Michigan mulls license limits

Hello!

Since Mike has his hands full, I took over the intro for this issue. It has been a great week for folks who love sitting through government meetings about cannabis!

In Michigan, producers and advocates agree that there is too much cannabis being produced in the state, and even some of the largest producers in the state seem to be resigned to the fact that a moratorium is on the horizon, even if it distracts from other factors that have contributed to the state’s supply problems.

As always, I can be reached at Zack@GrownIn.com. My cell number is 678-463-3010 and I can also be reached on Twitter @zhuffman.

Zack Huffman

Andrew Brisbo (left), executive director of Michigan's Cannabis Regulatory Agency, listens to comment from Steven Timmerman of Rio's Happy Tree during a public comment period on Sept. 14, 2022.

Moratoriums on new grow licenses and eliminating existing excess grower licenses in Michigan are popular options among operators and advocates based on public commentary before the state’s Cannabis Regulatory Agency (CRA), Wednesday morning.

“I really believe that a moratorium on grow licenses will positively affect this market,” said Wayne Kenny, Director of Compliance and Licensing for Kola Farms.

Kenny was just one of many speakers representing grow operations that said they supported a moratorium, though there was a wide variety of suggestions on how a moratorium should be implemented. Some argued for an immediate halt to new grow licenses, while others suggested carve outs for those who have already started the licensing process, or for social equity applicants. There were different suggestions for how long the moratorium should last, from indefinitely, to one or two years, or until the state can determine that the supply is back on track.

Testifiers agreed that oversupply was a problem in the state, but there was also a lot of concern over unexpected repercussions of a blanket moratorium, the constant influx of illicit products and the fact that cultivation licensing has been outpacing retail licensing, slowing down the movement of product.

On the other hand, there is only so much the CRA can do, since it cannot force towns and cities to opt in, nor does it have the resources to exclusively police its market.

The average price of an ounce of bud in the medical market was $110.72 in July, a 48% drop from $213.89, the July 2021 average. The adult use market saw a similar decline, averaging $121.58 per ounce in July, reflecting a 44% drop from $217.94 in July 2021.

In that same period, Michigan saw a 48% increase in immature plants, 295% in vegetative plants, and 69% in flowering plants.

Meanwhile, the state has issued over 700 Growers licenses, the majority of which are Class C, which allows up to 2,000 plants and can be stacked five at a time at a single address. This means a single grow site can potentially house 10,000 plants. Operators can then cram 2,000 more plants if they have an Excessive Growers License.

In light of Michigan’s ongoing oversupply problem, the CRA presented three policy questions up for public comment when it announced its Sept. 14 quarterly meeting.
Should the CRA consider a moratorium on issuing grower licenses? If so, who would it apply to and for how long?
Should the agency eliminate its excess grower license type?
Should the agency allow individuals to hold interests in more than five grow operations or one microbusiness after Jan. 1, 2023?

“We’ve been hearing concerns that the supply of marijuana produced by licensed growers exceeds or may soon exceed consumer demand,” said outgoing CRA executive director Andrew Brisbo. “Concerns include that the wholesale price of flower is lower than that of the process of production, or will be when harvests are highest in October.”

Thursday marked Brisbo’s final public hearing as head of the agency after serving as CRA executive director since 2019. Last month the state announced that he would soon be leaving for another state government post, to run the state’s Building Code division. The next day, Thursday, Gov. Gretchen Whitmer announced Brian Hanhan, CRA’s manager of field operations, inspections, and investigations, would take over as the agency’s acting executive director.

“We are against the excessive grower license, we believe that the smaller farmers should have the advantage,” said Steven Timmerman of microbusiness Rio’s Happy Tree during the hearing’s open comment period.

He suggested that if a moratorium were put in place, that it should be for the prequalification process, so that aspiring operators who are still in the middle of the licensing process were able to complete the process.

“It is extremely difficult for a small farmer to get into the business right now,” said Jay Elms of Healing Organics Garden. “The failure rate is ridiculous. When these farms are failing, it is the locals who are being hurt the most. It is fellow Michigan residents who are losing their jobs in cultivation.”

Thomas Levigne, of the Cannabis Counsel law firm, also expressed concern for current applicants.

“We are against the moratorium, because there are a lot of people that are in the process right now,” said Thomas Levigne, of the Cannabis Counsel law firm. “We have always been against the excess grow licenses. The activists that drafted this law were careful to not allow big businesses to come in. We limited it to 10,000 plants for that precise reason.”

Other speakers took a harder line.

“I do support a moratorium that starts immediately,” said Andrea Alcantara, a worker at a craft grow facility in southern Michigan. “I would like them to remain in place until interstate trade opens and I think allowing people to own multiple stakes in multiple grows dilutes the integrity of microbusinesses. I think it makes it more like 7-11 than your local coffee shops.”

Aside from the assortment of growers, there was also commentary from the Michigan Cannabis Manufacturers Association (MCMA), the Michigan Cannabis Industry Association and the Michigan chapter of the National Organization for the Reform of Marijuana Law.

Without completely dismissing the idea, MCMA Chair Shelley Edgerton, said the organization was not necessarily opposed to a moratorium, but that a better solution would be to bring more municipalities into the fold of allowing dispensaries and to crack down on the state’s illicit supply, which she said is increasingly coming from licensed growers.

“Certainly our group is open to it, but I think the devil is in the details,” she said. “We have people in the pipeline with an expectation of a grow license. We have people that have just started out and how would it impact them?, and then you still have people that want to be an entrepreneur and want to bring a craft license to the area. I think anybody with a blanket moratorium is not going to be successful.”

In contrast, the Michigan Cannabis Industry Association was in favor of a moratorium, according to its executive director, Robin Schneider.

“The large majority of our members do support a moratorium on grower licenses,” she said, noting that the organization polled its membership on the issue last spring. “The results were overwhelmingly in support of a moratorium.”

Michigan’s chapter of NORML did not take a stand on the moratorium, but its Executive Director Rick Thompson said the group was definitely opposed to excess grower licenses.

“We disagreed with the creation of the excess grow licenses,” he said. “We would like to see it go away. It certainly doesn’t seem to benefit the community at this point.”

Thompson said he was concerned that a moratorium could make it harder to convince municipalities to opt in.

“One of the biggest incentives for them to accept a new cannabis business is the opportunity for cultivation. If we put a moratorium out it might discourage more communities from accepting that,” he said. “However, having said that, I stand with the small farmers. The small farmers need the protection that that moratorium would provide. It needs to be a time sensitive one that allows for an opportunity for review of the moratorium at a regular period so that we can lift it whenever the circumstances of the market corrects itself.”

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September 15
UConn Researchers to Create Curriculum for CT's First 'Green Lab' [UConn Today]
Social Equity Council finalizing low-interest loan, accelerator programs ahead of adult-use cannabis launch [Hartford Business Journal]

September 13
CT company being paid $600,000 to screen some cannabis license applicants [CTInsider]

September 10
Struggling CT hemp farmers feeling 'left out' of state's cannabis plans [CTInsider]

September 9
New Haven sees debate over cannabis dispensary zoning [Yale News]