The primary reason behind the difficulty in securing funds for marijuana-based businesses is the complex legal status around the cultivation, sale, and use of marijuana. Even if you reside in a state or country where marijuana is approved for medical and recreational use, your potential financiers might still have a million reasons to not fund your venture. 

Today, the State of Michigan officially declared a “shelter in place” order in order to contain the spread of COVID-19, also known as the “coronavirus.” The order asks residents to avoid all nonessential travel and requires all individuals to stay home or at their place of residence, with certain exceptions. This order will have a substantial effect on business activity in the State of Michigan, including Michigan’s cannabis industry. The order lasts until April 13, 2020, but it could remain in place longer than that date.

With exponential growth in industry comes growing pains. The Cannabis market is growing faster than the legislature can produce rules and laws to govern the industry. Likewise, the insurance industry is trying to understand cannabis and how they can offer affordable coverage that is valuable to Growers, Processors and Dispensaries.

The passage and rollout of the MRTMA has many Michigan MMFLA licensees wondering how they can transition to the recreational marijuana market. First off, it should be noted that for most MRTMA licenses, the owners first have to have a MMFLA license. There are exceptions to this requirement, however, the most important ones being the MRTMA microbusiness license, which allows for small scale vertical integration, and the Class A Grower license, which allows for the growing of 100 plants under the MRTMA. This rule also doesn’t apply to Designated Consumption Area licenses and event licenses.

Michigan’s two marijuana licensing statutes—the Medical Marihuana Facilities Licensing Act (“MMFLA”) and Michigan Regulation and Taxation of Marihuana Act (“MRTMA”) place limits on the number of plants a licensed grower can cultivate.  This is in contrast to most other states that limit cannabis cultivators by total canopy size rather than number of plants and is the reason why Michigan grower’s tend to cultivate plants differently than in other states.

The legalization of hemp-based CBD oil through the Farm bill in 2018 marked the beginning of an influx in CBD products and cultivation. The industry continues to grow in size and companies continue to establish their hold in the market. However, the regulations are prone to change, and compliance needs differ from state to state.

Many cannabis investors interested in getting into the industry have used the stock market as a way to invest in North America’s growing marijuana industry.  After experiencing years of nearly unfettered growth, cannabis stocks seem to have hit the proverbial wall. Popular stocks such as Tilray, Canopy, Medmen, and Aurora are no longer on a seemingly never ending upward trajectory. 

According to the emergency rules, Michigan hemp growers must collect samples in a sawtooth pattern, which will give testers a representative sample of the entire strain contained within a plot.  Each sample should be separately bagged, but samples from the same strain and same plot will be tested together. Because even one plant that contains over 0.3% of THC can cause a plot to fail, growers must consider the risk of loss and take steps to mitigate that risk. Even if an industrial hemp strain has previously passed inspection with the THC testing below 0.3%, THC levels can fluctuate in each crop cycle.  

Earlier this year, the Michigan Department of Agriculture and Rural Development (MDARD) launched an industrial hemp pilot program.  Last week, MDARD released the emergency rules related to the testing procedures for industrial hemp in Michigan. These rules outline the process for testing Michigan Industrial Hemp produced under the State’s Industrial Hemp-Ag Pilot Program.

Congratulations, you’ve successfully become an MRA approved State of Michigan licensed Marijuana Grower! Now what? The first obstacle many state licensed Growers face is where to obtain plants, seeds, seedlings, or tissue cultures. If you are a caregiver or you hire a full-time employee that’s a caregiver, you can transfer the caregiver product to the facility when the caregiver license is surrendered. This can give your facility a “running start” such that not all of your plants have to be started from scratch.

The Marijuana Regulatory Agency recently put out new rules that will initially govern Michigan’s “adult use” cannabis market. Included in these rules was several new license types not contemplated by the MRTMA statute, one of which is the marihuana event organizer license, as well as its companion license, the temporary marihuana event license.

The Emergency Rules issued by the Marijuana Regulatory Agency under the Michigan Regulation and Taxation of Marijuana Act (“MRTMA”) were released on July 3rd, 2019. These eagerly anticipated emergency regulations set forth the rules of the road that Michigan microbusinesses must comply with when operating a marijuana microbusiness facility. 

When evaluating a Michigan marijuana real estate opportunity, one of the first questions we ask is “is it contingent?” What this question really means is whether the seller will let the buyer back out if they are not able to ensure the necessary approvals or other important items needed to operate on the property. These contingencies can be drafted many ways, with some requiring the buyer to sacrifice part of his or her good faith deposit if they are unable to meet the contingency, and some simply entitling the buyer to a full return of the buyer’s earnest money deposit. How these are drafted depends on how the deal is negotiated and how sophisticated the parties to the transaction are.

As a cannabis attorney, you hear many horror stories from hemp and marijuana licensees. These horror stories can range from massive safety testing failures, incorrectly designed cultivation and processing facilities, and pest infestations and crop failures. While attending the NoCo Hemp conference in Colorado, there was one story in particular that seemed to stand out from the rest, not just in terms of the frequency, but also in terms of catastrophic results.

On April 18, 2019, Governor Gretchen Whitmer and the Michigan Department of Agriculture and Rural Development (MDARD) announced the launch of the state’s Industrial Hemp Ag Pilot Program for the 2019 planting season.  Although the U.S. government is implementing a national hemp program under the 2018 Farm Bill, which authorized the commercial production and processing of industrial hemp in the United States, the State of Michigan has the authority to authorize the growing of industrial hemp for research purposes.  The federal government’s program under the 2018 Farm Bill may not be ready until 2020. This program is an interim step conducted under the 2014 Farm Bill designed to allow the state’s hemp farmers and processors to prepare for the upcoming implementation of the state’s hemp program under the 2018 Farm Bill.  

The market for high-CBD hemp is booming, with certain farmers netting tens of thousands of dollars per acre for high-CBD hemp. In the U.S., much of the country’s hemp is being grown for the CBD or related markets, though cultivating high-CBD hemp outdoors can be a high risk / high reward venture. While the hemp plant is remarkable in its ability to adapt to different climates, good genetics for high-CBD hemp for outdoor growing in Michigan are hard to find, and genetics from other states such as Colorado will likely not do well in Michigan’s climate.

With the passage of the 2018 Farm Bill and the legalization of the commercial hemp market in the United States, you would think that transporting commercial hemp and hemp derived products between states would be a non-issue. This is especially true since the 2018 Farm Bill actually contains a provision guaranteeing the right of hemp farmers and hemp producers to transport hemp across state lines.

One of the major hurdles for Michigan cannabis business owners is finding financing for their medical and recreational marijuana projects. Due to the fact that marijuana is considered a controlled substance under the Controlled Substances Act, traditional bank and credit union financing is not available to plant-touching cannabis businesses. While it is certainly more difficult to obtain financing for your cannabis company, it is not impossible.

Recent polling data shows that Americans and Canadians alike are incredibly concerned about the safety of their medical and recreational marijuana purchases. With local news articles highlighting any crime that occurs at or near any cannabis businesses, and the slew of recalls announced on a near-weekly basis by Michigan’s licensing department, safety remains a significant factor in determining how the modern marijuana patient chooses their dispensary. Providing a feeling of security to your clientele can be difficult as the industry grows and changes so rapidly, but the payoff can be a loyal customer base and a better experience for everyone involved.

In November, Michigan voters approved a proposal to legalize recreational marijuana called the Michigan Regulation and Taxation of Marihuana Act, or the MRTMA. However, the state has yet to create the laws and infrastructure to allow businesses to sell recreational Cannabis in Michigan. It will likely take at least several months, if not a year, for the state to finalize procedures that will make recreational marijuana commercially available. So, for the time being, how can people who are not medical marijuana patients legally get their hands on marijuana? One intriguing method has emerged: “gifting” marijuana.