LANSING, MI – When big businesses open up medical marijuana facilities under a new law next year, they’ll know the rules well. In fact, they’ll have helped shape them.
Since February, businesses – through a cadre of lobbyists — have been privately weighing in on potential rules for the new, $837 million medical marijuana industry.
For smaller players like Elijah Jackson, 26, a caregiver in Monroe County, it’s hard to see where he fits into a picture he hasn’t helped paint.
“Honestly, I don’t at this point,” Jackson said. “I would love to be able to communicate a little more directly with this board and maybe get on a more personal level with them. I would hope to be able to secure at least a 500-count plant license… that would be the dream, would be to have the license.”
The state officials who will be in charge of regulating medical marijuana have agreed to personal meetings with big players, gone out to lunch with their lobbyists and given private presentations to lobbyist groups, according to records obtained by MLive and the Michigan Campaign Finance Network under the Freedom of Information Act.
The action stems from a 2016 law that set up the framework regulating marijuana facilities, from grow operations to dispensaries. But the legislature left many of the details up to the new Medical Marihuana Licensing Bureau within the Department of Licensing and Regulatory Affairs, and the licensing up to the Medical Marijuana Licensing Board, which begins accepting applications Dec. 15.
The department asked lobbyists and others for input through a series of questionnaires, said BMMR Director Andrew Brisbo, as it gathered information and educated itself before crafting regulations.
“We needed to rely on expertise, and that is individuals that are interested participants in the industry, their representation, other state regulatory agencies, we really have tried to gather as much information from all those sources as possible,” Brisbo said.
But for some, giving potential marijuana businesses input the rules they sought to be licensed under is concerning.
“There’s a very famous quote that says you can make the law and I’ll make the rules and I’ll win every time. And I can’t recall who said that quote, but it’s never been more true than in this circumstance,” said Rick Thompson, a medical marijuana advocate.
Big, small businesses fight for same licenses
What’s shaping up is a battle between the interests of existing medical marijuana shops that seek to stay in the business once it’s regulated, and larger players looking to break into the industry.
Existing dispensaries, which many patients rely on, are operating in a legal grey area that will soon become black and white. Dispensaries will be either licensed or unlicensed, legal or illegal.
Former state Rep. Mike Callton, who sponsored the 2016 law that creates a regulatory system for medical marijuana dispensaries, said he’s seen some bad ones.
“I saw a place I wouldn’t buy a hot dog in. You know what I’m saying? It was just pretty rough looking,” Callton said.
He said the new, regulated market will attract more investors and more capital, and lead to a more professional industry.
But people who already operate in the industry don’t want that shift to mean they get boxed out.
Dan Hall, a caregiver in Jackson who attended an August meeting of the Medical Marihuana Licensing Board, wasn’t surprised to learn the department had been talking with lobbyists for months before the board started taking public input at their meetings.
“They’re protecting the interests of their cronies that weren’t willing to take the risks that we were willing to take when we were willing to take them, regardless of the reasons and motivations,” Hall said.
Biggest players still in the shadows
LARA sent out a series of questionnaires to lobbyists and other interested parties starting in February. They solicited input, but in most cases lobbyists weren’t entirely transparent, at least via email, about where that input was coming from.
“In response to these questions, please see responses I received from one client below,” wrote Manny Lentine in a March 21 email to LARA’s Colleen Curtis, without identifying which client.
Brisbo said he knew whom many lobbyists were representing.
“I think in a lot of cases we met with lobbyists and their clients, so we knew who a lot of them were representing. But in the end, the aggregation of that information, it becomes sort of immaterial as to the source, if you will, because we wanted to collect all perspectives,” Brisbo said.
Lentine, who did not respond to requests for comment on this article, is a registered lobbyist. But technically he and others advocating on behalf of clients don’t have to register.
Michigan defines lobbying as “…communicating directly with an official in the executive branch of state government or an official in the legislative branch of state government for the purpose of influencing legislative or administrative action.” But only some officials — including elected officeholders and the highest-ranking department personnel — are considered lobbyable.
For these questionnaires, the responses were directed to Curtis, a classified civil servant who doesn’t fall under the act.
One company mentioned directly in emails is Moxie, a company that processes and distributes marijuana in multiple states. Lobbyist Ron Khoury submitted their answers to one of the LARA questionnaires. Its representatives did not respond to a request for comment.
In one email, Curtis thanked Gary Owen, a lobbyist for one of the state’s largest lobbying firms, Governmental Consultant Services Inc., for lunch and said it was good to meet with him and someone whose name was redacted to talk “about the new medical marijuana licensing law and the Department’s progress.”
In other emails, Owen asked state regulators, including Brisbo, to attend summits on medical marijuana in the firm’s conference room. Owen specifically said in one message that “even some folks that may be seeking licensure” would attend one of the events. Brisbo agreed to attend a July summit.
Brisbo said the department’s meetings weren’t limited to lobbyists and their clients. They’ve spoken at different associations and made themselves available, he said. Recently the bureau formed workgroupsto do more information-gathering.
The bureau met with both people who were represented by lobbyists and those who weren’t, he said.
“We have met with many different people, either individually or in larger groups,” Brisbo said.
Benefits for big businesses
In at least a few instances, decisions at the legislative and administrative levels have benefitted big businesses.
The emails obtained by MLive show that Lentine was able to get language in the state budget that would allow the state to consider a “closed-loop” payment system for medical marijuana. The system would allow for the state to track money in the marijuana industry. Lentine’s clients include CS Platform Technologies, which offers such a system, according to state lobbying records, and another called Payqwick that advertises itself as an electronic payment method for medical marijuana businesses.
The Department of Treasury doesn’t plan to pursue the closed-loop payment system at this time, a spokesman said.
Administratively, one of the questions the department circulated was whether people should be able to operate more than one type of license — growing, processing or selling — out of a single facility.
Of three groups whose responses to that question were included in the FOIA request, two supported it on behalf of their clients.
“Yes, growers, processors, and provisioning centers should be allowed to operate at the same location. It allows for enhanced efficiency and less potential for contamination through material movement and handling as well as preservation of the plant’s medicinal compounds, which are compromised when handled or stored improperly,” wrote a company called Compassionate Advisors.
In September, the department announced its intent to allow the co-location of such facilities.
Other moves the BMMR announced do not directly correlate to the questions it asked lobbyists, but put big businesses in a position to benefit over smaller ones.
The law required the board to make sure applicants had the means to operate and maintain medical marijuana facilities, but left it up to regulators to determine what that meant. At an October meeting of the licensing board, the BMMR announced its intent to require businesses seeking facility licenses to have between $150,000 and $500,000 in start-up capital to qualify for licenses.
Those limits are enough to snuff out smaller companies, some said.
“Come on guys. Let the middle class, everyday guys into this business,” said Christine Montague, of Ann Arbor, a caregiver who testified at the board’s Oct. 17 hearing on the matter.
“It looks like it’s going to hold us out, that’s what concerns me,” Montague said.
The department also decided to allow businesses to “stack” licenses for 1,500 plants, meaning they could have multiple licenses and grow double or triple or quadruple the plants in a single location. That’s something the law doesn’t contemplate, but some businesses supported through their lobbyists’ responses to the questionnaires.
Open questions
There are some questions the department still hasn’t settled.
It asked for input on things like whether businesses have to start new medical marijuana from seed, or could transition in bigger plants from current caregivers so they would have the medical marijuana available sooner. It asked what the mandatory testing standards for medical marijuana should be.
The department hasn’t answered these questions yet, but they have plenty of input from lobbyists.
And for the smaller players interested in getting into the industry, advocating for themselves is hard when you go up against longstanding lobbying firms and powerful corporations.
“I wouldn’t think I’d need a lobbyist. If I don’t have a fair chance off the rip from doing this then, I don’t know, whatever,” said Jackson, the Monroe County caregiver.
George Brikho owns two hydroponic gardening stores, and would like to open a dispensary. He started a group called Evergreen Management to lobby for small business owners in the medical marijuana industry while the legislation was going through. He was going against powerful interests back then, he said, and it hasn’t stopped.
“It was very tiresome for us to take on these big guys, because they obviously have deep pockets and deep relationships. We were able to beat them legislatively, and now we have a battle with it administratively,” Brikho said.
credit:mlive.com
