MI Social Equity Program – MMMP Caregiver Discount Eligibility Update from CRA

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The Cannabis Regulatory Agency (CRA) has announced an update to the caregiver criteria portion of the Social Equity Program which will allow caregivers an expanded opportunity to qualify for the fee reduction while also bringing it into alignment with the retention and disposal schedule established by the Michigan Medical Marijuana Program.

As per the new criteria, beginning October 1, 2023, an individual must have at least two years of caregiver experience – as a registered primary caregiver under the Michigan Medical Marihuana Act – in the last five years to qualify for the 10% caregiver fee reduction.

Participants in the Social Equity Program who are already receiving the 10% caregiver fee reduction will continue to be eligible for the fee reduction as long as their Social Equity eligibility status continues to be renewed. These changes will only affect those who are seeking the fee reduction for the first time.

For questions regarding the Social Equity Program, please email CRA-SocialEquity@michigan.gov or contact the CRA’s social equity team by phone at 517-284-8599.

Ex-House Speaker Rick Johnson sentenced to 55 months in federal prison for taking bribes

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This story was reprinted with permission from Crain’s Detroit and written by David Eggert.

Former Michigan House Speaker Rick Johnson was sentenced to 55 months in federal prison Thursday for taking at least $110,200 worth of bribes, including lobbyist-funded sex with a prostitute, while he chaired the state’s nascent medical marijuana licensing board.

Johnson, 70, of LeRoy, Michigan, helped the bribe payers — a Detroit-area businessman and two Lansing-based lobbyists — by assisting their companies and clients through the process, providing confidential information about the five-member board’s work and that of other applicants, and ultimately voting to approve the applications. In return, he accepted no fewer than 38 cash payments between June 2017 and February 2019, a $20,000 “loan,” $2,000 worth of sex with a woman in the adult entertainment industry and two trips on private jets to meet with Canadian investors in a company seeking licensure. The flights were valued at $8,200.

U.S. District Judge Jane Beckering sentenced Johnson in Grand Rapids, two weeks after she sentenced 71-year-old John Dawood Dalaly of West Bloomfield to 28 months. Johnson, Dalaly and lobbyists Vincent Brown of Royal Oak and Brian Pierce of Midland pleaded guilty in April and agreed to cooperate as part of deals. That suggested more people could be charged, though no one else has been to date.

Johnson “corrupted the process for the state’s issuance of licenses for businesses to operate in a new and lucrative industry,” prosecutors wrote in a court filing this month in which they asked for a sentence of at least six years and a $110,200 fine.

“Those who were denied a license by the (Medical Marijuana Licensing Board) now may wonder whether they had a fair and equal opportunity to compete in the industry. Law-abiding qualified applicants who did not have the ultimate insider ‘on the take’ may have struggled with understanding and navigating what became a tedious and lengthy application and approval process,” assistant U.S. attorneys Christopher O’Connor and Clay Stiffler wrote. “At the very least, although the government has no evidence that Johnson’s receipt of bribe payments prevented other qualified applicants from ultimately obtain licenses, Johnson’s crime has significantly damaged the trust that law-abiding citizens placed in his work as MMLB Chair and in state government.”

Johnson’s lawyer, Nicholas Dondzila, had recommended leniency, urging the judge to take into account factors such as his “substantial and material assistance” to investigators, others’ support for him, his public service and lack of a prior criminal history.

Johnson, a Republican, was House speaker from 2001 through 2004 before being term-limited. He was a partner in a multi-client firm in Lansing with Democratic former House Speaker Lou Dodak — Dodak Johnson & Associates — and was named to the newly created licensing board in 2017 by then-Gov. Rick Snyder after dropping his lobbying registration.

The appointment was controversial because Johnson had worked on the legislation to regulate medical marijuana but claimed he had no paying clients. He also had been negotiating the sale of his stake in the firm to Pierce, a marijuana industry lobbyist who had worked on the bills as a legislative staffer, before later selling it to Dodak, according to the Detroit Free Press.

Pierce and Brown will be sentenced Oct. 18.

CRA Publishes Michigan’s Marijuana Industry Voluntary and Involuntary Exclusion Lists

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In order to promote continued transparency with Michigan’s cannabis industry stakeholders, the Cannabis Regulatory Agency (CRA) has created and made public the marijuana industry voluntary and involuntary lists. These lists are now available on the CRA website and include individuals excluded from participating in the licensed marijuana industry in Michigan.

Individuals may be excluded from employment at, or participation in, a marijuana business and added to the involuntary exclusion list pursuant to the administrative rules. Individuals may voluntarily exclude themselves from employment at, or participating in a marijuana business, by signing a Consent Order and Stipulation (COS) to resolve disciplinary action the CRA has initiated against them.

It is vital that licensees screen prospective employees, supplemental applicants, and owners against the exclusion lists as they are prohibited from employing excluded individuals or allowing them to be supplemental applicants on a license.

Michigan’s marijuana industry exclusion lists – both voluntary and involuntary – can be found on the CRA website under the Disciplinary Actions page.

Michigan Cannabis Sales Set a Monthly Record in June 2023

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Michigan cannabis sales rose 6.0% in June from the longer May to a record $260.8 million. On a per-day basis, sales grew 8.8%. The growth of 39.2% from a year ago was up from the 31.9% level last month:

The Michigan Cannabis Regulatory Agency breaks out sales by medical and adult-use, with medical sales falling 69.1% from a year ago to $6.6 million, down 5.8% sequentially, and adult-use sales expanding 53.2% year-over-year to $254.2 million, up 6.4% sequentially:

The state breaks out sales by category and provides pricing detail by category, for both medical and adult-use:

MEDICAL/MMFLA CANNABIS SALES

ADULT USE CANNABIS SALES

As supply continues to expand, flower pricing for adult-use has seen a dramatic decline. In May, the average price of $1428 per pound fell sequentially, losing 1.5% and falling 27.1% from a year ago:

Michigan cannabis sales expanded 82.1% in 2021 to $1.79 billion and were up 27.9% in 2022 at $2.29 billion. So far in 2023, sales have grown 38.5% compared to the first six months of 2022. The program should continue to expand ahead as supply becomes more available and as distribution expands.

MMFLA Regulatory Assessments FY 2024

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Revised Confirmation of Tax Compliance Attestation for Medical and Adult-Use Applicants/Licensees

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In consultation with the Department of Attorney General and the Department of Treasury, the Cannabis Regulatory Agency (CRA) has revised the Confirmation of Tax Compliance Attestation (Treasury Attestation) for initial and renewal applications. The medical and adult-use treasury attestations have been revised and updated on the website. This revision is intended to align the application process with the statutory and administrative rule requirements, specifically, whether the applicant is delinquent in the payment of any tax required under federal, state, or local law for one or more years. Effective with today’s notification, applicants and licensees that submit the Treasury Attestation to the CRA are required to utilize the updated form as part of the application process. Failure to utilize the correct form will result in a notice of deficiency being sent and a delay in the timely processing of the application.

Additionally, the instruction booklets for the medical and adult-use applications have been updated to be consistent with the revised treasury attestations. Please note, the CRA has inserted into the instruction booklets additional guidance received from the Department of Treasury regarding how a delinquency is defined. This will impact how the attestation will be completed by the Department of Treasury and subsequently how the CRA will utilize the completed form when making licensing determinations consistent with the statute and administrative rules.

Please see the Department of Treasury guidance below:

To assist in the completion of this attestation, please note that the Department of Treasury defines delinquency as follows:

  1. For underpaid or no remittance tax returns, a taxpayer is considered “delinquent” in the payment of the required tax if the amount due indicated on the return has not been paid in full by the due date of the return.
  2. For post-return adjustments made by Treasury such as adjustments made when the return is processed, or as part of the audit process, a taxpayer is considered “delinquent” in the payment of the tax deficiency on the date that Treasury issues an assessment (Final Bill for Taxes Due) with respect to the determined deficiency.
  3. For “failure to file” situations, the taxpayer is considered “delinquent” in the payment of the tax at issue beginning on the day following the due date of the return that was required, but was not filed.

For questions or concerns regarding the updated Treasury Attestation please reach out to the CRA via email: CRA-AdultUseLicensing@michigan.gov. For questions or concerns regarding the status of your account with Treasury and any potential delinquency, please reach out to the Department of Treasury via email: Treas-MI-Marihuana-Tax@michigan.gov

Michigan’s Cannabis Regulatory Agency Notifies Consumers of Voluntary Marijuana Product Recall

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In the interest of public health and safety, the Cannabis Regulatory Agency notified consumers today of a recall of marijuana-infused edible products. Bloomfield Development Group Grow, LLC dba Golden Shores Cannabis Company (Bloomfield) – in coordination with the Cannabis Regulatory Agency (CRA) – is voluntarily recalling a limited amount of marijuana-infused edible products due to non-compliant creation and packaging.

The products were created containing 200 mg of THC per serving, which exceeds allowable concentration amounts. In addition, the product packaging is not child resistant as required by the administrative rules. The product is labeled as “The Weed Bar” without the required product modifier stating, “marijuana product,” “THC product,” or “cannabis product.”

Consumers who have these products in their possession should return them to the marijuana sales location for proper disposal. Consumers who have experienced adverse reactions after using these products should report their symptoms and product use to their healthcare providers. Consumers are encouraged to also report any adverse reactions to marijuana product to the CRA via email at CRA-Enforcement@michigan.gov or by phone at 517-284-8599.

Questions about this recall should be emailed to the CRA’s Operations Support Section at CRA-Compliance@michigan.gov.

Michigan’s Cannabis Regulatory Agency Takes Disciplinary Action against Mt. Morris Processor

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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) announced disciplinary action against Sky Labs, LLC, located at 9421 N. Dort Hwy, Mt. Morris, Michigan 48458. Sky Labs will surrender its medical processor license, have stringent compliance requirements placed on its adult-use processor license, and must pay a $100,000 fine.

“When businesses don’t follow the laws and rules that govern the cannabis industry, it is important that they be held accountable for their actions,” said CRA Executive Director Brian Hanna. “It is vital to the health and safety of the public that all licensees in Michigan’s cannabis industry abide by the rules and laws that are in place to protect the public.”

The stringent compliance requirements contained in the consent order and stipulation require Sky Labs to do the following regarding its adult-use processor license:

  • Submit to a full onsite audit conducted by CRA staff and correct any deficiencies.
  • Provide a copy of all standard operating procedures to the CRA.
  • Provide a copy of all logs maintained on a monthly basis, for 12 months.
  • Submit payment for the $100,000 fine.

If Sky Labs fails to timely comply with the terms of this order, its license will be suspended until compliance is demonstrated. The details of Sky Labs’ violations can be found in the disciplinary documents issued by the CRA (link, link, link, link).

To summarize, in part:

In spring 2021, Sky Labs had marijuana vape cartridge concentrates fail safety compliance testing for banned chemical residues. In addition, Sky Labs had a product fail safety compliance testing for Vitamin E Acetate, a target analyte banned for inhalation by the Food and Drug Administration (FDA). During the investigation to determine the cause of these failures, the CRA discovered the record of formulation used in the production of the concentrate did not include the minimum requirements and did not include the test results for the terpenes used in the concentrate.

In September 2021, during an inspection, the CRA observed eleven employees actively working in the production of marijuana products who were not trained on safe food handling and were not in the possession of food handling training certificates. The CRA also observed Sky Labs producing, packaging, and storing vape cartridges in a back trailer without a working video surveillance system. In addition, the CRA observed pre-rolls without statewide monitoring system (Metrc) tags affixed to the pre-rolls, bags, or storage bins. This marijuana product could not be identified on any manifest or in the statewide monitoring system as being sourced from a licensed grower.

In December 2021 and January 2022, CRA audits were performed for multiple Metrc packages tags (packages) from Sky Labs’ inventory; these packages previously received full compliance testing. The packages tested first were not the same packages that were tested for the second time, and/or the packages were not in the same condition at the time of the second testing, even though all the products contained in the packages were sampled from the same Metrc package tag.

In June 2022, Sky Labs distributed Chewii Sour Cherry Edibles to employees of the adult-use processor establishment. Ten employees each received one package containing 20 pieces each. Sky Labs admitted the packages were mislabeled and as a result, were distributed to employees as trade samples. The labels on the edibles displayed a large sticker showing “200 MG CBD” and Sky Labs did not place a THC amount or modifier anywhere on the packages. An employee provided the edibles to her 4-year-old child. The child consumed two edibles which contained 20 mgs of marijuana. The child became seriously ill and was hospitalized due to adverse reactions to the marijuana edibles. A police report was filed with the Davison City Police Department and an investigation was opened with Child Protective Services.

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