Medical marijuana dispensary , tax proposal passed by Michigan House panel despite concerns

LANSING, MI — Michigan bills that would create a new and regulated medical marijuana industry — and provide a framework that could apply in case of full legalization — are heading to the full House for consideration.
The House Judiciary Committee on Tuesday quickly advanced the three-bill package, approving the legislation before taking public testimony on changes that many in the audience had not seen, a process that one concerned activist called “atrocious.”
The bills would license medical marijuana dispensaries in communities that want them, institute an 8 percent tax on retail sales, allow non-smokable forms of the drug and create a
seed-to-sale tracking system for pot plants.
“This is something I’ve been working on longer than my bachelor’s degree,” said Rep. Mike Callton, R-Nashville, who sponsored the dispensary bill and an earlier version that cleared the House last session. “It’s been essentially over 4 years, and it’s been an education. Now it’s better than it’s ever been.”
The dispensary legislation would create a five-tier licensing system for growers, processors, testing labs, “secure transporters” and dispensaries. Licensing would be handled by a five-member board appointed by the governor.
Nick Wake, a legislative assistant for Callton, said the distribution model addressed concerns from the law enforcement community, which wanted to “break the chain of custody and chain of control” to reduce the potential for marijuana being diverted to the black market.
But critics, including Democratic Rep. Jeff Irwin of Ann Arbor, argued that the cost of the proposed tax and regulatory model will be passed on to patients, who may look to the black market if prices are too high. Michigan does not tax most other forms of medicine, he noted.
“When we add all these layers of regulations, we are increasing the cost in the legal market, thereby giving a huge advantage to the illegal market,” Irwin said. “If we grab too tightly, this may squeeze through our fingers, and we end up with less control rather than more control.”
The House Fiscal Agency, in a 17-page analysis of an earlier version of the bill, estimated that the proposed computer tracking system would cost the state about $227 per registered medical marijuana patient, on top of other fees and taxes.
Michigan voters approved a medical marijuana law in 2007 that created a system of registered patients and caregivers, who are allowed to grow small amounts of the the drug in secured locations.
The law did not address dispensaries and alternative forms of the drug, however, and a series of state court decisions has clouded their legal status. Dispensaries have continued to operate in some communities at the leisure of local law enforcement agencies.
The new package, updated significantly since introduction in February, would create a separate set of regulations for medical marijuana businesses and provide criminal penalties for violators. The regulations could theoretically apply to recreational marijuana sales if they are legalized in 2016 or beyond.
Licensing fees would be used to support regulations and enforcement. The Department of Licensing and Regulatory affairs would have to hire about 113 full-time employees, Michigan State Police would have to hire about 34 and the Attorney General’s Office would have to hire four workers for prosecution, according to HFA projections.
Revenue from the 8 percent retail excise tax would be divided between local municipalities (27.5 percent), counties (27.5 percent), sheriffs (5 percent) and the state’s general fund (40 percent).
A handful of medical marijuana patients testified in support of the general concept of dispensaries and non-smokeable forms of the drug, saying they would have better access to their medicine as a result.
“I would like to know that there is a place within my community where I can walk in to a clear, well-lit dispensary, know that it’s not laced and not have to do some shady back room deal,” said Lisa Dibble of Ludington.
However, several long-time medical marijuana activists who have been tracking the specific bills in question blasted recent changes, which were approved by the committee before Tuesday’s public comment period began.
In particular, they questioned the tiered system, and the “secure transporter” license, which would function much like wholesale distributors under the state’s current system for beer and wine.
“It’s a curious invention,” said Matthew Abel, a Detroit-based marijuana attorney and executive director of Michigan NORML.
“Those people will neither grow it or sell it, they’re just going to repackage it if that and take a cut. That’s going to drive up the price unnecessarily. That seems like a big business move to ensconce a few large companies into a cake job.”
Law enforcement groups, whose opposition killed similar bills last session, view the updated legislation as an improvement over previous versions but continue to have some concerns with increasing access to marijuana, which remains illegal at the federal level.
The Michigan Cannabis Development Association, an industry trade group supporting the bills, applauded Tuesday’s committee approval.
“These strong regulations will provide certainty to businesses, patients, caregivers, local communities, law enforcement and many others after years of confusion,” said MCDA secretary Willie Rochon.
“For these reasons, we urge the entire Michigan Legislature to pass these safeguards without delay and help provide relief to Michigan patients and clarity to Michigan businesses so everyone plays by the rules.”

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