In an effort to curb black-market sales, Michigan is planning to ease access to the recreational cannabis market next year. In March, Michigan will remove a prerequisite that was included with good intentions but has unintentionally complicated the fight against unlicensed, black market cannabis, the state Marijuana Regulatory Agency announced. From March next year, certain licensed recreational marijuana businesses will no longer be required to first hold a medical license.
Retailers, processors, transporters, safety labs, class B, and class C growers will be subject to lower license fees should they wish to grow, sell, test, or transport recreational marijuana. Most importantly, new businesses that aren’t interested in medical cannabis will now be able to access the recreational cannabis market. The prerequisite was a major barrier to entry into the recreational cannabis sector. Although Michigan issued the first medical licenses in 2018, recreational cannabis dispensaries didn’t start opening until last December.
The original intent of the medical license prerequisite was to give pioneering companies that assumed risk and invested early a chance to establish themselves and recoup costs before the recreational market with its competition could be opened to other players, explains Robin Schneider director of the Michigan Cannabis Industry Association, a trade organization comprised of over 200 marijuana businesses.
Although the prerequisite was to remain in place for two years after the state began awarding licenses last November, there was one caveat. The recreational cannabis law passed in 2018 by voters stated that the state could do away with the requirement one year after the first recreational business applications were received either to curb black-market sales, increase access to rural communities, or to satisfy supply shortages.
In this case, difficulty combating unlicensed and untested marijuana necessitated the move, the Marijuana Regulatory Agency says. “According to data provided by the Michigan State Police Marijuana and Tobacco Investigation Section, 80% of the seizures of illicit marijuana occur in municipalities that do not have regulated marijuana establishments. In the past year, the city of Detroit has seen a 365% increase in narcotics-related homicides and a 214% increase specifically in marijuana-related non-fatal shootings,” the agency says.
“As municipalities throughout the state consider ordinances to allow marijuana establishments, the current eligibility restriction acts as a barrier to approaching local authorization in a way that is equitable. Greater municipal participation is a critical element in reducing the impact of the illicit market.” Additionally, Marijuana Regulatory Agency Director Andrew Brisho says, short supply in the nascent cannabis market has also been an issue.
“We certainly aren’t meeting demand yet, but I think it is important to consider the pace of growth in the regulated market, and whether that is consistently increasing to meet that demand at some point in a reasonable time frame.”
It would be interesting to hear what companies like Pure Extract Technologies Inc. think of how effective the plans of the Michigan authorities are likely to be.
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