ZONING TOPIC: MARIHUANA

PREPARING COMMUNITIES FOR NEW LEGISLATION REGARDING Marihuana – Medical & Recreational Why Examine This Issue?

Recent legislative changes in Michigan’s marihuana laws are prompting communities to evaluate whether or not to permit marihuana establishments. Laws are being updated frequently.

Marihuana laws in Michigan

• Michigan Medical Marihuana Act (MMMA) – 2008

• Initiated Act 1 of 2008 (ballot measure approved by Michigan voters)

• Medical Marihuana Facility Licensing Act (MMFLA) – 2016

• Public Acts 281, 282, and 283 of 2016

• Michigan Regulation & Taxation of Marihuana Act (MRTMA) – 2018

• Initiated Law 1 of 2018

2 Marihuana Definitions

• Marihuana (legal term) or Marijuana (common term): the plant Cannabis sativa L. with delta-9-THC concentrations above 0.3%. Includes products made from the marijuana plant, but excludes stalks, products made from the stalks, and some products made from seeds.

• Industrial Hemp: the plant Cannabis sativa L. with delta-9-THC concentrations below 0.3%. Includes products made from the industrial hemp plant.

• CBD (Cannabidiol): a substance derived from cannabis plants that does not have psychoactive effects.

3 Medical Marihuana

Michigan Medical Marihuana Act (MMMA), November 2008

• Physicians are allowed to prescribe marihuana to registered patients upon diagnosis of certain medical conditions.

• Michigan Department of Community Health established an identification card system for qualified patients and caregivers (small-scale growers).

• Allows permitted individuals (caregivers) to grow limited amounts of marihuana for qualifying patients following specific regulations (up to 12 plants per patient, serving up to 5 patients). Certified patients may grow up to 12 plants for their personal use.

• Accommodated small-scale grow operations for medical purposes.

• Treats grow operations like other uses—zoning may not entirely exclude them.

Dispensaries were not explicitly authorized.

4 Medical Marihuana

Medical Marihuana Facility Licensing Act (MMFLA), 2016

On September 21, 2016 Governor Synder signed three bills that created the Medical Marihuana Facility Licensing Act (MMFLA) that expanded the types of medical marihuana activities permitted under state law to include:

• Growers (commercial-scale operations): Class A, B and C

• Processors (resins, edibles, etc.)

• Transporters (secure transportation)

• Safety Compliance Facilities (testing labs)

• Provisioning Centers (dispensaries)

5 More on MMFLA (Medical)

• The state has a seed-to-sale tracking system to ensure compliance and taxability (Public Act 282) that is shared with local law enforcement.

• The Marihuana Regulatory Agency (MRA) within LARA issues licenses for newly permitted activities. Administrative rules for “Medical Marihuana Facilities” were effective November 27, 2018.

• Medical Marihuana Facilities applicants do not apply directly to municipalities—they must approach the state first, which provides notice of application to the community.

6 More on MMFLA (Medical)

• A licensed provisioning center may not allow a physician to conduct a medical examination or issue a medical certification document on their licensed premises to obtain a registry identification card.

• Individuals should apply directly with the MMMP

• The law provides that communities shall take action via ordinance to allow any of the permitted licensed facilities; if no action taken, the community does not permit such facilities.

7 More on MMFLA (Medical)

• A Marihuana Grower is licensed to cultivate, dry, trim, or cure and package marihuana for sale to a processor or provisioning center. A Grower cannot be a registered primary caregiver.

• Class A: 500 marihuana plants

• Class B – 1,000 marihuana plants

• Class C – 1,500 marihuana plants • Applicant, and each investor in the grower, must not have an interest in a secure transporter or safety compliance facility. • Must employ an individual with a minimum of 2 years’ experience as a caregiver (This restriction ends after December 31, 2021) • The licensee must not be an active caregiver and must not employ an active caregiver. • Cultivation must occur in industrial or agricultural zoned areas, or in unzoned areas that meet local ordinance requirements.

8 Licensed MMFLA Facilities in Michigan

https://www.michigan.gov/lara/0,4601,7-154-89334_79571_78089---,00.html 09/10/19 9 MMFLA (Medical)

• In Oakland County, the following communities have opted- in with ordinances to permit some facilities licensed through the MMFLA (through 8/30/2019): • Ferndale • Hazel Park • Orion Charter Township • Pontiac • Walled Lake • These communities permit growers, processors, provisioning centers, safety compliance facilities and secure transporters. • Provisioning centers are capped at 3 for Ferndale, Hazel Park and Walled Lake. Orion Township does not permit provisioning centers.

09/10/19 10 MMFLA (Medical)

• Revenue Implications • State law (MMFLA – Medical) allows communities to charge up to $5,000 to cover the cost of enforcement and administrating the law (actual costs must be demonstrated) • Currently there is a 3% tax on gross retail receipts in addition to the 6% sales tax at provisioning center on all products sold. • This will be repealed at the end of this year to comply with the MRTMA (Recreational facilities).

09/10/19 11 Recreational Marihuana

Michigan Regulation and Taxation of Marihuana Act (MRTMA) November 2018 ballot proposal permits the recreational use and possession of marihuana for people 21 and older and will permit the following facilities following the establishment of licensing rules by the State:

• Growers (commercial-scale operations)

• Processors (resins, edibles, etc.)

• Transporters (secure transportation)

• Safety Compliance Facilities (testing labs)

• Provisioning Centers (dispensaries)

• Microbusiness (cultivation of less than 150 plants) – New

• This law requires communities to take action by ordinance to prohibit one or more facilities.

12 Recreational Marihuana

• What is a Microbusiness? In Michigan, a microbusiness license allows a person or company to:

• Grow up to 150 cannabis plants,

• Process cannabis into concentrates, edibles, or other infused products,

• Package the finished products, and

• Sell to adults who are over the age of 21. A microbusiness cannot sell or transfer any products to any other adult-use establishments.

13 Recreational Marihuana

• Rules issued by the State of Michigan on July 3, 2019 (64 pages)

• Note: the state is still required to establish a plan that promotes and encourages participation in the marihuana industry by people from communities that have been disproportionately impacted by marihuana prohibition and enforcement and to positively impact those communities. • State is accepting applications on Nov. 1. • Communities without ordinances taking action on facilities permitted by state law will be considered by the state to permit all types available for license.

14 Recreational Marihuana

• The rules identified three new categories of licenses will be available that will also require local approval: • Marijuana event organizer • Temporary marijuana events, such as Cannabis Cup competitions, where cannabis can be sold and consumed. • Designated Consumption Establishments [DCE], or Social Clubs, where people can gather to use marijuana, but where nothing else can be sold, such as coffee or snacks.

15 Recreational Marihuana

• The new licensing type ‘Marijuana Event Organizer’ allows anyone who receives this license the ability to apply for a Temporary Marijuana Event license. The license for event organizers is valid for one year. • Unlike many of the establishment licenses available under the MRTMA, there are no specific requirements to become a Marihuana Event Organizer or Temporary Marihuana Event licensee.

16 Recreational Marihuana

• Temporary marijuana events, such as Cannabis Cup competitions, where cannabis can be sold and consumed. • A state license held by a marihuana event organizer for an event where the onsite sale or consumption of marihuana products, or both, are authorized at the location indicated on the state license during the dates indicated on the state license.

17 Recreational Marihuana

• The MRTMA requires a number of steps before a Temporary Marihuana Event can take place: • Coordinator must submit state application no less than 90 calendar days before the first day. This application should include: • Dates/hours of operation – temporary events may last between 1-7 consecutive days • Address/location where temporary event will be held • May only be held at venue expressly approved by municipality • Information regarding each marihuana establishment (retailer or microbusiness) that will be participating • Diagram of physical layout of temporary event, including • Where event will be taking place, entrances/exits to be used by patrons; • All areas where product will be consumed and retail areas where product will be sold • All areas where waste will be stored and where product will be sold • Specific location of each retailer/microbusiness that will be participating (each will be assigned a location number) • Info for primary contact person(s) (must be onsite at event and reachable) • Fees: • If No Sales – $500 per day of event • If Sales – $500 per day of event + $500 per licensed retailer/microbusiness participating

18 Recreational Marihuana

• Designated Consumption Establishments [DCE], or Social Clubs, where people can gather to use marijuana, but where nothing else can be sold, such as coffee or snacks. • Allows the license holder, with local approval, to operate a commercial space that is licensed by the MRA and authorized to permit adults 21 years of age and older to consume marijuana and marijuana products on premises. • A Designated Consumption Establishment license does not allow for sales or distribution of marijuana or marijuana product, unless the license holder also possesses a Retailer or Microbusiness license.

19 Recreational Marihuana

• Differences between the medical and recreational license requirements: • Marijuana retail shops can deliver products to homes and to social consumption clubs, while medical marijuana cardholders can only get the product delivered to their homes. • Recreational license applications will be expedited for people who already hold medical marijuana licenses.

20 Recreational Marihuana

• Differences between the medical and recreational license requirements: • Growers and processors of marijuana can offer employees free samples of products that can be used off-site to ensure the quality and potency of the products. They can also offer free samples to retail establishment owners who want to try the product before deciding whether they want to purchase it. • Potency guidelines for recreational marijuana will be set at a future date and will most likely be lower than the 50 milligram per serving dose that is allowed for medical marijuana-infused products such as gummies and mints.

21 Recreational Marihuana

• Social Equity. A program, developed per the MRTMA, which is designed to encourage participation in the marijuana industry by people who live in the 19 Michigan communities which have been disproportionately impacted by marijuana prohibition and enforcement: • The MRA identified communities as eligible using (1) marijuana-related convictions and (2) poverty rate. Counties in which the total number of marijuana-related convictions exceeded the average marijuana-related conviction rate for the state were selected. From that group, communities were selected in which 30% or more of the population live below the federal poverty level.

Albion Hamtramck Niles Benton Harbor Inkster Pontiac Detroit Kalamazoo River Rouge East Lansing Mt. Morris Saginaw Ecorse Mt. Pleasant Ypsilanti Flint Muskegon Highland Park Muskegon Heights 22 Recreational Marihuana

• In Oakland County, the following communities have taken action to opt out of permitting facilities licensed by the MRTMA (through 8/30/2019):

Note: the chart may not reflect all communities who have opted out, including the City of Troy 23 Recreational Marihuana

• Up to $5,000 license fee for administration and enforcement. • There is a 10% tax on products sold in addition to the 6% sales tax • The first $20 million in the first two years goes to research on the medical benefits of marijuana. • The remainder will be split between: • Cities and counties that host marijuana businesses; • the school aid fund; • the transportation fund to improve roads; • further revenue-sharing payments to cities, townships, villages and counties; • and the state’s general fund.

24 Tax Revenue Comparisons Recreational Marihuana

25 26 27 28 Industrial Hemp

Photo source: University Of Kentucky College Of Agriculture 29 Industrial Hemp

• Hemp is related to marijuana, but is genetically different and contains a maximum of 0.3 percent tetrahydrocannabinol (THC) -- the active component in marijuana that causes psychoactive effects. • Hemp is valued for its fiber -- but the entire plant can be used to make a variety of products including fabric, carpeting, insulation, livestock feed and plastics. • Hemp is also a source of cannabidiol, or CBD oil. CBD oil can also be extracted from marijuana, which makes its regulation difficult for officials. • The 2018 US Farm Bill declassifies industrial hemp as a Schedule 1 controlled substance.

30 Industrial Hemp

• 2018 Federal Farm Bill legalized industrial hemp under U.S. federal law with the United States Department of Agriculture (USDA) providing regulatory oversight. • On December 28, 2018 Michigan House Bills 6330, 6331 and 6380 (Public Acts 641, 642, and 648 of 2018) were signed into law by Governor Rick Snyder, amending the Industrial Hemp Research Act creating the new Industrial Hemp Research and Development Act. • The Industrial Hemp Research and Development Act requires the Michigan Department of Agriculture and Rural Development (MDARD) to regulate the growing, processing and handling of industrial hemp. • Governor Gretchen Whitmer and MDARD launched the State of Michigan’s Industrial Hemp Ag Pilot Program for the 2019 planting season to allow for the growth, cultivation and marketing of Michigan grown industrial hemp.

31 Industrial Hemp

• The federal government is still developing the rules for a national hemp program. • This year, Michigan officials launched a pilot program using a provision in the 2014 U.S. Farm Bill to allow for the growth, cultivation and marketing of Michigan grown industrial hemp. • The Michigan Department of Agriculture and Rural Development issued 600 industrial hemp licenses to farmers during four day-long licensing events held at the end of April.

32 CBD Products

33 CBD Products

• CBD (Cannabidiol): a substance derived from cannabis plants that does not have psychoactive effects. • CBD products produced from marijuana will not be regulated as marijuana if the THC content is below 0.3%.

• Edible marijuana products containing CBD made by licensed processors may only be produced using CBD obtained from regulated sources. Currently, these regulated sources include state of Michigan licensed growers or processors under the MMFLA. [Note – this permits edibles without THC to be sold at retail]

• Only facilities licensed by the Bureau of Marijuana Regulation (BMR) under the MMFLA can commercially grow, process, and sell marijuana and marijuana products.

34 Municipal Considerations

Currently, communities are required by the MMFLA act to allow growing facilities, limited to 12 plants per patient up to 5 patients, for licensed caregivers as allowed in the 2008 legislation.

MMFLA (Medical): Facilities defined under this act prohibited unless the city adopts ordinances to permit.

• The state intends to rely on the local municipality’s authorizing ordinance to determine if an applicant is in compliance with certain provisions of the MMFLA, including the following:

• What is permitted: The types of marihuana facilities – growers, processors, secure transporters, safety compliance facilities, and provisioning centers.

• How many are permitted: The maximum number, if applicable, of each type of marihuana facility permitted.

• How and where are they permitted: Local zoning regulations that apply to marihuana facilities, including whether or not licensees may apply for special use permits.

35 Municipal Considerations

• Medical Marihuana Facilities: Municipalities are not required to “opt out” or prohibit marihuana facilities within their boundaries. If municipalities do nothing, marihuana facilities will be unable to be licensed at the state level to operate in their locality (municipalities opting out still must respond to notices of application received from the state).

• Recreational Marihuana Facilities: Municipalities are required to pass ordinances to prohibit or limit marihuana facilities within their boundaries. If no action taken, facilities licensed by the State of Michigan under this act will be permitted as of December 6, 2019.

Note: Marihuana is still illegal at the federal level. States that have adopted medical marihuana and recreational marihuana laws have done so on the assumption that the federal government won’t enforce its own laws.

36 Municipal Considerations

• For Information: This zoning map illustrates residentially zoned areas (yellow) and the 1,000 ft buffer distance from schools where marijuana facilities could not be permitted.

37 Resources

• Michigan Marihuana Regulation

• : https://www.michigan.gov/lara/0,4601,7-154-11472-493396-- ,00.html

• Map of Licensed Facilities

• https://www.google.com/maps/d/u/0/viewer?mid=1enHhLpd940Do- D3laelB09hVrv1lMRcw&ll=44.47659873449689%2C-85.72026825&z=7

• Michigan Municipal League

• http://www.mml.org/resources/information/mi-med-marihuana.html

38