A six-bill package introduced this month in Lansing seeks stricter state oversight of medical cannabis caregivers, which critics say is a veiled attempt by commercial growers to increase their retail market share.
House Bills 5300-5302 and 5319-5321 would limit the amount of plants and the number of patients that medical cannabis caregivers could serve under the state’s 2008 medical marijuana law. The bills would require caregivers to obtain a state license and also subject caregiver-grown cannabis to licensed testing. Cannabis sales from caregivers to patients would be exempt from taxes under the bill.
The Michigan Cannabis Manufacturers Association (MCMA), a trade group representing large-scale commercial cannabis growers, backs the legislation, saying it would bring state oversight to a large majority of unregulated cannabis sales. The group commissioned a study from East Lansing-based Anderson Economic Group showing roughly two-thirds of Michigan’s $3.2 billion in annual cannabis sales take place outside of the licensed marketplace.
“Which means there’s an awful lot of product out there that’s not being tested for safety and not being taxed,” MCMA Executive Director Stephen Linder told MiBiz. “The intent of all of the bills is to provide safe, tested products.”
In addition to licensing and testing requirements, the bills would limit the total number of plants a caregiver could grow to 12 after scaling back the number of patients from five to one.
“The bills we’ve written are a great pathway for people who are now caregivers to get a very low barrier to entry license and not have to build facilities,” Linder added. “The only real requirement is for them to test their product.”
However, the proposals have brought fierce opposition from caregiver advocates as well as some vertically integrated cannabis companies in the licensed marketplace. Critics say caregivers helped supply the state’s medical marijuana patients for nearly a decade before Michigan’s current regulatory structure was created in 2016 and followed up with a 2018 law for recreational cannabis.
“Knowing all of the drafters of the 2018 legalization bill, I don’t know a single one of them who support any changes to the state’s caregiver law,” said Josh Hovey, vice president at Lansing-based public relations firm Martin Waymire who served as spokesperson for the 2018 ballot initiative. “That is a pretty good indication that the intent of legalization was to create a law where caregivers and the licensed industry could live side by side.”
“Today you have a set of businesses seeking to gain a larger share of the market by essentially writing caregivers out of Michigan law or making it very difficult to operate and serve their patients,” Hovey added. “That’s why you’re seeing a really large section of Michigan’s licensed industry kind of break away from that effort to limit caregiver activity.”
The proposals also brought scrutiny from multiple company officials who recently participated in an MiBiz roundtable on Michigan’s cannabis industry. Some panelists called the effort a fundamental misunderstanding of Michigan’s cannabis “gray” market, and noted that many caregivers have since moved into the licensed marketplace. Caregivers can also provide niche products for patients at much lower costs than licensed retailers.
“Legacy Michigan caregivers that got in the regulated side of retail understood the Michigan market,” Peter Marcus, communications director of Grand Rapids-based Terrapin Care Station, said during the roundtable. “Your big (management services organizations) from out of state had no concept of the Michigan market. The institutional knowledge is on the legacy side. It’s the people who know about cannabis, quality and the market — they came from the underground side and have watched it grow forever. (Out-of-state companies) know about finance, publicly traded this and that. They don’t know a lot about marijuana.”
Linder contends that existing caregivers could still operate in Michigan, albeit under new regulations.
“They can still do it, they just have to buy a cheap license and test their product,” Linder countered.
Meanwhile, the bills would require a supermajority of support from the state Legislature, as well as Gov. Gretchen Whitmer’s approval. While some cannabis advocates have suggested this is too much of a barrier, Hovey noted that the effort is part of a well-funded campaign from multi-state operators.
“We’re not going through this process as an exercise,” Linder said. “We’re going through this process because we think the people of Michigan deserve to have confidence in the products they’re consuming. We would not have done this if we didn’t think reasonable people in the Legislature whose job it is to protect people were ready to hear the benefits of these bills.”