Why Michigan hasn't given out any medical marijuana licenses yet

The Michigan Medical Marijuana Licensing Board gave preliminary approval to nine applications, denied two and postponed action on another potential business.

And yet, 16 months after the Michigan Legislature passed bills to regulate and tax the medical marijuana industry and four months after the state started accepting applications for licenses, not a single business has been awarded a license to begin operating in what has been estimated will be at least a $700-million business in the state.

The slow pace comes as dispensaries already serving customers face a June 15 deadline to either get a license or be shut down.

"There was a lot to be done after the law was passed. We had to get an IT system set up, build an organization and hire employees," said Andrew Brisbo, director of the Bureau of Medical Marijuana Regulation. "I think we made tremendous progress and I'm pleased with where we stand considering the time frames we've had to deal with."

The licensing board at least made some progress Thursday, approving pre-qualification for four dispensaries, including three that also were pre-qualified as a grow operation, one testing facility, one secure transporter and two processing facilities.

A pre-qualification means that the applicants have gone through the background checks done by the Department of Licensing and Regulatory Affairs and the Michigan State Police, but they still have to get approval from the community where they want to do business and have their facility inspected by the state. Once they get those, they can go back to the licensing board to get a license.

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Amy Brown, owner of ABKO Labs, had the distinction of getting the first pre-qualification approval from the board.

"I'm very excited," she said. "I was in financial services for 28 years and I'm also a lawyer and I was ready for a career change moment. My dad was a chemist and I was looking at getting into this and we started working on this together."

Her dad has since died, but she's looking for space for her marijuana testing facility in a community that has passed an ordinance that allows for medical marijuana businesses. She also hasn't started hiring employees because, until Thursday, she wasn't sure whether she would be able to get a license.

"We have a location in Warren that is ideal, but it's a little too close to residential," Brown said. "So we've got to work on that."

The two applicants who were denied — a secure transporter and grow operation — both had criminal records that, on their own, wouldn't have disqualified them from getting a license. But they had failed to disclose the issues on their applications and that led to them getting denied.

"It’s unfortunate that we’re confronted with the situation of having to drag people through the mud," said board member David LaMontaine, referring to Raymond Oatman, who was applying for a growing license. "He served his time, he beat his drug addiction and it looks like he's got a successful plumbing business going. But he failed to disclose not just one, but two things."

The other denial came for Greentransport Services, a Gratiot County secure transporter whose owner had a 20-year-old, non-drug-related misdemeanor that he failed to disclose on his application.

"It isn't so much that he had this old conviction, it's the fact that he left it off his application," said board member Donald Bailey, a retired Michigan State Police officer.

Bailey also had a problem with an application from an Ann Arbor business that applied for licenses for a dispensary, grow operation and processing facility. He questioned the large financial transactions that were disclosed in the application and suggested that it might be laundering money.

"This was a business that was making millions a year ago and sold to the applicant for $59,000. I’m a police officer and that doesn’t make any sense to me," Bailey said.

But other board members noted that they didn't read the application in the same way and realize that because of federal drug laws, which still consider marijuana an illegal substance, the industry is largely a cash industry because banks don't want to run afoul of federal regulators.

"As it pertains to the money business, this is going to be a cash business and people are going to have to get creative," LaMontaine said. "I’m not sure if these guys are just smarter or ahead of the game."

Several people who have submitted applications, but haven't gotten a hearing yet, complained to the board of the snail's pace in awarding licenses. The issue becomes especially crucial on June 15, the date when 215 medical marijuana businesses that are operating under emergency rules while their applications wait to get consideration, will have to shut down or risk getting their applications denied.

"If you only reviewed 11 applications today, you’re going to have to have 43 meetings to get through the rest of them," said Tim Schuler, who has applied for a secure transport license. "And all the ones who have gotten pre-qualification have to come back for approval before they get a license."

David Harns, spokesman for LARA, said businesses still operating after June 15 could risk their chance at a license, but "LARA does not currently intend to issue cease and desist letters nor refer to law enforcement any applicant who turned in their state application with local attestation by Feb. 15, 2018, has a pending application, and is making a good faith effort to become licensed by LARA."

The state sent cease and desist orders last month to more than 200 marijuana facilities that were operating without having submitted an application.

The businesses that got pre-qualification Thursday were: ABKO Labs, a testing facility; Motas, Inc., a secure transporter based in Hazel Park; Herban Legends dispensary; Pure Green, a processor in Inkster; Agri-Med, a Class B grower and dispensary in Muskegan; Green Eden, a Class C grower and dispensary in Portage; Cannarbor, Inc., a dispensary in Ann Arbor; Arbor Farm, a Class A grower in Ann Arbor, and Arbor Kitchen, a processor in Ann Arbor.

Consideration of the application from Straw Hat, Inc., a Class C grower in Adrian, was postponed.