licensing marihuana facilities.”

The bulletin echoes the same authorization provided in the MMFLA. The bulletin does indicate that the BMMR will be reviewing local ordinances to ensure compliance with the following prior to issuance of a state license:

• The types of facilities allowed;
• The maximum number of each type allowed to operate (and presumably verification the maximum limit has not been exceeded);
• Any zoning regulations that apply, including the requirement for special use permits.

One issue of interest will be for those townships that adjust maximum allowable facilities. Once state licensing review begins, any townships adjusting their ordinances will want to ensure updated ordinances are maintained on file with the BMMR.

The bulletin can be reviewed here: http://www.michigan.gov/documents/lara/ADVISORY_BULLETIN_-_Municipal_Authorization_FINAL_604557_7.pdf.

— Christopher S. Patterson

 Click here for a PDF version of this publication.

Fahey Schultz Burzych Rhodes PLC, Your Township Attorneys, is a Michigan law firm specializing in the representation of Michigan townships. Our lawyers have more than 150 years of experience in township law, and have represented more than 150 townships across the state of Michigan. This publication is intended for our clients and friends. This communication highlights specific areas of law, and is not legal advice. The reader should consult an attorney to determine how the information applies to any specific situation.