Michigan Judge Blocks Officials From Closing Unlicensed Cannabis Dispensaries

Michigan regulators keep trying to shut down the state’s unlicensed medical cannabis businesses. But Court of Claims Judge Stephen Borrello keeps blocking them. On Thursday, Judge Borrello signed his latest restraining order against the enforcement of a dispensary licensing deadline. Since regulators began attempting to curtail unlicensed dispensary operations in September 2018, the deadline has been pushed back several times.

Michigan Court Blocks “Drop Dead” Date for Unlicensed Provisioning Centers

March 31, 2019 was supposed to be a final deadline for Michigan’s unlicensed dispensary owners to either submit an application for a”provisioning center” license or shut down. State regulators called the deadline a “drop-dead date,” a stricter approach Michigan Gov. Gretchen Whitmer said was necessary in the face of additional pressure and scrutiny facing regulators over the sale of untested medical cannabis products.

Despite previous repeated attempts to enforce similar deadlines, dispensaries have sued and won injunctions against state-enforced shutdowns. Tuesday’s ruling keeps their winning streak alive, pushing back the licensing deadline for two more weeks. In other words, unlicensed medical cannabis dispensaries can still operate under the emergency rules set up last year.

Yet state officials and patients are growing increasingly concerned that those emergency rules aren’t doing enough to ensure safety. “I’ve heard a lot and I appreciate all the concerns about the supply of marijuana,” said Rick Johnson, chairman of the Medical Marijuana Licensing Board.

Under the program’s emergency rules, LARA permitted provisioning centers to sell untested medical cannabis products through 2018. Patients had to sign disclosure forms acknowledge they understood the risks of consuming untested marijuana. Once lab testing of caregiver grown cannabis became a requirement, more than a dozen strains failed due to mold, yeast, chemicals and other contaminants.

Why Does Michigan Keep Going After Medical Cannabis Dispensaries?

The state’s crackdown against unlicensed dispensaries stems from the nearly 8 year gap between the passage of Michigan’s medical cannabis law and legislation establishing a licensing and regulatory framework for the industry. In the meantime, an unlicensed industry of growers, distributors and retailers emerged to serve the program’s 50,000-plus caregivers and roughly 300,000 registered patients.

Efforts to block licensing deadlines focus on the impact dispensary closures have on patient access and affordability. But as the state licenses more provisioning centers and gears up to regulate an adult-use industry, officials have an incentive to shut down businesses that won’t get on board.

And that incentive is tax revenue. According to Michigan’s Department of Licensing and Regulatory Affairs (LARA), legal medical cannabis sales topped $42 million in just the first four months after the opening of the first licensed provisioning center. When authorized provisioning centers get the green light to begin selling to retail consumers, total cannabis sales could top $1 billion, state officials estimate.

Michigan’s Regulation and Taxation of Marijuana Act went into effect on December 6, 2018. The law imposes a 10 percent excise tax on provisioning center retailers. Customers will pay standard 6 percent sales tax. But adult-use consumers will have to wait at least a year for LARA to license and regulate the retail industry.

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