Michigan officials issued a set of heavily anticipated emergency rules for the recreational marijuana market this week that will define how the commercial sale of the now-legal drug will operate.
The rule set comes more than six months after 57 percent of Michigan voters chose to legalize marijuana and hemp in the state.
Broadly, the recreational marijuana market is designed to mimic the medical marijuana market — but with fewer hurdles to starting a business and more opportunities for social consumption.
Here are 11 key points to understand from the state’s emergency rule set:
1. Retail sales are still months away
Since the law took effect in December 2018, Michigan residents age 21 and older have been able to possess and consume marijuana.
But they haven’t been able to buy weed legally yet — as the only state-licensed businesses open and operating are required to serve only card-carrying medical patients.
The emergency rules didn’t indicate any sign of when the first retail sale may happen, but did lend some clues.
The Marijuana Regulatory Agency will begin accepting business license applications Nov. 1.
Once businesses are licensed by the state, regulators could choose to allow medical marijuana products to be sold on the recreational market. As the medical program has struggled with licensed supply issues, that may not occur.
Industry experts predict sales may occur by the first quarter of 2020, and no later than March 2020.
2. Cities and townships have until Nov. 1 to ban businesses
State officials intentionally left four months in between the time they announced the recreational marijuana rules and when they would start accepting applications to allow local governments time to read and interpret them.
Since November 2018 when Michigan voters chose to legalize, more than 600 communities have passed a ban on adult-use marijuana businesses. That means about 4.7 million Michigan residents live in a place that has banned the cannabis industry, according to an MLive analysis.
Some of those bans are temporary, as cities and townships wanted to wait and see how the industry would be regulated before deciding how they wanted to zone and regulate it themselves.
3. «Emergency» rules
Under the state law voters approved last year, officials with the Marijuana Regulatory Agency are required to start accepting business license applications by December 6, 2019.
In order to meet that deadline, regulators decided to issue a set of «emergency» rules now that expire in six months.
In its filing July 3 with the Secretary of State, the agency wrote: «To date, no administrative rules have been promulgated under the authority granted to the agency. Specifically, there are no current administrative rules to provide for the lawful cultivation and sale of marihuana to persons 21 years of age or older or to ensure the safety, security, and integrity of the operation of marihuana establishments. There is a need for clarity in the implementation of this act.»
4. Social use will soon be allowed
Smoking and consuming marijuana at special events and festivals will soon become a reality in Michigan, if organizers choose to get a permit from the state.
Smoking lounges and clubs will also become possible soon under a special state license. However, regulators said alcohol and food sales can’t occur in those establishments.
5. It will be easier to start a recreational marijuana business than a medical marijuana business
People interested in starting a recreational marijuana company will have an easier time getting into the industry than those trying to start a medical marijuana company.
Regulators have decided to eliminate the need for business license applicants to show they have funds to finance their enterprise.
That’s significantly different than the capitalization requirements medical marijuana businesses have had to disclose: they’ve had to prove to state regulators that they had from $200,000 to $500,000 in assets, depending on the type of license they were applying for. One-fourth of that had to be liquid.
Licensing fees for recreational businesses will also be lower than those for medical businesses. For example, entry-level grow licenses cost $4,000 (for 100 plants) in the recreational industry and cost $10,000 (for 500 plants) in the medical industry.
Additionally, a license for a retail store costs $20,000 to $30,000, depending on volume, in the recreational industry; whereas medical provisioning center licenses cost $66,000.
6. Medical and recreational marijuana can be sold in the same store
Medical marijuana provisioning centers will be able to sell adult-use cannabis products in the future with little effort.
The medical products and adult-use products have to be physically separated, according to the state’s rules.
But the store can use the same main entrance and point-of-sale systems for the transactions.
7. Home delivery will be an option
Any adult 21 and up will be able to order marijuana deliveries to their home in the future — in the same way that medical marijuana patients can do now.
8. No weed drive-thrus
State regulators made a point of banning weed drive-thrus in their emergency rules.
They also are banning mobile weed shops and online mail-order sales.
9. Mega-growers are getting a hand from the state
Under the new state law, the number of large-scale grow licenses a business can hold are capped at five. That means the maximum number of plants a commercial grower could have is capped at 10,000.
For some large-scale businesses, that’s not close to enough. Regulators have created a new license type — called excess grow — for large-scale businesses that operate in both the medical and recreational market. The new license type allows growers to have more plants than is currently capped under state law.
10. Medical marijuana plants will be used to start recreational industry
State officials will allow medical marijuana plants to be transferred to licensed recreational marijuana grow facilities to help the adult-use market launch.
11. A social equity plan is in the works
State officials plan to help out communities that have been disproportionately affected by the past prohibition of marijuana by releasing a social equity strategy.
According to the emergency rule set, that could include waiving or reducing application fees for certain qualified applicants.
The social equity plan will be released later this July.