Planning the Michigan marijuana industry
Three groups have competing ideas for a legal pot industry in the state.
Three organizations — only one of which is revealing its financial backers at this point — claim to be working on plans for the commercialization of fully legalized recreational marijuana in Michigan.
Supporters expect voters to approve legalization at the November election in 2016.
The group revealing its backers and funding, the Michigan Comprehensive Cannabis Law Reform Committee — also known as MiLegalize.com — claims “monopoly capitalists … plan to win control of all legal cannabis production in Michigan.”
“Will we let rich investors monopolize marijuana in Michigan?” the website asks.
MiLegalize, with headquarters in the Detroit area, and the Michigan Cannabis Coalition based in Pontiac each have had their ballot question approved by the Michigan Secretary of State and are listed on the Board of Canvassers website: On the SOS website, click on Elections in Michigan, then on Board of State Canvassers.
The third organization, the Michigan Responsibility Council in Lansing, has not yet filed anything with the Secretary of State “but we do plan to have a ballot initiative,” said Suzie Mitchell, MRC executive director.
Unlike MiLegalize, the Cannabis Coalition has not provided any information to the Secretary of State on its donor identities or expenses. If it has received contributions and has spent money as of July 20, the names and dollar amounts will have to be revealed by July 27, according to Fred Woodhams, a spokesperson for the Secretary of State office.
A marked difference between the two existing ballot questions is the amount of marijuana a 21-year-old Michigan resident could legally grow at home. Matthew Abel, a key member of MiLegalize and executive director of Michigan NORML, said theirs would allow 12 homegrown plants, and “any violation would only be a civil infraction, like a speeding ticket.”
The Cannabis Coalition would limit that to two “flowering plants” per residence, regardless of how many adults live there. It cannot be sold, and the local governments “may” authorize more than two plants but can also charge permit fees.
Matt Marsden, who was press secretary and senior advisor to Republican Sen. Randy Richardville, is listed on the Michigan Cannabis Coalition website, micannabis.vote, as “MCC spokesperson,” the only name on the website as of June 24. He did not respond directly to emails from the Business Journal, but Grand Rapids attorney Matthew Herman did contact the Business Journal at the request of someone else supporting the Cannabis Coalition.
Herman has been in the news lately, both as an investor in the medical marijuana industry and as a legal defender of individuals charged with violation of the state’s medical marijuana laws. He is now representing former Grand Rapids state representative Roy Schmidt, charged with illegally selling pot.
Herman received a large amount of media coverage in the spring for his “Fort Knox of Pot,” a secure, high-tech indoor growing facility in a secret location in Grand Rapids, providing leased space to medical marijuana “caregivers” who are legally allowed to grow pot for their patients.
Herman said “industrial leaders” are investing in getting the recreational marijuana industry going in Michigan, but he did not provide names. He said they are “keeping their cards close to the chest at this point,” and when asked why, he said he thinks it’s because they want to get the petition for the Cannabis Coalition going.
“They don’t necessarily want it to be about them,” he said.
Herman, who said he is a member of the Coalition, said it is a group of investors who want to “steer the legislation in a responsible and focused way,” and he identified himself as one of the investors. He said they have a “regulatory scheme” to lay out “well thought-out rules” for the marijuana industry predicted to start in Michigan after expected legalization in November 2016.
Herman stressed the Coalition “wants to build an industry, as opposed to just legalize” recreational marijuana. He said the legalization of recreational marijuana in Colorado has led to issues in its marijuana production, including price gouging.
Herman said the MiLegalize group’s proposed law is too rigid, and the state’s medical marijuana law is too rigid, as well.
“With our group, you’d be able to change things if it wasn’t working,” he said.
Mitchell, president and CFO of Mitchell Research and Communications in Lansing, said the Michigan Responsibility Council was formed in the first quarter of 2015 and “represents what will be the cultivators” of recreational marijuana in Michigan, under the ballot initiative they plan to launch this summer. At this point, she said, the MRC is an educational initiative regarding the legalization of cannabis.
“We are not a ballot initiative at this point,” stressed Mitchell.
She said the MRC proposed legislation would establish 10 marijuana cultivation sites in Michigan, where all commercial production would take place.
“We believe it’s the responsible thing to do, to have 10 sites where the public and police know where this product is being grown,” she said.
The MRC does represent major investors, said Mitchell. “We’re building an industry, similar to the liquor industry. And major investors have the capital to buy the land, put up good facilities. … It’s very expensive to do this.” She declined to identify any of those investors.
All three groups also have plans on how to tax recreational marijuana, which vary somewhat in how the tax revenues would be used.
“We also want to do away with the caregiver model that is currently in place today for medical marijuana because that model allows people to grow and to also infiltrate into the black market. We believe, through our discussions with various police organizations, that having 10 cultivation sites — that everyone knows where they are — is much more responsible. And we are better able to regulate it and we will have a greater impact on fighting the black market,” said Mitchell.
Mitchell said people who have obtained medical marijuana cards in order to treat their maladies “will still be able to get their marijuana tax-free. We will not have an excise tax on it like the others will — no sales tax.”
She said there would be sales tax and an excise tax, under the MRC proposal, but it will only pertain to recreational marijuana. All sales, both medical and recreational, would only take place at a state-regulated marijuana dispensary, not by “caregivers” allowed under current law to grow it for medical marijuana cardholders.
She said their legislation would also establish a Marijuana Control Commission “similar to the liquor control commission” that would determine where dispensaries are located in the state.
Mitchell said her mother, a cancer patient, is a medical marijuana user and she has taken her to dispensaries “where no one knew what was in the products, how much to take. … It wasn’t safe.” The MRC proposal will require testing of all pot sold and labeling indicating the THC content, “so that everything is tracked, from seed to sale,” she said.
“It’s a business to us,” she said. “It’s an industry. It’s not just, ‘Oh, let’s legalize it.’”
Mitchell said she has worked in politics and fundraising for more than 30 years, including ballot initiatives. She indicated she has worked on behalf of Republican causes.
Her group would also allow individuals to grow two plants at home.
NORML stands for the National Organization for the Reform of Marijuana Laws, an American nonprofit organization based in Washington, D.C., that has been around for at least 40 years. NORML’s goal is to move public opinion enough to legalize marijuana throughout the U.S.
Abel said the MRC had asked MiLegalize to support it “and this we declined. We don’t feel that’s going to provide us as much choice, quality and price competition for the consumers. NORML is a consumers lobby; we’re looking out for the recreational market that is coming up.”
“My feeling is that the MRC is not a serious effort, that it is a distraction … an effort to prevent us from getting our proposal on the ballot,” said Abel.
He also believes the Michigan Cannabis Coalition — “the current competition” with MiLegalize — is “attempting to sow confusion” that will lead to some people not signing the MiLegalize petition because they will think they already have, when in fact it was the Cannibis Coalition petition they signed.
“I’d give you even odds that they are the same group,” Abel said, referring to both the Cannabis Coalition and the Michigan Responsibility Council. “Whoever is pulling the strings, they’re pulling the strings for both of these groups.
“Our position is more for small business.”