Michigan’s Cannabis Regulatory Agency (CRA) released draft regulations on Nov. 25 that include a new rule preventing businesses with collection judgments from renewing their annual license.
The draft regulations, which must still be vetted by the public before they are finalized, include provisions about pre-rolls, advertising and public consumption, as well as a firm move against the state cannabis market’s long-standing debt problem.
“These draft rules are the result of the extensive feedback we’ve received over the last two years and we’re excited to move this process forward,” said CRA Executive Director Brian Hanna in a released statement. “We’ll continue to listen as we move into the next phase of public written comment and our in-person public hearing early next year. This set of rules was designed to set Michigan’s cannabis industry on a path towards continued success as well as align Michigan with possible federal regulation.”
There’s a lot of interest from cannabis suppliers over the new rules regarding debt. The problem with unpaid bills in Michigan has grown to the point where a robust Facebook group, Blacklist of MI Cannabis, has developed to allow vendors to call out non-paying operators. While expressing support, members of the group told CRB Monitor News they felt regulators could go further in addressing the chronic debt problem.
“As a cultivator who is about to bring our first harvest to market, I love it,” said Erik Arizona. “It finally gives us recourse, albeit indirectly. But knowing that retailers and processors can’t just blatantly steal from us with no penalty, and the state just shrugging their shoulders and telling us to take them to court, is nice.”
He added that he would also like to see the state be more proactive through its METRC track and trace program to prevent debtors from accepting new product they cannot afford before their license expires.
“Denying a license renewal is a great first step, however, we are already seeing in many cases, a licensee gets fined or in trouble for something, they close down and reopen under a new name or with new partners. It’s the same bad actors, just with a different license number,” said Lindsay Feehan, owner of Emerald Transport Michigan. “Also, the CRA publishes licensing reports every month. Those reports used to include who was on the license. In April 2024, they stopped including that information and also went back and redacted it from all previous reports.”
“The company in debt should have to shutter completely until the debt is paid. Vendors who are already screwed out of their payments shouldn’t have to sue to get their money,” added cannabis operator Ila Nicole. “The reason the operators are getting away with robbing the vendors is because the CRA didn’t address this from the start.”
Other new rules would prohibit licensees from publicly claiming ownership or management that differs from what CRA has already approved. Designated consumption establishments would be allowed to co-locate with non-cannabis businesses, as long as they do not serve alcohol.
Dispensaries will be able to make their own pre-rolls, but they would not be able to sell product that came from registered caregivers.
The CRA will hold a public hearing on the draft rules in early 2025.
Oversupply crushing market despite strong sales
Michigan’s adult-use has been struggling amid oversupply and a market that bottomed out in 2022. Prices have since stabilized, but they remain low, making it difficult for retailers who are pressured to keep prices low in order to remain competitive and cultivators who are feeling the same price crunch while also dealing with retailers that struggle to pay their bills.
Michigan voters legalized adult-use cannabis in November 2018, making it the first Midwestern state to do so. From there, the Wolverine State emerged as a sales powerhouse, second only to California. Cannabis sales are expected to reach $10 billion since they started in 2019, reported Bridge Michigan.
As of Nov. 27, there were 2,869 active cultivation licenses in Michigan, according to the CRB Monitor database. This number is likely much larger than the total number of cultivators because Michigan allows growers to hold up to six cultivation licenses for a single location.
Almost all of the cannabis produced, roughly 98% of both medical and adult-use in the state, comes from Class C growers, which are allowed to stack licenses to produce up to six times the 2,000 square-foot canopy limit per license.
These cultivators serve approximately 1,010 licensed retailers between both the medical and adult-use markets.
