Michigan to open access to the recreational marijuana market in March to help curb black market sales
First recreational marijuana facility in Kent County has grand opening
Early next year, Michigan will eliminate a barrier to entry in the state’s recreational marijuana industry that has stifled growth and unintentionally complicated the fight against unlicensed, black market marijuana.
As of March 1, certain newly licensed recreational marijuana businesses — retailers, processors, transporters, safety labs, class B and C growers — will no longer be required to first hold a medical marijuana business license, the state Marijuana Regulatory Agency announced Tuesday, Oct. 6.
This means lower application and license fees for businesses not wishing to grow, sell, test, process or transport medical marijuana. And it opens up market access to new businesses; for instance, those in communities that have not opted in to the medical marijuana market but that would like to participate in the recreational market.
Robin Schneider, director of the Michigan Cannabis Industry Association, a trade organization comprised of over 200 marijuana businesses, said the original intent of the medical license prerequisite was to give pioneering companies that assumed risk and invested early a chance to establish themselves and recoup costs before the recreational market was flooded with competition. The first medical marijuana business licenses were issued in 2018 and recreational businesses began opening last December.
The prerequisite was to remain in place for two years after the state began accepting licenses last November, but there was a caveat. The 2018 voter-passed recreational marijuana law said the state could do away with the requirement one year after the first recreational business applications were received in order to curb the black market, increase access to rural communities or to satisfy supply shortages.
The Marijuana Regulatory Agency in its decision to eliminate the requirement early is citing difficulties combating unlicensed and usually untested marijuana.
“According to data provided by the Michigan State Police Marijuana Tobacco Investigation Section, 83% of the seizures of illicit marijuana plants and products occur in municipalities that do not have regulated marijuana establishments,” the Marijuana Regulatory Agency said. “In the past year, the city of Detroit has seen a 36% increase in narcotics-related homicides and a 214% increase in specifically marijuana-related non-fatal shootings.
“As municipalities throughout the state consider ordinances to allow marijuana establishments, the current eligibility restriction acts as a barrier to approaching local authorization in a way that is equitable. Greater municipal participation is a critical element in reducing the impact of the illicit market.”
Detroit, where hundreds of marijuana shops were openly operating prior to creation of the licensed market and have since been shut down, has yet to approve any recreational marijuana business licenses.
The industry itself is split on whether the medical license rule should remain in place through the original November 2021 expiration date.
“Stand-alone retailers are going to say we need more production licenses on the rec side,’ Schneider previously told MLive. “If you are a medical grower or a vertically integrated grower, you’re probably not going to be as supportive.”
According to Marijuana Regulatory Agency Director Andrew Brisbo, short supply in the fledgling market remains an issue.
“And the greater number of operators and the more competition there is, that would tend likely to reduce prices through the supply chain and at the retail level,” Brisbo said in August. “We certainly aren’t meeting demand yet, but I think it is important to consider the pace of growth in the regulated market and whether that is consistently increasing to meet that demand at some point in a reasonable time frame.”
Since recreational marijuana sales began Dec. 1, the industry has reported $272 million in revenue. Medical marijuana sales totaled nearly $333 million over the same time frame.
Monthly recreational sales for the first time surpassed medical sales in July, a trend that’s expected to continue indefinitely as recreational sales approach a projected $1 billion per year.
Michigan to open access to the recreational marijuana market in March to help curb black market sales First recreational marijuana facility in Kent County has grand opening Early next year,