With rules forthcoming from the Department of Licensing and Regulatory Affairs, Michigan State University Extension is offering training for local government on next steps in local regulation of medical marijuana facilities.
On September 21, 2016, Governor Snyder signed three new laws that clarify and add to the state’s voter-approved Michigan Medical Marihuana Act from 2008. The new laws give local governments the authority to regulate the number and location of commercial medical marijuana facilities, allow marijuana-infused products and create a “seed-to-sale” tracking system. The bills are now PA 281, 282, and 283 of 2016.
Public Act 281, the Medical Marihuana Facilities Licensing Act (MMFLA), creates a licensing and regulatory structure for five types of medical marijuana facilities: growers, processors, provisioning centers, secure transporters and safety compliance facilities. The act authorizes applications for state operating licenses beginning December 15, 2017.
That date is rapidly approaching and more and more Michigan local governments are discussing whether to allow medical marijuana facilities within their jurisdiction or not. To keep such facilities out, local governments need not take any action. To allow one or more facility type, local governments must pass an ordinance authorizing the facility type(s).
The MMFLA is absent particular details with respect to the required operations of medical marijuana facilities and the Michigan Department of Licensing and Regulatory Affairs (LARA) is charged with making rules to further regulate the five facility types. In particular, the Bureau of Medical Marihuana Regulation is responsible for the oversight of medical marijuana in Michigan. In September the Bureau of Medical Marihuana Regulation began releasing advisory bulletins for medical marijuana facilities.
In addition to providing prospective facility operators with the rules by which they must operate, the bulletins also provide local governments insights as to aspects of medical marijuana facilities that local ordinances can and cannot regulate.
The fall 2017 webinar will assume a base-level of understanding of the national and state context of medical marijuana, the overall regulatory framework in Michigan and local government roles in planning and zoning for uses of land.
The “Next Steps in Local Regulation of Medical Marijuana Facilities Webinar” will be delivered live at three different dates and times allowing participants to choose the option that works best: November 30, 2017, 6-8pm, December 4, 12:30-2:30pm and December 11, 6-8pm. The webinar will review Michigan’s medical marijuana facilities laws, summarize options for local government regulation, highlight ordinances that municipalities are adopting and compare approaches and detail state authority and the latest rules facilities must follow.
Those interested in the “Next Steps in Local Regulation of Medical Marijuana Facilities Webinar” may wish to first view a webinar recording of the winter/spring MSU Extension training – “Regulating Medical Marijuana Facilities: A Webinar for Local Government” presented on March 30, 2017. Information on how to access the webinar recording is available at http://msue.msu.edu/mmfla along with educational materials and resources from the earlier training.
Setting up ridiculously difficult requirements for licensing eligibility prioritizes the high profits of a few over industry efficiency, true competition, and patient/consumer rights.
State-sanctioned medical marijuana operational licenses are increasingly becoming a “pay-to-play, greatest barrier to entry” model. In this sort of system, there is usually some combination of the following, all geared towards minimizing the number of licensed cannabis businesses and towards making sure all those who get such licenses are very well-funded:
A difficult and time consuming license application process;
High application fees;
An unreasonably short application window; and
High minimum funding requirements.
To varying extents, Florida, Illinois, New York, Hawaii, Minnesota, and Nevada all have this sort of legalization regime.
Florida. In Florida, only five agricultural nurseries that have been in existence for at least the last thirty years were even eligible to be licensed as dispensing organizations under the state’s extremely limited medical marijuana program. From the few nurseries that qualified, the state prioritized financials in its scoring process and required all of the nurseries to post a $5 million dollar performance bond. In other words, if you weren’t a large and well-funded nursery that has been around for 30-plus years, forget about it. These five nurseries have nearly unfettered access to Florida’s population of 20 million and there’s a chance these five nurseries could end up being the sole providers of medical cannabis under Florida’s impending medical marijuana ballot initiative.
Illinois. Illinois allows only 21 cultivation centers and 60 dispensaries to serve all 13 million people in the state. Illinois set up a point system for judging cannabis licensing applicants based on their proposed security plans, their expertise in growing marijuana, and their plans for patient education. Cultivation centers were required to pay $200,000 for an initial license and have at least $500,000 in liquid assets, in addition to a non-refundable $25,000 application fee. Dispensaries were required to pay $30,000 for a license and have $400,000 in liquid assets, in addition to a non-refundable $5,000 application fee.
New York. Start-up costs for running a medical cannabis company in New York were estimated at around $25 million. The state required a $10,000 non-refundable application fee, plus a $200,000 refundable registration fee for each application. Those seeking a cannabis license also had to show they had the real estate necessary to produce cannabis or be able to post a $2 million bond. Only five operators are allowed to run up to 20 dispensaries throughout the state, and applicants had to produce a litany of documents for the state’s Department of Health that described, in detail, the applicant’s manufacturing processes, transporting, distributing, sale and dispensing policies or procedures. Not as exclusive as Florida, but that’s 20 dispensaries for 20 million people.
Hawaii. Hawaii kicked off its new MMJ legalization regime with a five-year residency requirement and the requirement that its MMJ companies be majority-owned by Hawaiians. Hawaii has some of the toughest, most protectionist cannabis regulations and barriers to market entry in the country. It is set to have only 16 dispensaries in the state, and business applicants also needed to show $1,000,000 “for each license applied for,” and “not less than $100,000 for each retail dispensing location,” all of which had to be under the control of the applicant for no less than 90 days prior to the date of application. There was also a $5,000 non-refundable application fee for each license. Applicants awarded with licenses had to pay $75,000 for each license within a week of approval. Dispensary licensees must also pay an annual renewal fee of $50,000.
Minnesota. Minnesota has an extremely limited medical cannabis program. First, only two operators serve the entire state for cultivation, manufacturing, and distribution. The two operators each operate four dispensaries in the state, for a total of eight. The two operators were selected after the state reviewed their personal histories and capabilities with respect to cultivation, manufacturing, and patient services — these folks even had to commit to having a licensed pharmacist on staff to distribute the cannabis (which makes little sense since cannabis cannot be legally prescribed). And, of course, the state also assessed their financial stability and business plans. One of the operators, Leafline, reportedly raised $12.4 million in investment from 113 investors. All of this for a state that, at the time, claimed to have only 5,000 registered qualifying patients.
Nevada. In Nevada, running a marijuana business is like running a casino — it’s capital-intensive and only a select few get to participate. Nevada requires local control of its cannabis businesses and its license applicants needed to show no less than $250,000 in liquidity. They also had to produce volumes of documents showing detailed floor plans, security, personnel manuals, and even advertising and marketing plans, all of which were scored against a strict point system. In addition, the application fee was a non-refundable $5,000, and the license issuance fee (per license) is $30,000.
All of the above states have created massive barriers to entering into their medical marijuana industries. On the flip side, all four states (Colorado, Washington, Oregon, and Alaska) that legalized recreational marijuana do not have nearly the barriers to entry as these medical states.
Though it makes sense for states to want to closely hew to the priorities set forth in the 2013 Cole memo, setting up ridiculously difficult requirements for licensing eligibility prioritizes the high profits of a few over industry efficiency, true competition, and patient/consumer rights. The medical marijuana states have set up uneven playing fields that give the already wealthy near monopoly power over medical cannabis. How is this a good system for anyone but the few who have bestowed with the spoils?
I can only hope that Colorado, Washington, Oregon, and Alaska will eventually serve as models in in showing how letting the marketplace choose cannabis winners and losers is preferable to patronage systems with high barriers to licensing. So far, these recreational-legal states are proving that market entry equality and the priorities set forth in the Cole memo can be squared.
Genetic differences between hemp and marijuana determine whether Cannabis plants have the potential for psychoactivity, a new study by University of Minnesota scientists shows.
“Given the diversity of cultivated forms of Cannabis, we wanted to identify the genes responsible for differences in drug content,” says U of M plant biologist George Weiblen. While marijuana is rich in psychoactive tetrahydrocannabinol (THC), hemp produces mostly a non-euphoric cannabidiol (CBD), but the genetic basis for this difference was a matter of speculation until now. The study was published in the July 17 online edition of New Phytologist.
The discovery of a single gene distinguishing the two varieties, which according to Weiblen took more than 12 years of research, could strengthen hemp producers’ argument that their products should not be subject to the same narcotics laws as hemp’s cannabinoid cousin. Since 1970, all Cannabis plants have been classified as controlled substances by the federal government, but nearly half of all states, including Minnesota, now define hemp as distinct from marijuana. Efforts to revise hemp’s U.S. legal status so that it could again be cultivated commercially have gained momentum in recent years.
The market for hemp seed and fiber in the U.S. surpassed $600 million last year alone. But despite the plant’s surging popularity as an ingredient in food, personal care products, clothing and even construction, commercial hemp cultivation is prohibited by the federal government. Currently, all hemp products are imported to the U.S.
Research on hemp is tightly controlled by government regulations. Weiblen and his co-authors at the University of Mississippi are among few labs in the country with the federal clearance to study Cannabis.
“It’s a plant of major economic importance that is very poorly understood scientifically. With this study, we have indisputable evidence for a genetic basis of differences among Cannabis varieties,” says Weiblen, “further challenging the position that all Cannabis should be regulated as a drug.”
Weiblen is a professor with a joint appointment in the University of Minnesota’s College of Biological Sciences and College of Food, Agricultural and Natural Resource Sciences, a resident fellow in the Institute on the Environment and serves as the Curator of Plants at the Bell Museum of Natural History.
Largest Health Care Fraud Settlement in U.S. History
Department of Justice – Office of Public Affairs Monday, July 2, 2012
Global health care giant GlaxoSmithKline LLC (GSK) agreed to plead guilty and to pay $3 billion to resolve its criminal and civil liability arising from the company’s unlawful promotion of certain prescription drugs, its failure to report certain safety data, and its civil liability for alleged false price reporting practices, the Justice Department announced today. The resolution is the largest health care fraud settlement in U.S. history and the largest payment ever by a drug company.
GSK agreed to plead guilty to a three-count criminal information, including two counts of introducing misbranded drugs, Paxil and Wellbutrin, into interstate commerce and one count of failing to report safety data about the drug Avandia to the Food and Drug Administration (FDA). Under the terms of the plea agreement, GSK will pay a total of $1 billion, including a criminal fine of $956,814,400 and forfeiture in the amount of $43,185,600. The criminal plea agreement also includes certain non-monetary compliance commitments and certifications by GSK’s U.S. president and board of directors. GSK’s guilty plea and sentence is not final until accepted by the U.S. District Court.
GSK will also pay $2 billion to resolve its civil liabilities with the federal government under the False Claims Act, as well as the states. The civil settlement resolves claims relating to Paxil, Wellbutrin and Avandia, as well as additional drugs, and also resolves pricing fraud allegations.
“Today’s multi-billion dollar settlement is unprecedented in both size and scope. It underscores the Administration’s firm commitment to protecting the American people and holding accountable those who commit health care fraud,” said James M. Cole, Deputy Attorney General. “At every level, we are determined to stop practices that jeopardize patients’ health, harm taxpayers, and violate the public trust – and this historic action is a clear warning to any company that chooses to break the law.”
“Today’s historic settlement is a major milestone in our efforts to stamp out health care fraud,” said Bill Corr, Deputy Secretary of the Department of Health and Human Services (HHS). “For a long time, our health care system had been a target for cheaters who thought they could make an easy profit at the expense of public safety, taxpayers, and the millions of Americans who depend on programs like Medicare and Medicaid. But thanks to strong enforcement actions like those we have announced today, that equation is rapidly changing.”
This resolution marks the culmination of an extensive investigation by special agents from HHS-OIG, FDA and FBI, along with law enforcement partners across the federal government. Moving forward, GSK will be subject to stringent requirements under its corporate integrity agreement with HHS-OIG; this agreement is designed to increase accountability and transparency and prevent future fraud and abuse. Effective law enforcement partnerships and fraud prevention are hallmarks of the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which fosters government collaboration to fight fraud.
What does the Medical Marihuana Licensing Board (“the board”) do?
The Medical Marihuana Licensing Board is comprised of 5 members, appointed by the Governor (with input from the Senate Majority Leader and the Speaker of the House), to administer the Medical Marihuana Facilities Licensing Act. This includes reviewing applications, issuing licenses, revoking/suspending licenses, renewing licenses, and investigating individuals who are applying for licensure or complaints received about someone who holds a license.
What are the different licenses I can apply for?
You may apply for the following licenses:
Grower
Processor
Transporter
Provisioning Center
Safety Compliance Facility
What costs are associated with a license?
Payment to secure transporters for transferring marihuana, as needed;
Annual, nonrefundable fee (of up to $5,000) to be set by, and paid to, your local municipality.
These fees are used to offset administrative and enforcement costs associated with the operation of a marihuana facility in the municipality;
An application fee per category and class of license;
Investigation and processing fees not covered by the application fee;
An annual regulatory assessment fee;
A renewal fee;
Late fees if renewal fee is not paid on time;
Provisioning centers will pay 3% on gross retail receipts
Does my municipality have any involvement with my license?
Yes, a municipality (city, township or village) has the following involvement:
Must pass an ordinance which authorizes the type of facility you wish to open;
May limit the number of each type of facility within the municipality’s boundaries;
Any other ordinances relating to marihuana facilities;
May adopt zoning regulations relating to facilities within its jurisdiction;
The municipality must receive notice from you that you have applied for any one of the five licenses;
May establish an annual fee to be paid by you; the fee can be as much as $5,000.00;
Must approve your request to have your license transferred, sold or purchased.
Does my criminal history prevent me from obtaining a license?
It depends on whether the following are true:
The applicant is ineligible if he or she has been convicted of or released from incarceration for a felony under the laws of this state, any other state, or the United States (federal law) within the past 10 years or has been convicted of a controlled substance-related felony within the past 10 years.
The applicant is ineligible if he or she has been convicted of a misdemeanor involving a controlled substance, theft, dishonesty, or fraud in any state within the past 5 years.
The applicant is ineligible if he or she has been found responsible for violating a local ordinance in any state involving a controlled substance, dishonesty, theft, or fraud that substantially corresponds to a misdemeanor in that state within the past 5 years.
The Board may take into consideration the following:
Whether the applicant has been indicted for, charged with, arrested for, or convicted of, pled guilty or nolo contendere to, forfeited bail concerning, or had expunged any relevant criminal offense under the laws of any jurisdiction, either felony or misdemeanor, not including traffic violations, regardless of whether the offense has been expunged, pardoned, or reversed on appeal or otherwise.
What prohibits a person from obtaining a license?
An applicant cannot obtain a license if any of the following is true:
The applicant is ineligible if he or she has knowingly submitted an application for a license under this act that contains false information.
The applicant cannot be a member of the Medical Marihuana Licensing Board.
The applicant is ineligible if he or she fails to demonstrate the ability to maintain
adequate premises liability and casualty insurance for its proposed marihuana facility (an insurance policy that covers at a minimum of $100,000).
The applicant cannot hold an elective office of a governmental unit of this state, another state, or the federal government; is a member of or employed by a regulatory body of a governmental unit in this state, another state, or the federal government; or is employed by a governmental unit of this state. This subdivision does not apply to an elected officer of or employee of a federally recognized Indian tribe or to an elected precinct delegate.
The applicant, if an individual, is ineligible if he or she has been a resident of this state for less than a continuous 2-year period immediately preceding the date of filing the application. This requirement does not apply after June 30, 2018.
The applicant is ineligible if the Board determines he or she failed comply with section 205(1).
The applicant fails to meet other criteria established by rule.
The applicant is ineligible if he or she has been convicted of or released from
incarceration for a felony under the laws of this state, any other state, or the United States (federal law) within the past 10 years or has been convicted of a controlled substance-related felony within the past 10 years.
The applicant is ineligible if he or she has been convicted of a misdemeanor involving a controlled substance, theft, dishonesty, or fraud in any state within the past 5 years.
The applicant is ineligible if he or she has been found responsible for violating a local ordinance in any state involving a controlled substance, dishonesty, theft, or fraud that substantially corresponds to a misdemeanor in that state within the past 5 years.
What other things may potentially prevent an applicant from getting approved for a license?
The Board may take into consideration the following:
The integrity, moral character, and reputation; personal and business probity; financial ability and experience; and responsibility or means to operate or maintain a marihuana facility of the applicant and of any other person that either:
Controls, directly or indirectly, the applicant.
Is controlled, directly or indirectly, by the applicant or by a person who controls, directly or indirectly, the applicant.
The financial ability of the applicant to purchase and maintain adequate liability and casualty insurance.
The sources and total amount of the applicant’s capitalization to operate and maintain the proposed marihuana facility.
Whether the applicant has filed, or had filed against it, a proceeding for bankruptcy within the past 7 years.
Whether the applicant has been served with a complaint or other notice filed with any public body regarding payment of any tax required under federal, state, or local law that has been delinquent for 1 or more years.
Whether the applicant has a history of noncompliance with any regulatory requirements in this state or any other jurisdiction.
Whether at the time of application the applicant is a defendant in litigation involving its business practices.
Whether the applicant meets other standards in rules applicable to the license category.
Whether the applicant has been indicted for, charged with, arrested for, or convicted of, pled guilty or nolo contendere to, forfeited bail concerning, or had expunged any relevant criminal offense under the laws of any jurisdiction, either felony or misdemeanor, not including traffic violations, regardless of whether the offense has been expunged, pardoned, or reversed on appeal or otherwise.
Where can I find more information on each type of license?
Details on each license category can be found in Part 5 of the Michigan Medical Marihuana Facilities Licensing Act, 2016 PA 281.
