BMMR Rick Johnson and lobbyists to enter pleas in MI medical cannabis licensing bribery probe

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Rick Johnson, Lobbyists To Enter Plea To Bribery In Marijuana Probe — 10:32 a.m.

Former Michigan medical marijuana board chair Rick JOHNSON, two lobbyists and a fourth individual have signed plea agreements admitting to their role in a bribery scheme involving the state’s marijuana licensing operations.

U.S. Attorney Mark Totten said Johnson, the former House Speaker, accepted more than $100,000 in bribes while serving as chair of the medical marijuana licensing board, including from companies who sought licenses and from their lobbyists.

“To be clear, Johnson accepted these bribes illegally, which is to say he accepted them with the understanding that these bribes were offered to influence him or to reward him for actions that he might take,” Totten said today at a press conference on the lawn of the Charles E. Chamberlin Federal Building at the corner of Townsend and Allegan streets.

“Public corruption is a poison to any democracy,” he added. “Those who wield the power of the state have a sacred responsibility to serve the people they represent. And when a government official takes a bribe they violate that solemn duty.”

Also entering a plea agreement to conspiracy to commit bribery John Dawood Dalaly and registered lobbyists Brian Dennis Pierce, 45, of Midland, and Vincent Tyler Brown, 32, of Royal Oak.

Totten said whether the defendants will serve prison time is not yet known, but the maximum Dalaly, Pierce and Brown face is up to 10 years in prison.

The investigation, which began as early as December 2017, is ongoing. It has included the execution of multiple search warrants and reviewing “a lot of digital evidence,” Totten said, declining to elaborate.

Johnson served as chair of the Michigan medical marijuana licensing board from May 2017 through April 2019

MDARD reminder: Growing hemp to be sold as plant starts

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As hemp growers prepare for planting season, the Michigan Department of Agriculture and Rural Development (MDARD) is reminding those interested in growing hemp to be sold as plant starts, also known as propagative stock, to remember:

  • You are required to hold a Hemp Grower Registration to grow hemp, of any quantity and to any plant growth stage. Click here for an application.
  • You are required to hold a Hemp Processor-Handler License from the Cannabis Regulatory Agency to process, handle, transport, market, broker, or sell hemp plants (or seed). Click here for the processor-handler application.
  • Hemp Processor-Handlers cannot sell viable hemp plants (or seed) to the public. Hemp Processor-Handlers can sell viable hemp only to registered Hemp Growers or other licensed Hemp Processor-Handlers.
  • Like any hemp crop, each lot of contiguously planted hemp of each variety must be sampled and tested by MDARD prior to being harvested, which includes gathering up immature plants for sale or movement off the grower’s registered growing locations. Click here for steps to request preharvest sampling.
  • Registered growers can also sign up for Performance-Based Sampling (PBS) of immature plants. Instead of paying for MDARD to sample and test lots every time a grower has a batch of immature plants ready for sale, a grower participating in PBS requests sampling of each variety only once per year. If a variety complies with THC testing, no additional sampling is required for the year.
    • Note: Federal and state law allow for PBS plans but otherwise require sampling and testing for THC compliance, even of immature plants. More information about requesting PBS can be found here. MDARD expects to adjust PBS over time with United States Department of Agriculture approval as more data becomes available.
  • Recordkeeping is required. All growers must maintain records showing the name and address of the supplier from whom seed or starts were purchased. Maintain seed labels and Certificates of Analysis, particularly if you are interested in Performance-Based Sampling.

This information is current as of March 2, 2023.

For more information about Michigan hemp licensing for growing and/or processing, and help with licensing applications and associated laws and regulations, please reach Michigan Cannabis Lawyers at (517) 512-8364.

Cannabis Regulatory Agency Summarily Suspends Lansing Processor

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February 21, 2023 – In order to ensure the health, safety, and security of the public and integrity of the state’s marijuana business operations, today the Cannabis Regulatory Agency (CRA) issued formal complaints and announced summary suspensions of the medical and adult-use processor licenses held by TAS Asset Holdings, LLC, located at 919 Filley St., Suite A, in Lansing.

The CRA also released a Marijuana Consumer Advisory Bulletin to make consumers aware of marijuana products that were combined with illicit marijuana product before being sold in the regulated market. The affected marijuana products are marketed under the brand “Fwaygo Extracts” with the product name “Space Rocks.” The final product – which was not produced in compliance with the statutes and administrative rules – was manufactured between November 10, 2022, and November 17, 2022. Pictures of the affected product are available in the bulletin.

“The conduct alleged in the formal complaints is a significant risk to the public health and safety of marijuana consumers in Michigan,” said CRA Executive Director Brian Hanna. “While we work through the process to seek revocation of these licenses, it is vital that all licensees throughout the state realize that the CRA will continue to do what it takes to protect the public from bad actors in the regulated market.”

The CRA’s formal complaints allege that on September 16, 2022, two packages of vape cartridges failed safety compliance testing for Bifenthrin, a chemical banned from use in the regulated market. Before they were transferred to and processed by TAS Asset Holdings, both packages had passed full safety compliance testing with no Bifenthrin detected.

The CRA began to investigate the cause of the safety compliance test failure. Video surveillance footage showed that the product used to make the vape cartridges was not the same product recorded in Metrc (the statewide monitoring system) that had passed compliance testing.  The product used to make the vape cartridges had not been processed or entered into Metrc as being a part of the regulated market.

During the investigation, CRA staff noted that the business had many areas that were dirty and cluttered and had leaking containers of various process stages of marijuana and waste. The CRA investigators observed an unapproved, unlicensed warehouse being utilized as a part of the licensed business. The CRA investigators also observed various untagged marijuana products including flower, distillate, concentrates, and THCa powder in the unapproved warehouse. In addition, three barrels of an unknown substance that were wrapped in plastic, two black totes of an unknown substance, and several mason jars of oil were discovered. No surveillance cameras were in the unapproved room, and none of the marihuana products found in that room had Metrc tags.

A TAS representative admitted that the business’s signature product, “Space Rocks,” is produced using the untagged THCa powder. The investigation also showed that TAS was storing and interchanging illicit marijuana products with regulated product found at the business. A safe on the premises contained three jars of distillate and five jars of marijuana concentrate that did not have Metrc tags affixed.

A review of video surveillance footage shows that TAS employees were bringing additional unregulated product into the business from their personal vehicle.  The product did not contain a Metrc tag, and its origin could not be tracked to a licensed business.

The formal complaints allege 23 regulatory violations against each of TAS Asset Holdings’ processor licenses. The licensee may request a hearing to contest the allegations in the formal complaints. State law also provides for a hearing to determine whether the summary suspensions should remain in effect.

Marijuana consumers who have experienced adverse reactions after using these products should report their symptoms and product use to their health care providers. Marijuana consumers are encouraged to also report any adverse reactions to marijuana products to the CRA via email at CRA-Enforcement@michigan.gov or by phone at 517-284-8599.

CRA issues fine and suspends Detroit Provisioning Center license for 30 days

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October 10, 2022 – The Cannabis Regulatory Agency (CRA) ordered today a 30-day suspension of the medical marijuana provisioning center facility license held by The House of Mary Jane – located at 19154 James Couzens, Detroit, MI 48235.  In addition to the suspension, the order requires the payment of a $75,000 fine. The license suspension begins 10 days after the effective date of the order.

Representatives of The House of Mary Jane (“Respondent”) recently signed a consent order, allowing the CRA to treat the following allegations as true for the purposes of resolving the formal complaint:

  • The CRA conducted an unannounced compliance visit at the licensed provisioning center and observed multiple bags, backpacks, and duffle bags of suspected marijuana products that did not have the tracking identification numbers assigned by the statewide monitoring system (METRC) attached.
  • Respondent was advised not to sell or destroy the untagged products until the investigation was completed and until guidance was given by the CRA. The CRA also requested that Respondent provide 30 days of video surveillance coverage required by administrative rule. Respondent failed to provide the 30 days of video surveillance as requested by the CRA.
  • The CRA returned to the provisioning center facility and inquired about the untagged marijuana products; Respondent then claimed to have destroyed the remaining untagged marijuana products. Video surveillance recordings of the product destruction were requested but not provided by Respondent.

“The Cannabis Regulatory Agency has a legal responsibility to protect the health, safety, and welfare of the public,” said CRA spokesman David Harns. “Our licensees must follow all of the rules and laws that govern the cannabis industry. Untagged marijuana products and the inability to provide video footage is simply unacceptable.”

Gov. Whitmer Appoints Acting Executive Director to Cannabis Regulatory Agency

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LANSING, Mich. — Today (September 15, 2022), Governor Gretchen Whitmer announced the appointment of Brian Hanna as acting executive director of the Cannabis Regulatory Agency (CRA). Effective September 19th, Hanna will join the CRA, bringing extensive experience to fill this vital role within the Whitmer-Gilchrist Administration.

“I am thrilled to welcome Brian Hanna as the new acting executive director of the Cannabis Regulatory Agency, where he will continue putting Michiganders first, growing our economy and creating jobs,” said Governor Whitmer. “The state of Michigan and the CRA are at the forefront of the nation’s hemp and marijuana industry, setting the standard for stimulating business growth and preserving secure consumer access to cannabis. A win for the industry is a win for Michiganders because its tax revenue allows us to invest back into our schools, roads, and other essential services that make a real difference in our communities. I am confident Brian will serve as an excellent leader as the CRA continues establishing Michigan as the national model for cannabis regulations.”

Hanna’s previous service in the Marijuana Regulatory Agency, now CRA, under former Executive Director Andrew Brisbo will ensure he continues the mission and ongoing work of the agency. Hanna spent 5 years with the CRA as the manager of field operations, inspections, and investigations. He has a law enforcement and military background, having previously worked as a criminal intelligence manager and analyst with MSP and as a Deputy Sheriff for Kalamazoo County. He also served as a Captain in the United States Army Reserve with a combat deployment to Afghanistan from 2010-2011. Hanna holds a Bachelor of Arts in Criminal Justice from Western Michigan University and an associate’s degree in law enforcement from Kalamazoo Valley Community College.

“I am excited to return to the Cannabis Regulatory Agency and am grateful for this opportunity,” said Hanna. “I look forward to reconnecting with stakeholders to ensure we have a clear and concise regulatory framework for oversight of this industry to promote continued growth in Michigan. I also look forward to working with the Administration and our legislative partners wherever possible to continue providing safe products to consumers. I’m honored that Governor Whitmer has appointed me to lead this important agency and look forward to getting to work.”

The State of Michigan will conduct a nationwide search to select a permanent executive director for the CRA.

CRA Public meeting scheduled for 09/14/22

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The Cannabis Regulatory Agency (CRA) will hold a public meeting on Wednesday September 14, 2022, at 9:30 A.M. For meeting information please see the Public Notice Announcement by clicking here.

The purpose of this public meeting is to hear complaints and receive the views of the public on CRA’s administration of the authorities, powers, duties, functions and responsibilities under Michigan’s marijuana laws.

Specifically, the CRA is seeking public input on the following topic:

The agency has been hearing concerns that the supply of marijuana produced by licensed growers exceeds, or may soon exceed, consumer demand. The concerns include that the wholesale price of flower is lower than the cost of production – or will be when harvests are highest in October. Background data from CRA monthly reports:

  • Between July 2021 and July 2022, the average retail price for an ounce of flower has declined 48% in the medical market (from $213.89 to $110.72) and 44% in the adult-use market (from $217.94 to $121.58).
  • Between July 2021 and July 2022, the number of plants being grown by medical and adult-use growers has increased as follows:
  • Immature plants – 48% (from 282,945 to 417,469).
  • Vegetative plants – 295% (from 228,611 to 903,115).
  • Flowering plants – 69% (from 309,554 to 521,997).
  • Between July 2021 and July 2022, the number of active grower licenses* has increased 65% and the number of active retail licenses** has increased 34%.

* Includes all medical and adult-use grower licenses of all classes, does not include microbusinesses or class A microbusinesses.

** Includes all medical provisioning centers and adult-use retailers, does not include microbusinesses or class A microbusinesses.

Questions for consideration:

  1. Would you support a change in the law to place a moratorium on the issuance of grow licenses? If so, under what conditions? If so, for what period of time?
  2. Should the agency eliminate the excess grower license established in the administrative rules, as authorized by Sec. 8(2)(a) of the MRTMA [MCL 333.27958(2)(a)]?
  3. Should the agency promulgate a rule as authorized by Sec. 9(3)(d)(3) of the MRTMA [MCL 333.27959(3)(d)(3)] to authorize an individual to hold an interest in more than five marijuana growers or in more than one marijuana microbusiness after January 1, 2023?

While the public hearing will be held in person, members of the public will also have the opportunity to attend, participate, and give public testimony via Zoom. The CRA encourages members of the public to participate and provide recommendations to the CRA.

 

Keep up to date on Michigan’s evolving licensed cannabis landscape by staying tuned to Michigan Cannabis Lawyers. Call us today at (517) 512-8364.

CRA Guidance for Tinctures

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Tinctures are not defined in either the Medical Marihuana Facility Facilities Licensing Act (MMFLA) or the Michigan Regulation and Taxation of Marihuana Act (MRTMA). When a term is not specifically defined in statute, the Cannabis Regulatory Agency (CRA) uses the plain meaning of the term as defined in the dictionary. As a result, CRA policy has been that a product labeled as being a tincture must contain alcohol.

The CRA recently reviewed products produced and sold by several licensees that are labeled and sold as tinctures. The products appeared to be non-compliant because they were labeled as a tincture but contained no alcohol and exceeded the allowable THC limit of 100 mg per container in the adult-use market.

The CRA has been notifying licensees that the sale of these products is a violation. In response, many licensees have expressed concern about the lack of a clarifying statutory definition, common industry practice in other states, and residual solvent compliance testing for tinctures.

To address these concerns until a long-term solution can be implemented, the CRA will allow licensees to make the necessary changes to packaging, labeling, formulations, and recipes, and take no disciplinary action against licensees regarding product that is currently available for sale or transfer for 60 days from the date of this bulletin (August 30, 2022).

For more help navigating Michigan’s cannabis laws and rules, be sure to reach out to Michigan Cannabis Lawyers at (517) 512-8364.