The state is opening up the medical marijuana business to big-time grow operations, according to an advisory released Thursday.
When the Legislature passed medical marijuana bills last year, it created three classes of licenses for growers: Class A - up to 500 plants; Class B - up to 1,000 plants, and Class C - up to 1,500 plants.
The rules advisory released this week, however, specifies that one person or business can apply for as many of the Class C licenses as they want, opening up Michigan's market to mega growers.
“The stacking of class C grow licenses is a more efficient way for LARA (the state department of Licensing and Regulatory Affairs) to keep track of large grows in the state,” said LARA spokesman David Harns. “Stacking will also allow businesses to operate more efficiently, which in turn will allow for a better consumer experience.”
But some potential growers believe the ruling will squeeze the smaller operators out of Michigan's lucrative medical marijuana industry.
“They're doing everything they can do to shut down the mom and pops,” said Jason Durham, a medical marijuana cardholder and caregiver, who grows pot for five patients, but hopes to be awarded a license to grow up to 500 plants. “They want it to be one corporation that has control so they only have to babysit and monitor one business.”
It will be more expensive for the large-scale growers to get into the business. Everyone seeking a license will have to pay an application fee that will carry a cost of between $4,000 and $8,000 depending on the number of applications received. But the regulatory assessment will carry a sliding scale cost ranging from $10,000 for the smallest grower up to $57,000 for large growers, transporters and dispensaries.
The applicants also will have to prove they have the capital for the operation and carry enough insurance and security.
Applications for the five categories of medical marijuana licenses — for growers, processors, transporters, testers and dispensaries — will be available on Dec. 15, and the Michigan Medical Marijuana Licensing Board will begin awarding licenses in the spring of 2018.
The medical marijuana business, once the newly regulated business is up and running, is expected to generate $711 million in sales a year and $21 million a year in tax revenues for the state.
Robin Schneider, legislative liaison for the National Patients' Rights Association, which advocates for safe and legal access to medical marijuana, said she understands the department's desire to stick to the letter of the law, which said the number of licenses can't be mandated, “But there is the potential that they'll take away opportunities for smaller business owners.”
In other states, large-scale grow operations are well underway. In southern California, Canndescent, a 9,600-square-foot marijuana grow facility opened in September with plans to expand to 100,000 square feet of growing space now that voters have approved marijuana for recreational use in November. And in Massachusetts, Americann has the option to purchase a 52-acre parcel of land, which would be transformed into greenhouses and processing facilities.
Durham hopes that won't become the landscape in Michigan.
“It will make it almost impossible for us small guys to get into the market," he said.
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