October 31, 2018 Deadline for Caregivers and The Changing Marihuana Dynamic in Michigan

Caregivers and the DoDo

Marijuana and extinct birds would seemingly never show up in any discussion. Nonetheless, in talking to our cannabis clients, a number of them are asking about the feasibility of the Caregiver model, especially as it was pushed for years. What many in the market have actually referred to as the "Caregiver Model" is going the way of the Do-Do bird on October 31, 2018. Halloween this year will be the extinction event for the caregiver model as numerous have known it for several years here in Michigan. While Caregivers will certainly continue to be able to grow and sell to their registered patients, and for themselves, if they are likewise registered qualifying patients, the "gray market" where they were selling their overages, and making a pretty good profit, is coming to an end.

What was the "Caregiver Model?"

Under the old "Caregiver Model," a Registered Caregiver could grow up to seventy-two (72) marihuana plants, if they had five registered qualifying patients (the most you were permitted) and they were a registered patient too. Sometimes, multiple caregivers would collect at one area and grow their crops with each other, separated by paint lines on the flooring, or in more sophisticated circumstances, with each having a protected locked space within the bigger enclosed, secured center. Lots of caregivers could produce even more functional marihuana than their patients can use. Those caregivers would certainly after that market their excess to dispensaries, many of which were operating with municipal approval throughout the State. This "gray" marketplace led to considerable earnings for numerous caregivers and dispensary owners. Under Michigan's Medical Marihuana Facilities Licensing Act, nonetheless, caregivers were mosting likely to be terminated by 2021. Numerous Caregivers and market experts felt that meant the "Caregiver Model" could continue to produce those same revenues for an additional two or two and a half years. The State, nonetheless, had other plans.

The State's Response

The State of Michigan, nevertheless, had other plans for the upstart cannabis market. Initially, the Bureau of Licensing and Regulatory Affairs has taken a very scrutinizing strategy to licensing applications where any of the applicants were Caregivers. Most of those applications have actually been denied over the past several months because the Board has located that there were failures to divulge by many of these caregivers relating to how much money they made, just how they made it, and for failure to declare that income on a State or Federal Tax Return. However, in a September 2018 posting, LARA and the BMMR posted that all centers that are running with municipal approval, but which have actually not obtained a State License, should stop purchasing unlabeled and unauthorized medical marihuana on October 31, 2018. https://www.michigan.gov/lara/0,4601,7-154-79571_79784-479748–,00.html. Any marihuana acquired after the October 31, 2018 date by those facilities have to be effectively classified and coded as required by the rules, and must come from an appropriately State Licensed grower or processor. The caregivers might still grow, however they will certainly have no methods by which to sell their product legally to a provisioning center or processor. The old "Caregiver Model" will, effectively, come to an end.

Results and Effects

Some might argue that there are still licensed or unlicensed facilities that are going to continue purchasing from caregivers, in spite of the State mandate. To be sure, there might be some that take that risk.

Nevertheless, the State has demonstrated a commitment to enforcement and evaluation. If the State were to determine that a candidate or a licensed center was still taking caretaker excess and selling them, the State would likely act. If an applicant were to be caught participating in this model, they would likely be refuted immediately by the Board. If a licensed center were to be caught breaching this mandate, the State would likely progress with sanctions against that center's license, including a suspension or abrogation of the license. Provided how much those licenses are worth, and the expense of obtaining any one of the allowed facility licensing types, many owners will certainly be very unwilling to take chances with the possible loss of their license, or knowledge that their license will not be restored.

If you are a caregiver and don't recognize what to do come October 31, 2018, are a person thinking of requesting a MMFLA license, or are a candidate who needs representation or has concerns about how these adjustments will certainly impact you, give us a call. We have the experience and knowledge in the marijuana and marihuana regulation areas to help address your concerns and provide you the advice you need.