October 31, 2018 Deadline for Caregivers and The Changing Marihuana Dynamic in Michigan

Caregivers and the DoDo

Cannabis and extinct birds would seemingly never turn up in any conversation. Nevertheless, in talking with our cannabis clients, a number of them are asking about the viability of the Caregiver model, particularly as it was promoted several years. What several in the market have referred to as the “Caregiver Model” is going the way of the Do-Do bird on October 31, 2018. Halloween this year will certainly be the extinction event for the caregiver model as lots of have recognized it for many years here in Michigan. While Caregivers will certainly continue to be able to grow and sell to their registered patients, and for themselves, if they are likewise registered qualifying patients, the “gray market” where they were offering their overages, and making a fairly good profit, is coming to an end.

What was the “Caregiver Model?”

Under the old “Caregiver Model,” a Registered Caregiver might grow up to seventy-two (72) marihuana plants, if they had five registered qualifying patients (the most you were permitted) and they were a registered patient too. In many cases, several caregivers would gather at one location and grow their crops with each other, divided by paint lines on the floor, or in more innovative scenarios, with each having a safeguarded locked room within the larger confined, locked facility. Lots of Caregivers might produce far more useful marihuana than their patients can use. Those caregivers would certainly then market their excess to dispensaries, many of which were running with municipal approval throughout the State. This “gray” marketplace resulted in substantial revenues for several caregivers and dispensary owners. Under Michigan’s Medical Marihuana Facilities Licensing Act, nonetheless, caregivers were going to be terminated by 2021. Many Caregivers and industry experts really felt that implied the “Caregiver Model” could remain to generate those very same earnings for another two or two and a half years. The State, however, had other plans.

The State’s Response

The State of Michigan, nevertheless, had other plans for the upstart cannabis industry. Initially, the Bureau of Licensing and Regulatory Affairs has actually taken a very scrutinizing approach to licensing applications where any one of the applicants were Caregivers. Most of those applications have actually been denied over the past several months due to the fact that the Board has found that there were failures to divulge by most of these caregivers regarding just how much money they made, just how they made it, and for failing to proclaim that revenue on a State or Federal Tax Return. Nonetheless, in a September 2018 posting, LARA and the BMMR posted that all centers that are running with municipal approval, but which have not received a State License, need to stop acquiring unlabeled and unsanctioned medical marihuana on October 31, 2018. https://www.michigan.gov/lara/0,4601,7-154-79571_79784-479748–,00.html. Any type of marihuana purchased after the October 31, 2018 date by those centers have to be correctly identified and coded as required by the policies, and must originate from a properly State Licensed grower or processor. The caregivers might still grow, but they will have no ways through which to offer their product legally to a provisioning facility or processor. The old “Caregiver Model” will, effectively, come to an end.

Outcomes and Effects

Some might argue that there are still licensed or unlicensed facilities that are going to continue buying from caregivers, despite the State mandate. To ensure, there may be some that take that risk.

Nonetheless, the State has demonstrated a commitment to enforcement and evaluation. If the State were to establish that a candidate or a licensed facility was still taking caretaker overages and marketing them, the State would likely take action. If an applicant were to be caught engaging in this model, they would likely be refuted asap by the Board. If a licensed facility were to be caught breaking this mandate, the State would likely move forward with sanctions against that center’s license, consisting of a suspension or revocation of the license. Given how much those licenses are worth, and the cost of obtaining any of the allowed facility licensing types, most owners will certainly be extremely resistant to take chances with the possible loss of their license, or expertise that their license will certainly not be restored.

If you are a caregiver and don’t know what to do come October 31, 2018, are a person considering looking for a MMFLA license, or are an applicant that needs representation or has concerns about just how these changes will impact you, give us a call. We have the experience and understanding in the cannabis and marihuana law areas to aid address your questions and supply you the support you require.

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