#mmfla

Caregivers and the DoDo

Cannabis and extinct birds would seemingly never come up in any type of conversation. Nevertheless, in speaking with our marijuana clients, much of them are asking about the practicality of the Caregiver model, especially as it was pushed for many years. What many in the industry have referred to as the "Caregiver Model" is going the way of the Do-Do bird on October 31, 2018. Halloween this year will certainly be the extinction event for the caregiver model as many have known it for many years here in Michigan. While Caregivers will continue to have the ability to grow and sell to their registered patients, and for themselves, if they are also registered qualifying patients, the "gray market" where they were selling their overages, and making a fairly good revenue, 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 5 registered qualifying patients (the most you were allowed) and they were a registered patient also. In many cases, multiple caregivers would collect at one place and grow their crops together, divided by paint lines on the flooring, or in more advanced situations, with each having a secured locked space within the larger enclosed, locked center. Many Caregivers could produce much more usable 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 "grey" industry resulted in considerable earnings for lots of caregivers and dispensary owners. Under Michigan's Medical Marihuana Facilities Licensing Act, nonetheless, caregivers were mosting likely to be terminated by 2021. Many Caregivers and sector experts felt that indicated the "Caregiver Model" can remain to generate those exact same revenues for an additional 2 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 marijuana sector. Initially, the Bureau of Licensing and Regulatory Affairs has taken a very scrutinizing strategy to licensing applications where any one of the candidates were Caregivers. Much of those applications have been refuted over the past several months due to the fact that the Board has discovered that there were failures to reveal by most of these caregivers regarding just how much money they made, just how they made it, and for failure to proclaim that income on a State or Federal Tax Return. Nonetheless, in a September 2018 publishing, LARA and the BMMR published that all centers that are running with municipal approval, but which have actually not received a State License, need to stop buying unlabeled and unauthorized medical marihuana on October 31, 2018. https://www.michigan.gov/lara/0,4601,7-154-79571_79784-479748–,00.html. Any kind of marihuana purchased after the October 31, 2018 date by those facilities have to be properly classified and coded as required by the regulations, and must originate from a properly State Licensed grower or processor. The caregivers may still grow, however they will certainly have no methods by which to market their product legitimately to a provisioning center or processor. The old "Caregiver Model" will, effectively, come to an end.

Results and Repercussions

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

Nevertheless, the State has actually shown a commitment to enforcement and examination. If the State were to identify that a candidate or a licensed center was still taking caretaker overages and selling them, the State would likely act. If a candidate were to be caught engaging in this model, they would likely be refuted as soon as possible by the Board. If a licensed center were to be caught breaching this mandate, the State would likely move forward with sanctions against that center's license, consisting of a suspension or cancellation of the license. Given just how much those licenses are worth, and the cost of obtaining any of the permitted facility licensing types, a lot of owners will be really resistant to take chances with the possible loss of their license, or expertise that their license will not be renewed.

Caregivers and the DoDo

Marijuana and extinct birds would seemingly never ever come up in any type of conversation. Nevertheless, in talking to our marijuana clients, a number of them are inquiring about the feasibility of the Caregiver model, particularly as it was promoted several years. What many in the sector have described as the "Caregiver Model" is going the way of the Do-Do bird on October 31, 2018. Halloween this year will certainly be the extinction event for the caregiver model as numerous have actually known it for years here in Michigan. While Caregivers will continue to have the ability to grow and offer to their registered patients, and for themselves, if they are additionally registered qualifying patients, the "gray market" where they were offering their excess, and making a pretty good revenue, 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 5 registered qualifying patients (the most you were enabled) and they were a registered patient also. In many cases, multiple caregivers would gather at one place and grow their crops together, separated by paint lines on the flooring, or in more sophisticated circumstances, with each having a secured locked area within the bigger enclosed, locked facility. Numerous Caregivers might create even more usable marihuana than their patients could utilize. Those caregivers would certainly then offer their overages to dispensaries, many of which were operating with municipal approval throughout the State. This "grey" marketplace resulted in substantial earnings for numerous caregivers and dispensary owners. Under Michigan's Medical Marihuana Facilities Licensing Act, nevertheless, caregivers were going to be eliminated by 2021. Several Caregivers and industry insiders really felt that meant the "Caregiver Model" can remain to generate those very same revenues for an additional 2 or 2 and a half years. The State, however, had other plans.

The State's Response

The State of Michigan, nonetheless, had other plans for the upstart marijuana market. First, the Bureau of Licensing and Regulatory Affairs has actually taken a very scrutinizing technique to licensing applications where any one of the applicants were Caregivers. A lot of those applications have been refuted over the past several months due to the fact that the Board has found that there were failures to disclose by most of these caregivers relating to how much money they made, exactly how they made it, and for failing to state that revenue on a State or Federal Tax Return. Nonetheless, in a September 2018 publishing, LARA and the BMMR posted that all centers that are running with municipal approval, but which have not gotten a State License, have to quit purchasing unlabeled and unsanctioned medical marihuana on October 31, 2018. https://www.michigan.gov/lara/0,4601,7-154-79571_79784-479748–,00.html. Any type of marihuana acquired after the October 31, 2018 date by those centers need to be properly identified and coded as required by the policies, and must originate from a properly State Licensed grower or processor. The caregivers might still grow, yet they will certainly have no ways whereby to offer their product legitimately to a provisioning facility or processor. The old "Caregiver Model" will, effectively, come to an end.

Outcomes and Consequences

Some may say that there are still licensed or unlicensed centers that are mosting likely to continue purchasing from caregivers, regardless of the State mandate. To be sure, there may be some that take that threat.

Nonetheless, the State has actually shown a commitment to enforcement and evaluation. If the State were to identify that a candidate or a licensed center was still taking caretaker excess and offering them, the State would likely act. If a candidate were to be caught taking part in this model, they would likely be refuted as soon as possible by the Board. If a licensed facility were to be caught breaching this mandate, the State would likely move on with sanctions against that center's license, consisting of a suspension or abrogation of the license. Given just how much those licenses are worth, and the expense of obtaining any one of the allowed facility licensing types, a lot of owners will be really resistant to take chances with the possible loss of their license, or understanding that their license will not be renewed.

If you are a caregiver and do not recognize what to do come October 31, 2018, are a person thinking of getting a MMFLA license, or are an applicant that needs representation or has concerns concerning just how these adjustments will influence you, give us a call. We have the experience and understanding in the cannabis and marihuana legislation areas to assist address your inquiries and supply you the guidance you need.

AG Sessions Removes Obama Administration Regulation Regarding Prosecution of Federal Cannabis Regulations. On Tuesday, Attorney General Jeff Sessions issued a policy which directs local U.S. Attorneys to prosecute federal criminal offenses for cannabis law offenses, even in States where recreational and medicinal cannabis usage has been authorized by the voters. The new policy directive is problematic for a variety of reasons, and ought to create worry for individuals that utilize medical cannabis in Michigan, or to individuals who distribute it.

Criminal Law Consequences. The policy change might pose severe difficulties to the Marijuana industry, that has been gradually progressing over the past decade. Until the policy change on Tuesday, a growing number of States resisted Federal policies and prohibitions on cannabis usage for any reason, and have passed medical cannabis statutes, as we have here in Michigan, or they have granted recreational use of cannabis, as Colorado and California have done, as examples. Nevertheless, even though the legislation in Michigan permits the usage of Medical Cannabis, those persons who are presently allowed to have, move and use cannabis legally under State law, are specifically breaking federal law, and those persons could be prosecuted in Federal Court for their narcotics violations.

Previously, the Obama Administration had produced a policy statement that, in States that had passed cannabis usage laws, the Federal Government would look the other way, except if they uncovered cannabis being sold on school grounds or in violation of other public policy regulations. The policy enabled the development of permitted usage of marijuana, both medical marijuana and recreational use cannabis, including here in Michigan. Now, there are serious worries that the expansion movement in other States will cease because of a fear that there may be a Federal crackdown on the cannabis industry. Given that there are central registries in States that have medical marijuana, and that in States that have authorized recreational usage, corporate documents denoting businesses that are participated in the marijuana industry, there are, rightfully many individuals who are afraid of arrest and, worst of all, Federal forfeiture of money and their products.

Impact on Michigan. The effect to Michigan, like other States, is not fully ascertainable at this point. The concern circles around the issue of whether the US Attorneys for the Eastern and Western District are interested in reapportioning constrained resources to prosecute medical cannabis facilities. The U.S. Attorney's Office has a restricted budget and has to prioritize when and where to devote those resources. Lately, there has been a strong drive to focus on heroin, fentanyl, and human trafficking, all of which are significant issues, especially in the Eastern District which covers Wayne, Oakland and Macomb counties, as well as others.

Those facts propose that it is not likely that the US Attorney will redirect those resources to start strongly prosecuting marijuana associated companies.

Nevertheless, there is a reason that the Medical Cannabis Facilities Licensing Application has a full-page waiver, implying that the candidate recognizes that the operation of their facility or usage of their license to take part in any way in the cannabis industry, is not allowed by Federal Law and that the United States Government could prosecute such an organization for illegal offenses. Prior to the policy position revision issued by AG Sessions last Tuesday, the chances of such prosecutions were minimized. Now, however, Michigan Medical Cannabis Facilities Licensing Act applicants need to be familiar with the policy change, as they have a significant amount of capital in jeopardy in not only getting the license, but in handling their establishment. Despite The Fact That Medical Marijuana Facilities are operating in complete compliance with Michigan Law, the operators, employees and financiers could all be subject to Federal prosecution.

Conflict of Laws and the 10th Amendment. Several people may rightfully shake their head in confusion at these issues. One view is that, Michigan voters have passed a law allowing the usage of marijuana under specific highly regulated conditions. Why should the Federal Government be able to come in and tell the State of Michigan they can't permit the usage of Medical Cannabis. The other view is that the Federal Government has said the usage of marijuana is prohibited and so, the States shouldn't be able to undermine those regulations. Such is the age-old dispute over Federalism and States' Rights. The answer is, the States have their own system of regulations that they are authorized to execute, separate and apart from those passed and implemented by the Federal Government. The dualist system of laws is an outgrowth of the 10th Amendment's provisions, enabling the States to have their own set of laws, an outcome of what is generally called the "States' Rights" movement. Nevertheless, where Federal Law and State Law are in direct dispute, Federal Law may be implemented, even if some States have conflicting laws, because of this dual system. Therefore, anyone applying for a facilities license under the Medical Cannabis Facilities Licensing Act, needs to not only take the waiver seriously, but needs to get in touch with a lawyer who can discuss with you the possible criminal liability you may undergo in Federal Court should you establish and operate any of the facilities permitted under the MMFLA.