Michigan Cannabis Shops Will Now Only Accept Supply from State-Licensed Growers

Michigan regulators have been trying to get a grip on the state’s vast network of unlicensed cannabis growers and sellers for nearly a year. But the latest move by the department of Licensing and Regulatory Affairs (LARA) could have the opposite effect, driving unlicensed growers back to the so-called “black market.” On Thursday, LARA issued new policy guidance barring licensed medical marijuana provisioning centers from stocking caregiver-grown cannabis, effective immediately. Instead, Michigan cannabis shops will now only accept supply from state-licensed growers and processors. Caregiver growers will still be able to sell cannabis to state-licensed growers and processors—just not sellers. But they’ll have to pay to have those products tested, first.

Rejecting Caregiver-Grown Cannabis Latest Page in Ongoing Regulatory Saga

Michigan’s transition from a largely informal medical cannabis economy to a fully regulated retail and medical industry has been, in a word, chaos. Or in the words of Court of Claims Judge Stephen Borrello, who has been at the center of the state’s ongoing regulatory saga, it has been “apt to sudden change, freakish, or whimsical.”

Borrello has ruled on multiple legal challenges to LARA’s attempts to shut down unlicensed dispensary operators. In every case, he’s filed injunctions to block the closures and keep dozens of unlicensed dispensaries operating. Judge Borrello’s latest ruling gave those unlicensed dispensaries a 60-day grace period, which allows them to continue operating up to two months after LARA denies their license application.

But Borrello left one thing up to LARA. Namely, the question of whether to allow caregivers to supply the licensed market. On Thursday, LARA issued guidance addressing precisely that issue. It told caregivers that they could no longer supply licensed cannabis retailers with products. But caregivers can still sell to licensed processors and growers.

New Regulations Could Make Michigan’s Unlicensed Market Explode

LARA’s latest policy shift barring caregivers from selling to licensed retailers has stirred the already simmering pot between Michigan’s small-scale caregiver-growers and the corporate “mega-growers” keen on muscling them out.

Requiring the licensed market to switch over to regulated product is a major win for corporate growers, who have long-criticized the state’s reliance on caregiver-grown cannabis. That caregiver-grown cannabis has also come under increased scrutiny after some batches of product tested positive for E. coli, Salmonella, mold, and other contaminants. Contaminated products were recalled and according to officials did not cause any illnesses or other adverse effects among consumers.

Corporate growers and other licensed cultivation operators also claim that caregiver-growers cut into their bottom line. From the consumer side, however, caregiver products are still favorable as less expensive and more focused on the needs of patients. Corporate growers are more interested in the retail market, patients and caregivers claim.

And that, according to Jerry Millen, owner of Walled Lake, a licensed provisioning center, is a recipe for “black market” diversion. “I’m afraid this is going to make the black market explode 100-fold,” Millen said.

The beef over the quality of caregiver-grown products has soured many unlicensed growers to the licensed industry. And since Judge Borrello’s ruling means unlicensed dispensaries can stay open, caregivers are now highly likely to simply take their products to them instead. And without the regulatory overhead costs for testing and labeling, those products will be cheaper and potentially more medically-focused. It’s inevitable that patients will seek them out.

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