Uncertainty pervades medical marijuana market

Local medical marijuana businesses may need to close their doors in September or risk ever receiving a license as a state-imposed deadline threatens to curtail the entire industry statewide.

Emergency rules governing the fledgling pot market — already twice extended by Michigan’s Department of Licensing and Regulatory Affairs — have allowed entrepreneurs to conduct business while officials sift through hundreds of their outstanding licensing applications. But that temporary amnesty is scheduled to end Sept. 15.

And some said the complex regulatory framework surrounding the industry simply can’t keep up with the pace.

State regulators won’t grant full licensure to a business until they receive a nod from their local municipalities. LARA still needs to sort through nearly 1,000 applications and Lansing Clerk Chris Swope has yet to approve a single license for a dispensary as his staff navigates through appeals and a veritable maze of ongoing lawsuits.

Lawmakers and city officials — including Lansing Mayor Andy Schor — have urged officials to extend the deadline. Those who were denied licenses still aim to squeeze into a limited number of openings through ongoing appeals and litigation. And other cities, like East Lansing, are still hesitant to jump into the market.

“We are concerned that processing those applications will be difficult by the current deadline,” Schor wrote in a recent letter to Gov. Rick Snyder. “The City of Lansing is also working through our licensing approval process and we want to ensure patients have access to medication until such a time that licenses can be issued.”

Swope said it’s a “near impossibility” to approve local licenses ahead of the deadline. He wants to ensure those who might successfully appeal their denials will still have space to operate. And the state’s Medical Marihuana Facility Licensing Board will only meet for one more round of possible licensures, on Sept. 10, five days before the deadline.

“It’s a whole new regulatory structure,” Swope added. “I wish it could be faster and easier, but with what was adopted into state law and the city ordinance, I’m not sure it could be. We’re building a structure around a very intense and heavily scrutinized issue, and we’re just moving forward just as quickly as we can.” Local entrepreneurs — in the absence of a formal state license — are asked to close their doors after next month. Failure to respect the deadline will likely play a role in their ability to ever receive approval, according to LARA spokesman David Harns. The deadline simply can’t be extended forever, he suggested.

But concerns, in the meantime, continue to grow as those in the business face continued uncertainties in an industry in which they’ve already invested millions of dollars. Some contended the deadline would bolster black market sales while their attempts at legitimate business enterprises are mired in complex, bureaucratic delays.

“I don’t know if it’s a licensing bureau job to forecast the economic side of things,” Harns added. “We’ve reached a point of having product out there. We’ve done what it’s taken to ensure medical marijuana patients still have access to their medicine. At some point, we have to come to a transition into a regulated market.”

Among those vying for state licenses include two proposed dispensaries in Lansing, Huron Wellness Solutions and Superior Wellness Solutions. Both have since filed lawsuits against the city after they were originally denied local licenses and their subsequent appeals fell flat at Lansing’s Medical Marihuana Commission.

Attorney for the two dispensaries, Nikolas Calkins, acknowledged the ongoing litigation is “absolutely clogging” up Lansing’s system for granting licenses but represents a necessary step to ensure they’re being doled out fairly. He contends “arbitrary and capricious procedural errors” unfairly denied his unnamed clients their licenses.

“Our clients have decided to at least preserve their ability to gain licensure through judicial review,” Calkins added. The case isn’t yet scheduled for a hearing. City officials haven’t yet filed a response to their complaint.

Sixteen state licenses — including seven for dispensaries — have been fully approved since the regulatory scheme was first enacted. Another 52 have received pre-qualification but will still be unable to operate after Sept. 15. More could be approved at an upcoming meeting, but officials said access to medication isn’t a dire concern.

Harns estimated about two-thirds of medical marijuana patients live within 30 miles of one of the licensed facilities. Another 75 percent live within 60 miles. It might be a longer drive than what some cardholders would like, but they’ll still have access to their medication as the market continues to expand existing offerings, he said.

Officials at the City of East Lansing offered a similar perspective. The City Council there remains deadlocked on its willingness to engage in the process. Mayor Pro-Tem Erik Altmann suggested Lansing’s pot shops are only a short drive down the road.

“The whole regulatory system that Lansing has tried to put into place has been cumbersome and expensive, and it’s not something we can afford to do in East Lansing,” Altmann added. “Certainly, these places are going to open up again. Eventually these licenses are going to go out. I just don’t see this as an immediate issue.”

Council members opted to table a discussion about enacting a medical marijuana ordinance while Mayor Mark Meadows finishes a leave of absence. City Council last week was largely split on the decision; Altmann suggested Meadows might be able to serve as the tiebreaker when he returns from Europe sometime in October.

“Maybe we’ll be spared the details of what’s going to happen in Lansing,” Altmann added. “I can’t imagine why we would want to step into a regulatory framework that’s in flux like this. I just don’t want to get involved in an industry that seems to cause a lot of trouble and has a lot of other people getting sued.”

Visit lansingcitypulse.com for previous and continued coverage of the burgeoning medical marijuana industry.