New Proposed Regulations and Rules for Michigan’s Cannabis Industry

In August, the Marijuana Regulatory Agency (MRA) in Michigan proposed new marijuana regulations and rules for both adult-use and medical marijuana businesses.

As many people in the cannabis industry know, there’s already a comprehensive rule-set in place.

However, the new proposed rules include many changes; some large, some small, and some extremely significant.

There’s a public hearing scheduled for Monday, September 27, to take public comment on them.

Until then, read below for the highlights of the proposed rules.

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Employment Exclusion

The MRA provides an exhaustive list of people that are excluded from employment in the cannabis industry.

Someone is excluded from being employed at a cannabis business if:

• There’s a pattern of convictions involving theft, dishonesty, or fraud.
• They engaged in conduct involving theft, dishonesty, or fraud.
• They’re criminally ineligible for licensure under the acts (MRTMA and MMFLA), or these rules.
• They engaged in conduct that could negatively impact public health, safety, and welfare.
• They’re convicted of distribution of a controlled substance to a minor in any jurisdiction.

Furthermore, the MRA doesn’t want anyone employed in the industry with a record that indicates the person won’t, “maintain employment with honesty and integrity.”

If anyone meets this criteria, they can’t work for a cannabis business.

Then, the agency will file a notice of exclusion.

However, it’s important to note that there’s the opportunity to appeal this exclusion and request a hearing.

You must apply for a hearing within 21 days of receiving notice of exclusion.

This exclusion list indicates that the MRA wants to have more oversight of employees in Michigan’s cannabis industry, similar to Colorado.

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New Class A Microbusiness License

One of the most appealing changes to the Michigan marijuana proposed rules is the introduction of a class A microbusiness license.

Currently, a standard microbusiness license allows the cultivation of 150 plants.

However, a class A microbusiness license would allow the cultivation of up to 300 plants.

The MRA states that only mature marijuana plants matter in this 300 count.

An extremely important detail of this Michigan marijuana proposed rule is that a licensed processor can sell their marijuana-infused goods to a microbusiness.

The microbusiness can then sell these products to the consumer.

Currently, a microbusiness has to have resources available to process their marijuana into edibles.

With this proposed rule, the MRA indicates that they’re okay with microbusinesses purchasing edibles from licensed processors.

Let’s be clear; this new license is not a substitution for the current microbusiness license.

It would be another obtainable license for someone wishing to operate as a microbusiness.

Additionally, municipalities may choose to opt-in to allowing the standard microbusiness license over the class A microbusiness license.

If the MRA does adopt this rule, they should take action to encourage municipalities to opt-in to class A microbusinesses.

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Need clarification on these rules? Request a consultation now.

New Educational Research License

Another new license type introduced by the MRA in these Michigan marijuana proposed rules is the ‘marihuana educational research license.’

According to the R 420.27a, the marihuana educational research license authorizes a licensee to do all of the following:

• Obtain marihuana from a marihuana establishment.
• Produce marihuana products.
• Perform research on marihuana and marihuana products.
• Dispose of marihuana and marihuana products.

It’s important to recognize that the license allows the production of marijuana products, but not the sale of them.

Additionally, the licensee needs to apply and obtain, “the necessary registration from the United States Drug Enforcement Administration (DEA) within 90 calendar days of the issuance of a license.”

After that, you need to provide proof of registration to the MRA.

This rule is intended to provide an opportunity for schools with cannabis programs, such as Northern Michigan University, to conduct hands-on research in the classroom.

Additionally, growers or processors can apply for the educational research license.

They may want to conduct research into specific strains, effects, and more.

Given the fact that there’s been a prohibition of marijuana for the past 50+ years, there’s been a significant stifling of research related to it.

There’s so much more that we can learn from this plant; not only its medicinal properties, but other products that can derive from it.

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Packaging/Labeling Requirements for Edibles and Other Infused Products

Another highlight of the Michigan marijuana proposed regulations is the expanded packaging and labeling requirements for marijuana infused edibles.

The key takeaway from this proposed rule is that the MRA doesn’t want any edibles to appeal to minors in any way.

The rule states that, “a producer of edible marihuana product shall comply with all the following:”

(a) Not produce an edible marihuana product that is associated with or has cartoons, caricatures, toys, designs, shapes, labels, or packaging that would appeal to minors.

(b) Not produce edible marihuana products in the distinct shape of a human, animal, or fruit, or a shape that bears the likeness or contains characteristics of a realistic or fictional human, animal, or fruit, including artistic, caricature, or cartoon renderings. Edible marihuana products that are geometric shapes and fruit flavored are permissible.

(c) Not package an edible marihuana product in a package that bears the image, likeness, or contains the characteristics of commercially available food products.”

For example, producing infused cookies and brownies is OK, but producing a cookie in packaging that bears the likeness to Oreo™ packaging is not.

These rules are generally in response to something that the MRA identified as a problem.

They don’t want liability for any bad press.

Therefore, the MRA is likely to adopt this rule in some fashion.

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Contractual and Operating Agreements

This is, perhaps, the most interesting of the Michigan marijuana proposed rules. In R 420.112a, the MRA aims to allow licensees to enter contract(s) with other parties to use the other party’s intellectual property.

If adopted, they’ll also allow the other party to provide, “management or other services necessary for the operation of the licensee pursuant to a licensing, management, or other agreement approved by the agency.”

In the pre-qualification process, the MRA requires disclosure from all individuals that possess 10% or more equity in a company.

Some dread the disclosure process. While some fear denial due to criminal or civil litigation history, most simply don’t want their name on a license.

So, what do they do?

They go to lawyers like us for advice on what to do.

However, with this provision, it seems that the MRA wants to know the ins and outs of agreements from a licensed cannabis business.

Not only do they want to know them, but they want to approve these agreements.

This rule is one that seems entirely too broad, as the MRA doesn’t specify what agreements they want to see and approve.

Additionally, this rule doesn’t state the criteria they’ll be utilizing to approve these agreements.

The same can be said for R 420.206a.

In this rule, the agency aims to require two more things from licensees:

1. standard operating procedures (SOPs)
2. detailed financial records.

Again, they don’t state the criteria for these requirements.

The MRA is trying to close loopholes, which is expected.

However, they need to be way more specific when doing so; which is what we intend to comment on during the public hearing on these rules.

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Need clarification on these rules? Request a consultation now.

Requirements for Curbside Pick-Up

Lastly, the MRA is trying to provide more clarity for contactless transactions, such as curbside pick-up, that became popular due to the COVID-19 pandemic.

R420.207a states that a licensed retailer may designate an area for “contactless or limited contact transactions,” unless prohibited by the municipality where the retailer operates.

Additionally, this rule states the requirements for the product’s packaging, online orders, hours for curbside transactions, etc.

It’s interesting that the pandemic caused the MRA to adopt more sophisticated regulations in regards to curbside transactions.

What’s Next for Michigan Marijuana Proposed Regulations?

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From these Michigan marijuana proposed regulations, it’s clear that the MRA is trying to oversee licensees and their operations more.

Some make sense and are specific, while some need more clarity before enactment.

Luckily, that’s why there is a public hearing on Monday, September 27 for public comment on these rules before they’re made into law.

Our team of cannabis lawyers will ensure our voices are heard when it comes to passing them the final rule-set.

Need help getting into the cannabis business? Interested in growing your company? Request a consultation now.