Unlicensed Medical Cannabis Businesses That Remain Open Could Jeopardize Future License Approvals

On Oct. 30, 2018, Michigan Court of Claims Judge Stephen Borrello enjoined the Michigan Department of Licensing and Regulatory Affairs (LARA) from enforcing an Oct. 31 deadline for unlicensed cannabis provisioning centers to stop operations.

The injunction remained in force as the court case continued. Per the terms of the judge’s order, the injunction expired on Dec. 15, 2018 and the judge dismissed the case on Dec. 28.

Immediately after the dismissal of the case, LARA issued an advisory bulletin in which it stated that current rules do not allow unlicensed medical to operate legally. LARA allowed those provisioning centers that had applied for a license prior to Feb. 15, 2018 and submitted an attestation demonstrating local government approval for operation to continue operating until Dec. 31, 2018. If any remained operating after that date, LARA would treat continued operation as “an impediment to licensure.”

Confusing the matter is recent passage signing of Senate Bill No. 1262 of 2018 into law. Section 407a of the new law provides that criminal penalties and fines would apply if a medical cannabis facility operated without a license after June 1, 2019. But, it provides no protection for the pending applications of those operating without a license past the new Dec. 31, 2018 deadline.

In essence, there appears to be no criminal or civil liability under Michigan Medical Marihuana Facilities Licensing Act to continue operating without a license between Dec. 31, 2018 and June 1, 2019. However, continued operation after Dec. 31 without a license would still threaten one’s pending application to operate a medical cannabis facility.

Since the first of the year, we have heard of inspections of previously open, unlicensed facilities by LARA to determine if they were compliant with the new advisory bulletin. It seems that LARA intends to follow through on its threat.

There have been rumors of consideration of a possible reprieve in light of the incoming administration, but that may be just wishful thinking. It seems evident that those with pending licenses should consult with their attorneys on whether to remain open or not in light of the advisory bulletin and inspections by LARA.

Tags: Cannabis
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