Michigan's Proposal 18-1: What to Know About Recreational Cannabis Legalization

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Getting Ready for Recreational
Cannabis in Michigan
Things you need to know before November 6th
TRAVIS COPENHAVER | CANNABIS LEGAL GROUP

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Michigan Proposal 18-1
Marijuana Legalization Initiative (2018)
This proposal would:
• Allow individuals 21 and older to purchase, possess and use marijuana and marijuana-infused
edibles, and grow up to 12 marijuana plants for personal consumption.
• Impose a 10-ounce limit for marijuana kept at residences and require amounts over 2.5 ounces
be secured in locked containers.
• Create a state licensing system for marijuana businesses and allow municipalities to ban or
restrict them.
• Permit retail sales of marijuana and edibles subject to a 10% tax, dedicated to implementation
costs, clinical trials, schools, roads, and municipalities where marijuana businesses are located.
• Change several current violations from crimes to civil infractions.
Full Text Available at: https://www.regulatemi.org/

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•On November 6, 2018, the state of Michigan will
vote on Proposal 18-1. Voting “Yes” on Proposal
18-1 will drastically change the way Michigan will
deal with marijuana moving forward.

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•As a ballot proposal, Proposal 18-1 it will go into
effect 10 days after the official declaration of
election results.
•Approximately the weekend of November 16th,
depending on when the results are issued.

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•If Proposal 18-1 passes, it will create the Michigan
Regulation and Taxation of Marihuana Act or “RTMA.”
•This is an ambitious act designed to accomplish several
goals at once:
•Individual adult use rights
•Licensed commercial industry
•New licenses for industrial hemp, delivery, social consumption

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How does Proposal 18-1 Compare to
other states?

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What’s the status around the
country?
• Eight States legalized via
Ballot Initiatives:
2012
• Colorado
• Washington
2014
• Alaska
• Oregon
• Washington, DC
2016
• California
• Maine
• Massachusetts
• Nevada
• Legislative Bill:
• Vermont in 2018
• Failed Ballot Initiatives:
• Ohio in 2015
• Arizona in 2016
Pending 2018 Initiatives:
• Michigan
• North Dakota

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Measure Possession of Marijuana Homegrown Plants Taxes
Michigan 2.5 ounces of marijuana
15 grams of concentrate
(approximately 0.5 ounces)
12 plants 10% excise sales tax
California 1 ounce of marijuana
0.3 ounces of concentrate
$9.25/ounce cultivation tax on flower
$2.75/ounce cultivation tax on leaves
Nevada 1 ounce of marijuana
0.125 ounces of concentrate
Colorado 1 ounce of marijuana
1 ounce of marijuana concentrate
6 plants 10% sales tax on retail sales
15% excise tax on transfer from
cultivation to retail
Washington 1 ounce of marijuana
0.25 ounces of marijuana
concentrate
Illegal 37% excise tax sales tax
(Legislature increased after the
ballot)
Massachusetts 1 ounce of marijuana (10 ounces in
the home, like Michigan)
0.2 ounces of marijuana concentrate
6 plants 10.75% excise sales tax
(Legislature increased after the
ballot)
Maine 2.5 ounces of marijuana and/or
marijuana concentrate
Legislature added:
$20.94/ounce cultivation tax on
flowers $5.88/ounce cultivation tax
on trim
Comparison of Legalization Initiatives

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Regulation and Taxation of Marihuana Act
Purpose
1. To make marijuana legal under state and local law for adults 21 years of age or
older
2. To make industrial hemp legal under state and local law
3. To control the commercial production and distribution of marijuana under a
system that licenses and regulates

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Regulation and Taxation of Marihuana Act
Intent
1. To prevent arrest and penalty for personal possession and cultivation of marihuana by
adults 21 years of age or older;
2. To remove the commercial production and distribution of marihuana from the illicit
market;
3. To prevent revenue generated from commerce in marihuana from going to criminal
enterprises or gangs;
4. To prevent the distribution of marihuana to persons under 21 years of age;
5. To prevent the diversion of marihuana to illicit markets;
6. To ensure the safety of marihuana and marihuana-infused products; and
7. To ensure security of marihuana establishments

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Eliminating Criminal Penalties for Marijuana
Current Penalty for Simple Possession – Michigan State Law:
MCL 333.7403(2)(d): Possession of Marijuana
• Misdemeanor
• Up to one year in jail;
• Up to $2,000 in fines; or
• Both
• 180 days suspended driver’s license with first 30 days “hard suspension” (no driving at all)
• Probation up to two years

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Under the RTMA, the following acts are no longer unlawful, offenses, or grounds for arrest,
prosecution, penalty, search or inspection:
• Possession and use up to 2.5 ounces of marijuana, of which, not more than 15 grams can be
marijuana concentrate
• You can process, purchase, or transport up to 2.5 ounces of marijuana
• Within your residence, you can possess, store, and process up to 10 ounces of marijuana
• Excess marijuana must be stored in a container or area that is locked to restrict access
• No further restriction on stored concentrates
• 10 ounces covers both flower and concentrates

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Under the RTMA, the following acts are no longer unlawful, offenses, or grounds
for arrest, prosecution, penalty, search or inspection:
• You can cultivate up to 12 marijuana plants for personal use
• Any marijuana produced by these 12 plants is not subject to the 10 ounce
restriction
• Cultivation must occur in an enclosed area equipped with locks or other
security devices that restrict access
• Remember: this is for personal use. Commercial operations require licenses

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Under the RTMA, the following acts are no longer unlawful, offenses, or grounds
for arrest, prosecution, penalty, search or inspection:
• Assist another adult with the consumption or cultivation of marijuana
• Give away or transfer up to 2.5 ounces of marijuana, of which, not more than 15
grams can be marijuana concentrate
• You cannot seek payment for, advertise, or promote this to the public
• This is intended for sharing marijuana with your family, friends, or guests

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Minor Violations and Mistakes, such as:
• Consuming or smoking marijuana in a public place or a location where consumption is prohibited
• Cultivating plants in a location visible from a public place
• Possessing more than 2.5 ounces of marijuana within your residence
(Having more out than you are supposed to)
• Transferring marijuana to someone younger than 21
• Possessing marijuana if you are younger than 21
• Possessing marijuana on in a school bus, on the grounds of a school, or on the grounds of a correctional facility
These acts will be subject to:
• First Violation: Civil Infraction and $100 fine, forfeiture of marijuana
• Second Violation: Civil Infraction and $500 fine, forfeiture of marijuana

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Cultivating, possessing, or transferring more marihuana than you
are supposed to (more, but not more than double the amounts)
• 13+ Plants
• More than 2.5 ounces or 15 grams
• More than 10 ounces in your residence
• First Violation: Civil Infraction and $500 fine, forfeiture of marijuana
• Second Violation: Civil Infraction and $1,000 fine, forfeiture of marijuana
• Third Violation: Misdemeanor and $2,000 fine, forfeiture of marijuana

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Cultivating, possessing, or transferring more marihuana than you are supposed to
(More than double the amounts)
• 25+ Plants
• More than 5 ounces or 30 grams of concentrate
• Having more than 20 ounces in your residence, and that product isn’t coming from your own plants
Penalty:
• A misdemeanor, but this individual shall not be subject to imprisonment unless the
violation was habitual, willful, and for a commercial purpose; or
• The violation involved violence

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Laws that Are Not Changing
Operating any kind of motor vehicle
• Cars, Boats, and Aircraft
• Snowmobiles and ATV’s
• Anything with a motor
Smoking marijuana as the passenger of a motor vehicle on a public roadway
Engaging in butane extraction or any other processing method that utilizes
dangerous methods

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Employers:
• Can limit or prohibit possession and consumption
• Discipline employees for violations of any workplace drug policies or for
working under the influence
• Refuse to hire, discharge, discipline, or otherwise take adverse action
against an employee that violates a workplace drug policy or if that
person was working under the influence

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Landlords:
• Prohibit the consumption, cultivation, distribution, processing, sale, or
display of marihuana and marihuana accessories on property the person
owns, occupies, or manages.
• Can prohibit tenants from smoking
However:
• Landlords cannot prohibit a tenant from lawfully possessing and
consuming marihuana by means other than smoking.

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The 2008 Michigan Medical Marihuana Act
The 2016 Medical Marihuana Facilities Licensing Act
Any other law with respect to the medical use of marijuana

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Licensing and the Adult Use Industry

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New Licenses
•Marihuana Establishments:
• Marihuana Grower
• Marihuana Safety Compliance Facility
• Marihuana Processor
• Marihuana Microbusiness
• Marihuana Retailer
• Marihuana Secure Transporter
• And any other type of marihuana-related business licensed by LARA.

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Marihuana Growers
An entity licensed to cultivate marihuana and sell or otherwise transfer marihuana to marihuana
establishments
• Class A: 100 Plants
• Class B: 500 Plants
• Class C: 2,000 Plants
Notes:
• LARA can potentially create new “classes” of Growers 1 year after the Department starts accepting
initial licenses
• Don’t confuse MMFLA Grower Classifications with RTMA Classifications
• MMFLA Class A: 500 Plants
• MMFLA Class B: 1,000 Plants
• MMFLA Class C: 1,500 Plants

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Marihuana Processors
An entity licensed to obtain marihuana from marihuana
establishments; process and package marihuana; and sell or
otherwise transfer marihuana to marihuana establishments

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Marihuana Retailers
establishments and to sell or otherwise transfer marihuana to
marihuana establishments and to individuals who are 21 years of
age or older.

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Marihuana Secure Transporters
establishments in order to transport marihuana to marihuana
establishments

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Marihuana Safety Compliance Facilities
An entity licensed to test marihuana, including certification for
potency and the presence of contaminants

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Marihuana Microbusinesses
A new RTMA License Type:
• An entity licensed to cultivate not more than 150 marihuana plants; process and package
marihuana; and sell or otherwise transfer marihuana to individuals who are 21 years of age
or older or to a marihuana safety compliance facility, but not to other marihuana
establishments
• This is a closed loop system. All marijuana grown and processed by a Marihuana
Microbusiness must be sold at that location
• Marihuana Microbusinesses cannot buy products from other suppliers, nor sell their
products to other Marihuana Establishments

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The Department’s Role in Building the
Commercial Industry
LARA must begin accepting applications within 12 months after the
effective date of the RTMA.
◦ Approximately November 16, 2019 (Depends on the date the election
results are announced)
◦ If LARA doesn’t timely promulgate rules, one year after the effective
date, applicants can submit applications directly to municipalities
◦ All licenses are effective for 1 year

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The Department’s Role in Building the
Commercial Industry
1. Promulgate rules
• Expect something similar to what we’ve seen in the MMFLA
2. Grant or deny applications
• The RTMA does not have a licensing board. Licensing decisions are LARA’s responsibility
3. Ensure Compliance
• Investigate, inspect, review, fine for non-compliance; suspend, restrict, or revoke licenses when appropriate
4. Hold Public Hearings
• At least 4 per year, with the purpose of receiving views from the public on how LARA is administering the RTMA
5. Collect fees and fines
• Marihuana Regulation Fund, fines for compliance violations, etc.
6. Submit an annual report to the governor
• Includes data such as the number of licenses, demographic stats, enforcement and disciplinary summary, revenue and expenses
incurred, etc.

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Restrictions on Rules and Regulations
• The primary purpose of the rules is to determine the procedures for issuing licenses, and renewing,
suspending, or revoking licenses
• Application fees shall be limited to fees not more than necessary to pay for the implementation,
administration, and enforcement costs of the program; They should be related to the size of the
licensee or the volume of business conducted
• All qualifications used to determine license eligibility must be directly and demonstratably related to the
operation of a cannabis business
• Prior convictions solely for marijuana related offenses shall not disqualify an individual or otherwise
affect licensing eligibility. UNLESS that offense was for distribution of a controlled substance to a minor.

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The Rules are required to cover:
• Requirements and standards ensuring safe processes and health standards for safe preparations
• Bans and restrictions on pesticides not safe for marijuana
• Testing, packaging, and labeling standards
• Maximum THC levels for marijuana-infused products
• Sample sizes for testing requirements
• Security requirements, lighting, and alarms
• Procedures for secure transporting
• Restrictions on advertising, marketing, and display of product.
• Recordkeeping requirements, monitoring, and tracking requirements

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The Rules also need to cover new issues, not contemplated under the MMFLA:
• Requirements to ensure Marihuana Secure Transporters can properly service all Marihuana
Establishments
• Regulations that promote or encourage groups that have been disproportionately impacted by
marijuana prohibition to participate in the industry; plans that positively impact those communities
• Penalties that are appropriate for marijuana and Marihuana Establishments. Activities related to
marijuana are no longer acts of criminal conduct. Fines and punishment should be proportional to the
violation

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LARA Cannot Pass Rules That:
• Limit the number of any type of state license
• Require customers to provide stores with any identifying information other than proof of age
• Prohibits an adult use establishment from operating at a shared location with an MMFLA
establishment
• Prohibit co-location of growers, processors, and stores
• Restrict outdoor or greenhouse cultivation
• Any other rule that is “unreasonably impracticable” for applicants

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Potential for New Licenses
LARA has the ability to create additional license types. These licenses can cover a broad range of potential
activities, including:
• Licenses for the cultivation, processing, distribution, and sale of industrial hemp
• A limited ability to cultivate, process, or transport
• Delivery licenses
• Licenses that allow storage, sale, or purchase of marijuana
• Social Consumption Licenses
• Licenses that authorize the consumption of marijuana within designated areas
• Both permanent and temporary locations
• Contemplates allowing smoking in designated areas
• Licenses for scientific research or education
• Any other license that may be appropriate

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Potential for New Licenses
One year after LARA starts to accept applications (Approximately
November 16, 2020), LARA can start accepting applicants of any
other additional license types it creates.
This allows LARA to focus on implementing the commercial adult use
industry before focusing on new license types

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Restrictions on Applicants
For the first 24 months after LARA begins accepting applications (Approximately November 16,
2019 to November 16, 2021), the following restrictions apply:
• Class A Grow and Microbusiness applicants must be Michigan residents
• All other license type applicants must hold an MMFLA operating license
Note: No such restriction applies for safety compliance facility applicants

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The Application Process
•Applicants will submit an application directly to LARA
•Upon receipt of the application and application fee, LARA will forward a
copy of the application to the municipality where the facility is located
•LARA will determine whether the applicant qualifies and, within 90 days:
• Issue the appropriate license; or
• Send the applicant a notice of rejection, setting forth the specific reasons why
LARA did not approve the application

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The Role of Municipalities
A municipality may completely prohibit or limit the number of
marijuana establishments within its boundaries.
Unlike the MMFLA, no language in the RTMA states that a
municipality has to actively opt in or out.
In some cases, it will be possible for an MMFLA operator to move
forward without a local ordinance focused on adult use licenses.

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The Role of Municipalities
Default Zoning:
• All Marijuana Establishments must be located more than 1,000 ft. from
pre-existing public or private schools providing education in kindergarten
or any grades 1 through 12
• However, a municipality may adopt an ordinance that reduces this
distance requirement

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Ordinance Restrictions
Municipal Ordinances Can:
• Establishing restrictions on public signs
• Restrictions regulating the time, place, and manner of operations, and on the production, manufacture, sale,
and display of marijuana accessories
• Zoning, hours or operation, outward appearances, etc.
• Limiting the types of Marihuana Establishments allowed
• Authorize the sale of marijuana in designated areas
• Such as special events in limited areas or for limited times
• Facilitate social consumption
• Creating fines for violations of said ordinances.
• Penalties must be civil infractions and cannot be more than $500
• Create a local license requirements and charge up to $5,000 annually for this local license

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Municipal Ordinances Cannot:
• Limit or restrict individual possession, consumption, or cultivation rights
• Restrict the transportation of marijuana through the municipality’s jurisdiction
• Prevent operators from operating as a collocated Grower, processor, and retail store, operating at the same
location, nor can an ordinance prevent adult use operators from sharing a location with a medical facility under
the MMFLA.
• This creates a gray area: Can an MMFLA facility automatically seek an adult use license?
• Maybe. Further clarification will be needed from the rules and municipal ordinances
• Municipalities have up to a year to draft any limiting ordinances before LARA will accept applications if they have
concerns about this issue. They can stop this issue with an ordinance, but failure to pass a new ordinance may create
issues

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Municipal Ordinances Cannot:
Adopt ordinances that are “unreasonably impracticable.”
• “Unreasonably impracticable” means: The measures necessary to comply with the rules or
ordinances adopted pursuant to [the RTMA] that subject licensees to unreasonable risk or
require such a high investment of money, time, or any other resource or asset that a
reasonably prudent businessperson would not operate the marihuana establishment.
• This means ordinances cannot conflict with the RTMA or any rules promulgated by LARA.

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Challenging a Local Ordinance
If a municipality passes an ordinance, and that ordinance prohibits or restricts the
number of establishments allowed, individuals may challenge that decision via a
petition process.
• Such a petition requires the collection of at least 5% of eligible voters, as measured by the last
gubernatorial vote for that municipality. If collected, the petition is then sent to the
community’s next election.
• This process can be used to “improve” or “worsen” an ordinance, depending on your point of
view

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Operations
• All activity must not be visible from a public place outside the establishment
• Activity must occur at a fixed location. No mobile labs or grows. These activities need to
occur in known, enclosed areas, and secured to prevent access by persons not permitted
to be there
• Every entrance needs to be secure. Inventory and equipment needs to be secured during
and after operating hours
• Establishments may not refuse LARA representatives access for inspections during hours
of operation

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Operations
• No marijuana establishment can have volunteers or employees that are younger
than 21
• Closed system – all marijuana in the system must be created via the act
• Growers and Processors sell tested products to Retailers, moved via Secure Transporters
• Edibles cannot be in shapes or packages that are attractive to children nor in a form
easily confused with commercially sold candy that does not contain marijuana
• All products must be sold in opaque, resealable, child-resistant packaging designed
to be difficult for children under 5 years of age to open.
• Marihuana Secure Transporters may not hold title to marijuana

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Operations
Growers, Retailers, Processors, Microbusinesses, and Testing facilities, or their agents, can
transport up to 15 ounces of marihuana or 60 grams of marihuana concentrate
• Marihuana Establishments can possess and transport small amounts of marijuana
Product packaging restrictions do not apply to locations licensed for social consumption.
• The RTMA is very favorable to future licensing that allows onsite consumption
• Local municipalities can even designated areas that allow smoking

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Expectations
• We can expect regulations to be very similar to what we’re seeing in the MMFLA
• Testing
• THC potency and daily purchasing limitations
• Safety and security requirements
• METRC or a similar services for recordkeeping and tracking
• LARA isn’t going to reinvent the wheel
• Major Differences
• Laxed Application requirements compared to the MMFLA process
• However, we’ll have 2 years where operators are required to hold an MMFLA license
• Lower fees, in theory
• The RTMA requires state application fees to be limited to fees not more than necessary to pay for the implementation,
administration, and enforcement costs of the program
• Fees should be related to the size and volume of the business conducted

Michigan's Proposal 18-1: What to Know About Recreational Cannabis Legalization

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