Michigan continues to struggle mightily in its regulation of the marijuana industry. Judge Stephen Borrello recently described Michigan’s licensing approach for medical marijuana dispensaries as “apt to sudden change, freakish, or whimsical.” Not a comforting assessment.

The struggle derives in part from the initial decision to grant licensing authority to a volunteer board whose members were politically appointed. That problem appears to be resolved now; the Marijuana Regulatory Agency has recently taken over licensing authority.

Other serious problems remain, however. The licensing chaos has resulted in a substantial number of unlicensed dispensaries selling medical marijuana. Michigan’s Department of Licensing and Regulatory Authority (LARA) has been attempting to crack down on those unlicensed dispensaries, but Judge Borrello has issued a series of decisions allowing those dispensaries to remain open. In the most recent decision, Judge Borrello ruled that unlicensed dispensaries can remain open until their state licenses are approved or denied.

LARA is also not necessarily helping its own cause. Michigan has a significant amount of caregiver-grown marijuana. In recent policy guidance, LARA announced that licensed dispensaries must sell marijuana from state-licensed cultivators rather than caregiver growers. Critics suggest that requiring licensed dispensaries to sell marijuana from licensed cultivators will force caregiver growers to look for alternative outlets, i.e. the unlicensed dispensaries that remain in operation.

At the same time, Michigan cities and towns are feeling a pinch from lower-than-expected tax revenues. When the Michigan legislature recently passed legislation to create the recreational marijuana market, it abolished the medical marijuana excise tax effective three months after the start of recreational sales. Cities and towns had expected to split $24 million in revenue from that excise tax.

In short, Michigan is opening up a recreational legal market at a time when its medical market is in disarray. We will continue to monitor these developments.