Current Policy Proposal

In 2018, Michigan voters legalized marijuana under the promise to “regulate it like alcohol.” For consumers, the promise of the 2018 ballot initiative has come true – anyone 21 years or older can legally purchase, possess and consumer marijuana. But licensed marijuana businesses in Michigan still operate in an industry that remains Federally illegal. As a result, these businesses face regulatory requirements that are far stricter than the alcohol industry and do not have access to traditional banking or financial services to review credit scores, pursue collection services, or engage in legal mediation.

While the government has stated it will pursue rescheduling marijuana at a Federal level, the MCMSC believes we cannot wait. Michigan businesses are hurting right now with many owed tens of thousands, hundreds of thousands and even millions of dollars. Unless they can collect, many will not survive long enough to be rescued by rescheduling.

The Cannabis Regulatory Agency (CRA) acknowledges the problem of unpaid bills that face operators at all levels in the supply chain in the Michigan market. It has proposed a new rule that “will allow the CRA to deny a license or license renewal based on civil judgments/court orders resulting from unpaid debt for work, services, products, or equipment provided solely in the cannabis industry.”

The MCMSC supports this proposed rule from the CRA but wants to see it go farther. It is difficult for licensed businesses to obtain a judgement for debts due for a Federally illegal product. Even if a business can obtain a judgement, it will cost them a considerable amount of money and time, both of which they may not have when owed major debts from others in the market. The MCMSC applauds the CRA for the recognition of the problem and wants the rule enacted, but we believe it is only a small deterrent for businesses engaged in unethical business practices.

POLICY PROPOSALS

The MCMSC believes the Michigan marijuana industry should enact the following policies that are found in the Michigan alcohol industry:

1. Require “payment on delivery” and eliminate product sales on trade credit.
2. Prohibit “aid and assistance” and prohibit gifts of value in exchange for shelf space.
3. Establish a “return window” that defines when product(s) can be returned by a retailer.

Opponents will say these rules will not work in the marijuana industry despite the fact they have been part of the Michigan Liquor Control Code (MLCC) since the end of prohibition in 1933. These laws and regulations have been in place for almost 100 years and Michigan’s alcohol industry has managed to grow into a robust and diverse market.

In fact, most states alcohol laws across the country require “payment on delivery” and do not allow for trade credit. Those states that do allow for business-to-business trade credit on alcohol sales enact other regulatory guardrails to protect against abuse of agreed upon terms. Many establish a transparent delinquency reporting system where businesses habitually found to be delinquent are placed on a “no sale” list and prohibited from receiving product until their bills are paid. New York, Texas and Florida are notable examples.

These laws work for alcohol, and they can work in marijuana, another industry born from a long period of prohibition. States like New York and California have both introduced bills to establish marijuana credit laws molded from the alcohol industry, limiting credit terms to 90 and 30 days respectively. Michigan has one of the largest legal marijuana markets in the country and should be a leader on this most important issue facing the industry.

Help us be the voice that enacts that change!