How Michigan’s New Cannabis Business Group Seeks to Steady the Market

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Last week was a busy one for the newly-formed Michigan Cannabis Industry Association. After an initial splash announcing the group’s formation, the association began helping to shape the narrative around the state’s medical cannabis shortage, pushing regulators to temporarily reopen dozens of medical cannabis businesses that had been closed due to a regulatory bottleneck. Many of these businesses had existed, unlicensed, for nearly a decade, and their applications piled up when state decided to bring the illegal industry above ground.

The effort paid off. While the business association was just one of the reasons for the quick resolution of the shortage—a new Democratic administration under Gov. Gretchen Whitmer certainly played its role—the incident underscored the impact a trade group can have, at least according to Josh Hovey, its spokesman. (Hovey is also the senior vice president of Truscott Rossman, a communications firm led by the former head of communications for former Michigan Gov. John Engler.) The shortage was a “crisis” for patients, Hovey said, adding, “Fortunately, the state listened.”

The next step, Hovey said, is to work with the state to improve the licensing process, “so that we can get more businesses licensed.”

The group is led by CEO Robin Schneider, the finance director of the successful 2018 campaign to legalize adult use. Hovey had served as the ballot initiative group’s communications director. The state medical cannabis community is hopeful, as Whitmer and Democratic Attorney General Dana Nessel took office after campaigning to support cannabis. (The legislature remains in GOP control).

In an interview, Hovey told Cannabis Wire about the group’s short and long-term plans, including how business owners will deal with local bans on cannabis sales, as medical use businesses await licensure and adult use regulations are rolled out.

The conversation has been edited for length and clarity.

Can you explain this recent shortage of medical cannabis, why dozens of businesses were shuttered, and how things were resolved?

So there was basically two categories of [medical cannabis] businesses open—ones that were fully licensed and legally allowed to operate, and some operating under temporary licenses, undergoing the licensing process but not fully licensed yet. And just to ensure that patients had access to their medicine the state had allowed those temporary operators to be supplied from caregivers [those who grow or buy medical cannabis on behalf of patients] that were licensed by the state. As of January 1, the temporary operators had to all close down because they had not yet been processed for the a full license by the state, leaving only a handful of licensed businesses. And …there was a huge shortage of product available across the state to serve nearly 300,000 medical marijuana patients.

Michigan has struggled for years—medical marijuana has been legal since 2008 —with getting licenses and regulations approved. How will that change?

I think it’s going to happen a lot faster now that we have leadership in state government that is supportive of the industry rather than antagonistic. So hopefully we can work with them to speed up the processes and remove some of the the barriers to getting a fully legal and functional marijuana industry off the ground.

I mean they’re denying licenses on petty issues. Calvin Johnson is a former professional football player who accidentally forgot to pay traffic tickets and that was their rationale for denying his business a license, and that’s really not the intent of the law. And so I think we can help the state improve the way it grants licenses. And then as the adult-use business license process gets developed, and all those rules and regulations become written, we want to make sure that the state learns from the lessons of its medical marijuana-licensing challenges and doesn’t repeat those same mistakes. We want to be a partner with the state.

Why the focus on medical, given that adult-use was just approved?

The focus is on medical care because the product shortage and the patients in the state are relying on a working and functional medical marijuana system. And the reality is that the state is going to model the recreational licensing off of how it manages the medical program. So if we don’t get medical right, we can’t expect the state to do the adult-use licensing right.

There are dozens of communities that immediately banned cannabis operators and sales. Why did that happen?

There’s really two reasons. Some of them were just adamantly opposed to marijuana in general and didn’t want to have these businesses in their community. That’s fine. That’s their decision. Hopefully that was also the will of their voters when it came to Prop 1. The other reason is they’re taking just a more cautious wait-and-see approach.

We’re confident that once they see that this is a responsible industry, that it will be a good neighbor and a partner in their local community, they’ll change their minds and want to work to allow businesses to operate. And that’s an issue that that the association will work on, making sure that communities understand that a lot of those fears are unfounded. And we have data from other states that we will provide to them to demonstrate that this is not something that they should be afraid of, but rather something that they should embrace as a new opportunity to generate tax revenue and jobs in their community.

Will cannabis ever be as big as the Michigan auto industry once was? Or how would you compare the potential business impact?

Well, it definitely could be part of the solution. There’s a lot of industrial space in Michigan where growers could could buy up those warehouses and operate and get those properties back on the tax rolls and get people employed. There’s also, I think, an analogy to Michigan’s craft beer scene. The city of Grand Rapids, one of our largest and most prosperous cities, bills itself as Beer City, USA. They’ve embraced the craft brewing industry. And I see a future where communities in Michigan embrace craft cannabis and are the hub of the cannabis industry which is going to create thousands and thousands of jobs and generate tourism dollars.

What’s the biggest impediment to the industry, regulations or localities opting out?

I think it is going to be the regulatory issues, making sure that the rules are fair and that the application process is not designed to benefit only a few wealthy individuals, that it gives opportunities to small businesses and folks like that. And then making sure that local ordinances are fair and equitable.

There’s also some social justice aspects of Proposal One that was passed last year that require the state to ensure that opportunities are available to communities that have been disproportionately impacted by marijuana prohibition. And so working with the state to ensure that they’re encouraging minorities to participate in the legal marijuana market— that is another important aspect of the organization.

How should the state do that?

The new law requires the state to create some programs that encourage participation by minority communities, nothing more specific than that. So we will want to work with the state to make sure they follow through on that aspect of the law, and we’ll work with them on some idea about how they might fulfill those obligations.

There might be a scoring system—there’s a lot of different ways they could approach it, and the association hasn’t gotten together to develop those recommendations yet. We just want to make sure that they follow through and that it’s fair for everybody.

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