After obtaining a grower license, licensees must focus on regulatory compliance to maintain their license. Licenses must be renewed annually, which requires proving ongoing eligibility. Regulations include detailed reporting requirements for any changes, extensive recordkeeping, and allowing inspections. Non-compliance can result in fines or license suspension. Licensees must anticipate delays and uncertainty as the new industry develops. Maintaining compliance with all laws, rules and regulations is essential to the long-term success of a cannabis business.

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How to Maintain Your Grower License:
Navigating the Laws, Rules, and
Regulations between Licensure and
Renewal
NICKOLAS GALENDEZ| CANNABIS LEGAL GROUP

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What happens after I get my Grower License?
1) After obtaining your license, you may naturally focus your energy on your facility,
managing the company, establishing business relationships, and building your brand.
2) There will be uncertainty as well as expected/unexpecteddelays as Michigan’s
medical (and likely adult-use) cannabis industry develops and evolves.
3) It is important to plan ahead, anticipate setbacks, be forward-thinking, and flexible.
4) Licenses are renewable annually.
5) It is important to comply with all regulatory requirements and anticipate/adapt to any
changes so that you are eligible for renewal and able to maintain your license

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The Story of Detroit from MMCC Ordinance to
MMFLA Opt-In: Uncertainty and Delays

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The Story of Detroit from MMCC Ordinance to
MMFLA Opt-In: Uncertainty and Delays
Late 2015 – Michigan Legislature begins winter break; fails to adopt Medical Marihuana Facilities Licensing Act
(MMFLA)
December 17, 2015 – Detroit adopts Medical MarihuanaCaregiver Center (MMCC) Ordinance
March 2016 – Detroit starts accepting MMCC applications
◦ Delays in application process (unanswered questions, “green zones”, public hearings, appeals, lawsuits)
September 2016 – Michigan Legislature adopts MMFLA
November 7, 2017 – Citizens of Detroit pass MMFLA opt-in ballot initiatives
February 16, 2018 – Detroit Judge invalidates parts of MMFLA opt-in ballot initiatives
July 31, 2018 – Detroit adopts MMFLA opt-in ordinance

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The Story of Detroit from MMCC Ordinance to
MMFLA Opt-In: Uncertainty and Delays
TOTAL = 958 DAYS

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Summary of MMFLA Application Process:
Uncertainty and Delays

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Summary of MMFLA Application Process: Uncertainty & Delays
September 2016 – MichiganLegislature adopts MMFLA
December 4, 2017 – LARA issues Emergency Rules
December 15, 2017 – LARA starts accepting MMFLA applications
January2018 – MichiganLegislature amends MMFLA withPublic Act 10 of 2018
February 15, 2018 – “Application Deadline” for Temporary Operators
◦ LARA receives almost 200 MMFLA applications
May 30, 2018 – LARA renews Emergency Rules
June 15, 2018 – Temporary OperationDeadline I
September 11, 2018 – LARA issues new Emergency Rules for Temporary Operators
September 13, 2018 – MichiganCourt of Claimsissues temporary injunction re: September 15 deadline
September 15, 2018 – Temporary OperationDeadline II
October 1, 2018 – LARA issues new Emergency Rules for Temporary Operators II
*October 31, 2018 – Temporary Operation Deadline IV
December 15, 2018 – Temporary OperationDeadline III

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Summary of MMFLA Application Process:
Uncertainty and Delays
◦ Reasons for Uncertainty and Delays
◦ New law, rules, licensing framework, and application process
◦ Comprehensive disclosure requirements
◦ Length of time needed to gather, submit, review, follow up, and respond
◦ Regulatory Assessment Fee
◦ FY 2018 - $48K (except Class A Grower/safety compliance facility)
◦ FY 2019 - $66K (except Class A Grower/safety compliance facility)
◦ Municipal Application Process/Approvals & Closing on Property

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Summary of MMFLA Application Process:
Uncertainty and Delays in Lansing

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Summary of MMFLA Application Process:
Uncertainty and Delays in Warren

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Summary of MMFLA Application Process:
Uncertainty and Delays in Pontiac

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Summary of MMFLA Application Process:
Uncertainty and Delays in Grand Rapids

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Top Three Takeaways
1. Anticipate delays and embrace uncertainty
2. Fully comply with all laws/rules/regulations (and any
changes)
3. Plan for the future and don’t cut corners

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How to Maintain Your License
• Duty to Report
• Changes/Modifications to Facility Plan & Facility
• Regulatory Compliance – Tracking & Recordkeeping
• Inspections/Investigations
• License Renewal
• Grower Facility Operations
• Where to get plants?
• What to do after?
• Pesticide Compliance

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Duty to Report
• Rule 15 – Notification and Reporting
• Rule 16 – Notifications of diversion, theft, loss, or criminal
activity
• Rule 81 – Employees; requirements

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Rule 15 – Notification and reporting
• Continuing duty to provide LARA with up-to-date information
• Must report any changes to facility operations
• Must report material changes to LARA before making any
• Must notify LARA of certain incidents within 1 business day

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Rule 15 – Notification and reporting
• Examples of “material” changes
• Change in owners, officers, members, or managers
• Change of location (will require new license/new inspection)
• Any violations of local ordinance/zoning regulations related to licensed
activities
• Addition or removal of named people
• Change in entity name
• Any attempted transfer, sale, or other conveyance of an interest in a license
• Any change or modification to the facility that was not inspected or part of the
facility plan or final inspection
• Operational/method changes
• Additions or reductions in equipment

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Rule 15 – Notification and reporting
• Must notify LARA within 1 business day if:
• Adverse Reactions to product sold or transferred
• Criminal charges/convictions or civil judgments in any state
• Regulatory disciplinary actions taken in any state (including pending)
• Failure to report = sanctions/fines

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Rule 16 – Notifications of diversion, theft,
loss, or criminal activity
• Must notify within 24 hours:
• LARA
• State police
• Local law enforcement
• Failure to report = sanctions/fines

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Rule 81 – Employees; requirements
• Must have policy that requires employees to report any new or
pending charges or convictions
• Must immediately report to LARA if employee is charged or
convicted of felony

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How to Maintain Your License
• Duty to Report
• Changes/Modifications to Facility Plan & Facility
• Regulatory Compliance – Tracking & Recordkeeping
• Inspections/Investigations
• License Renewal
• Grower Facility Operations
• Where to get plants?
• What to do after?
• Pesticide Compliance

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Changes/Modifications to
Facility Plan & Facility
• Rule 9 – Marihuana facility plan
• Rule 21 – Changes to licensed marihuana facility
• Rule 34 – Building and fire safety

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Rule 9 – Marihuana facility plan
• Must report any changes or modifications to the marihuana
facility plan to LARA
• May require preapproval
• LARA has the authority to reinspect the facility to verify the
facility plan at any time

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Rule 21 – Changes to
licensed marihuana facility
• Any change or modification to the facility after licensure must
be approved by LARA before the change or modification is
made

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Rule 34 – Building and fire safety
• Facility subject to inspection to confirm no health/safety issues
• Must allow LARA to enter and inspect facility at any reasonable
time
• Additional fire safety inspections required if modifications to
grow areas, rooms and storage; other material changes

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How to Maintain Your License
• Duty to Report
• Changes/Modifications to Facility Plan & Facility
• Regulatory Compliance – Tracking & Recordkeeping
• Inspections/Investigations
• License Renewal
• Grower Facility Operations
• Where to get plants?
• What to do after?
• Pesticide Compliance

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Regulatory Compliance – Tracking &
Recordkeeping
• Rule 31 – State operating licenses; licensees; operations; general
• Rule 33 – Marihuana facilities; requirements
• Rule 35 – Security measures; required plan; video surveillance system
• Rule 37 – Marihuana product destruction and waste management
• Rule 38 – Storage
• Rule 45 – Plant batches/inventory
• Rule 71 – Tracking ID; labeling requirements
• Rule 72 – Marihuana plant; tracking requirements
• Rule 73 – Marihuana product sale or transfer; labeling and packaging
requirements

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Rule 31 – State operating licensees;
licensees; operations; general
• Must maintain records and make available to LARA upon request
• What are “records”? EVERYTHING
• Rule 19(8) – Books, ledgers, documents, writings, photocopies, correspondence,
electronic records, videotapes, surveillance footage, electronic storage media,
electronically stored records, money receptacles, equipment in which records are
stored, including data or information in METRC or any other document that is used
for recording information

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Rule 31 – State operating licensees;
licensees; operations; general
• What needs to be tracked and recorded? EVERYTHING
• All transactions, including current inventory
• All plants and product sold/transferred
• Surveillance and alarm system
• Product destruction and waste management methods
• Inventory storage
• Seed-to-sale tracking

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How to Maintain Your License
• Duty to Report
• Changes/Modifications to Facility Plan & Facility
• Regulatory Compliance – Tracking & Recordkeeping
• Inspections and Investigations
• License Renewal
• Grower Facility Operations
• Where to get plants?
• What to do after?
• Pesticide Compliance

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Rule 17 – Inspection; investigation
• LARA has authority to oversee and conduct inspections to ensure
compliance with the MMFLA and Administrative Rules:
• Investigate individuals employed by facilities
• Inspect and examine facilities
• Inspect, examine, and audit records of licensees

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Rule 17 – Inspection; investigation
• Facility, offices, and other places of business may be entered at
any time if evidence of compliance or noncompliance is likely to
be found
• Possibility of administrative hold; no sales/transfers during
investigation
• Must allow inspection, examination, and audit of relevant records

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Rule 19 – Sanctions; fines
•Sanctions
• License denial; limitations on license
• Removal of licensee or employee
• Revocation, suspension, nonrenewal, or administrative hold
• Orders to cease operations
•Fines (per day)
• Up to $5,000 (individual)
• Up to $10,000 or equal to daily gross receipts (licensee)

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How to Maintain Your License
• Duty to Report
• Changes/Modifications to Facility Plan & Facility
• Regulatory Compliance – Tracking & Recordkeeping
• Inspections and Investigations
• License Renewal
• Grower Facility Operations
• Where to get plants?
• What to do after?
• Pesticide Compliance

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Rule 14 – Renewal of a license
• To renew your license, you must prove that you are:
1. Eligible
2. Qualified
3. Suitable
• Need to timely submit complete renewal application(s)
• “Not less than 90 days before expiration of the license”

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Rule 14 – Renewal of a license
• What information and documents will be required?
• Updated information
• Entity and all Supplemental Applicants
• Facility
• Must be “current, complete, true, and accurate”
• Renewal can be denied if:
• (1) you do not file in time or (2) do not provide all required information

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How to Maintain Your License
• Duty to Report
• Changes/Modifications to Facility Plan & Facility
• Regulatory Compliance – Tracking & Recordkeeping
• Inspections and Investigations
• License Renewal
• Grower Facility Operations
• Where to get plants?
• What to do after?
• Pesticide Compliance

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Where to get plants?
• Language in MMFLA restricts ability to obtain plants from certain sources
• Transition from Emergency Rules to Administrative Rules
• Options available to temporary operators and early licensed facilities will be unavailable
• Changes to Caregiver Transfer/Capitalization and 30-Day Transition Period

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Where to get plants?
• MMFLA - MCL 333.27501(8)
• Within 30 days after license is issued
• Can transfer marihuana plants, seeds, and seedlings IF:
• lawfully possessed by an individual formerly registered primary caregiver
• who is an active employee of the grower
• Ends December 31, 2018
• Alternative Options
• MCL 333.27501(2)
• Grower Facility
• Allowed to sell/transfer plants to grower; must use secure transporter
• Caregiver
• Allowed to sell/transfer seeds, seedlings, or tissue cultures to grower; no secure transporter needed
• Not allowed to sell/transfer plants

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Where to get plants?
• Emergency Rule 20 – 30-Day Transition Period
• Period of thirty (30) calendar days; beginning on day license issued for first time
• Allows for product to be entered into METRC
• No similar language in Administrative Rules
• All product must be purchased and immediately entered into METRC

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Where to get plants?
• Emergency Rule 11 – Capitalization requirements
• Grower
• Class A - $150,000
• Class B - $300,000
• Class C - $500,000
• 25% must be liquid assets to cover initial expenses of operating and maintaining the facility
• Cash, CDs, 401(k), stocks and bonds, and marihuana inventory
• Marihuana Inventory
• Must be possessed by registered patient or primary caregiver
• No more than 15 ounces or 72 plants can be used as inventory and capitalization
• No similar language in Administrative Rules

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What to do after?
• Inventory Tracking, Testing, and Recalls
• Definitions
• Plant – any living organism that produces its own food through photosynthesis and
• (i) has observable root formation OR (2) is in growth material
• Cutting – section of lead stem or root stock used for vegetative sexual propagation
• Seed – fertilized, ungerminated, mature ovule, containing an embryo or rudimentary plant, of the marihuana
plant that is flowering
• Seedling – plant that has germinated and has not flowered and is not harvestable
• Tissue culture – cell, cutting, tissue, or organ, kept under sterile condition on nutrient culture medium of known
composition that does not have visible root formation
• Doesn’t count as a plant
• Batch – same variety grown/harvested/processed together; exposed to substantially similar conditions
• Immature plant – nonflowering; no taller/wider than 8 inches; produced from cutting, clipping, tissue culture, or
seedling; in growing/cultivating medium or container no larger than 2 inches wide/tall; sealed on sides/bottom
• Harvest batch – marihuana that has been harvested

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What to do after?
• Inventory Tracking, Testing, and Recalls
• Rule 45 – Plant batches; testing procedures
• Must uniquely ID each immature plant batch in METRC
• Batch size = 100 immature plants
• Must tag each plant greater than 8x8 inches with individual plant tag; record in METRC
• Must separate plants through different growth stages
• Must ensure plant tag always identified with plant so that all plants can be easily identified and inspected
• After harvest:
• Sample must be tested by safety compliance facility and pass all tests
• Maximum batch size = 15 pounds
• Must be quarantined from other plants/batches
• Must be easily distinguishable from other harvest batches until batch broken down into packages
• After passed test:
• Must destroy individual plant tags; attach package tag; record in METRC

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What to do after?
• Inventory Tracking, Testing, and Recalls
• Rule 46 – Retesting
• Safety compliance facility may retest sample to validate results of failed safety test
• Facility that provided sample is responsible for all costs
• Failed sample must pass two (2) separate retests
• Sample cannot be retested if:
• Product in final package
• Final test for pesticides failed
• If pesticide/active ingredient found banned by LARA, product ineligible for retest; must be destroyed
• Rule 47 – Recalls
• LARA may recall any products, issue safety warnings, and require facilityto provide informationalmaterial or
notifications

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Pesticide Compliance
• Rule 47 – Testing
• Required safety tests:
• THC/THC-A
• CBD/CBD-A
• Foreign matter
• Microbial and mycotoxin
• Chemical residue testing – pesticides, fungicides, and insecticides
• Heavy metals
• Residual solvents
• Water activity/Moisture
• If sample fails, must destroy entire batch; record in METRC
• LARA will publish list of approved pesticide active ingredients, including banned
substances and limits for use in cultivation

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Pesticide Compliance - Approved Pesticides

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Pesticide Compliance – Approved Pesticides

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Pesticide Compliance – Banned Pesticide
Active Ingredient List

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Top Three Takeaways
1. Anticipate delays and embrace uncertainty
2. Fully comply with all laws/rules/regulations (and any
changes)
3. Plan for the future and don’t cut corners

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Questions?