Earlier this week Michigan’s Marjuana Regulatory Agency announced sixteen blockbuster proposed changes to the state’s cannabis laws and regulations, which have the potential to provide Michigan with the most progressive social equity program in the nation. A result of the agency’s Racial Equity Advisory Workgroup formed in July 2020, many of the proposals reach far beyond racial equity, promoting cannabis medical research, providing municipal leaders education on the impact of legalizing cannabis in their communities, and creating a certification program for cannabis workers.
Michigan’s cannabis social equity program have had limited success. While it conducts outreach to potential license holders and application assistance and a break on license fees, few of the hundreds of license holders are people of color. According to the report, “Data collected in December 2020 by the MRA on individuals who have an ownership interest in a licensed adult-use establishment in Michigan showed that only 3.8% are black or African-American and 1.5% are Hispanic or Latino.”
Of the sixteen proposals, the two that would create new taxes have gotten the most local attention. The first, would create a 1.5% Intra-Licensee Transaction Tax to fund local social equity programs and municipal infrastructure projects. The second, would reinstate a 3% medical cannabis excise tax, also to redirect funding to local governments.
The new taxes would bring funding to municipalities that have missed out on the cannabis boom, says Workgroup member Eric Foster, a Lansing cannabis lobbyist.
“Because of the 241 communities that have opted-in so far, just 117 are still medical-only [while banning recreational sales] with no plans on changing any time soon. Then, of the ones that also allow recreational licenses, you have 20 that don’t have retail locations. So, there’s no extra tax money coming in,” explained Foster.
The report also proposes for MRA to create a market for Michigan residents to sell and purchase shares in Michigan cannabis companies, a concept that could allow individuals without access to large investors, to instead crowdfund their projects through community members.
“The opportunity to create a local stock exchange for social equity applicants really excites me a lot,” said Chris Jackson, a Workgroup member and an operating partner of the Sticky provisioning centers in Ypsilanti and Detroit. “Because there are three things that hold people back in cannabis: Access to capital, access to land, access to mentorship. If you can take care of those three things, everything else works itself out.”
Another proposal, to create a new version of the Microbusiness license, that doubles the number of plants to 300, and enables the owners to purchase plants from other growers, as well as to utilize outside processors.
“The key to that license is that it gets rid of shortages, because they will be able to sell amongst themselves,” said Cimone Cassion, another Workgroup member and cannabis insurance broker.
Many of the items can be enacted without statutory changes, and could be enacted without legislation, says MRA’s Director Andrew Brisbo.
“Some of the non-statutory ideas will likely be implemented immediately while others will be done over time. Legislative proposals will be incorporated into the MRA’s legislative agenda for introduction to the administration and legislative partners,” said Brisbo in a written statement Wednesday.
Brisbo and the MRA made a hard push during December’s lame duck legislative session to pass legislation merging the state’s two track medical-recreational license system. That stalled due to lack of interest from Republican legislative leadership, say advocates. Michigan’s governor, Gretchen Whitmer, is a Democrat.
“The tax pieces, you’ll have a fight on,” said lobbyist Eric Foster. “Those that are not statutory, I would hope those would be able to be put into place soon. They should be able to be worked out in 2021, because you’re going through the rulemaking process.You’ll need public comment, but that could be done in 2021.”