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Michigan Orders 210 ‘Grey Market’ Medical Marijuana Dispensaries To Close

By Roger Malespin

A wave of cannabis business closures in Michigan has caught the attention of the entire industry this past week. According the  state Department of Licensing and Regulatory Affairs, the closures are a result of those businesses not applying for a state license by the mid-February deadline or they did not receive proper authorization from their municipalities. 
“We had our team scour publicly available information to create a list and then we cross-referenced it with those who did turn in applications,” said David Harns, spokesman for the state Department of Licensing and Regulatory Affairs.
Much of the current confusion over cannabis businesses in Michigan stems from 2008, when Michigan voters passed a medical marijuana law which allowed caregivers to grow a small amount of the plant for patients with medical marijuana cards. For 8 years, these caregivers were operating as a ‘grey market’, meaning whether they were legal or not was uncertain. In 2016, the state passed a new law aimed at tightening the existing conditions in order to clear any confusion about their legality. The recently closed businesses failed to file for a proper license and have been receiving cease and desist orders from the state government.

“Personnel from the Bureau of Medical Marijuana Facilities Licensing Division Enforcement Section accompanied by Michigan State Police troopers have begun physically serving cease and desist letter to marijuana businesses that are not in compliance with Emergency Rule 19,” said David Harns in a written statement.
The day to day culling of these business, and the vetting of new applicants has been somewhat problematic for those seeking license. In one case, Michael Densmore, owner of GreenTransport Services in Gratiot County, wanted a license to be a secure transporter of medical marijuana to other cannabis businesses. But during a background check, a 20-year-old misdemeanor against Densmore that he hadn’t disclosed was discovered and he was declined. In another case, Tim McGraw, the owner of the business TJM Enterprises, which wanted to open a dispensary, had a misdemeanor marijuana charge in 2012 that was his first offense. The charge was removed from record after his completion of probation, but the extensive state background check uncovered it, and he was declined license based on his failure to disclose. 

It costs $6,000 to apply for a license. Licensees and applicants must notify the Department of Licensing and Regulatory Affairs, the state police and local law enforcement within 24 hours of any theft or less of product. Most of those who were rejected like Densmore and McGraw are eligible to re-apply in mid-April.

Licensing Board chairman Rick Johnson said the board is going through some growing pains. “We’ve got a lot of applications to get through and we’ll get through them,” he said. “But we want to get them right.”
This seems to be an inevitable result of the years of poor definitions and mismanagement by the Michigan state government on the legality of marijuana businesses. Though there doesn’t appear to be any attempt to change the law, only tightening the definition, the industry should still keep an eye on the situation and look out for any of the opposition lawmakers to undermine the existing terms.