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Will a Lack of dispensaries in MI Lead to a Lack of Availability and a Black Market?

Michigan is coming up against a September 15 deadline for medical marijuana facilities to be licensed or to shut their doors.  If a facility has not been granted a license by this deadline they will be issued a cease and desist letter. If a company does not comply with the notice to shut down it will be noted in their file and will have an adverse effect on their chance to obtain a license in the future.

As of July, there have only been 16 licenses granted in Michigan with 7 of them being dispensaries. This lack of licensed facilities potentially leaves many medical marijuana patients without access to medicine.  The small number of licenses granted is the result of a slow-moving government that has put a great burden on the applicants with the amount of background information required, and not because of a lack of interest in starting a marijuana-based business.

Michigan has 290,000 medical marijuana patients, which is the second largest patient base in the US.  The state calculates that ⅔ of the patients live within 30 minutes of the seven dispensaries already licensed.  Of the remaining 33 % of patients not within 30 miles, I would like to see the distance necessary to travel to reach a dispensary.  The distance coupled with a debilitating disease could make it nearly impossible for a patient to obtain medication. How many people are we talking about without access then?  Approximately 95,000 people. LARA does predict that many more businesses will be licensed within a short period of time, however, that short period of time is coming up quickly as the next meeting is Sept. 10.

One way to alleviate the inconvenience of not having a dispensary nearby is allowing online ordering and delivery which allows for additional access.  The state has done some research and believes this is a viable option. I do not fully agree that it is a viable option without understanding the additional cost that would be associated with a shipment. Each shipment would have to be tracked and perhaps other security measures enforced, increasing the cost of a shipment tremendously.

As Michigan is not the first state allows medical marijuana, it seems as if it would be beneficial to look at the other states such as Washington which has faced similar issues.  In 2016, when Washington moved from a medical state to allow recreational marijuana, the state issued just 222 licenses. This was done even though Washington data scientists said that the market could support up to 800 dispensaries. Additionally, the law said that there needed to be enough new licenses to accommodate the medical needs of qualified patients and designated providers.  The big difference, of course, is that Michigan is currently only working with medical marijuana, not recreational. But we also know this could change shortly. The other difference that strikes me is population, and therefore the potential market, between the two states. In 2016 Washington’s population was 7.281 million and Michigan’s current population is 9.962 million. Current rules and laws can only account for medical marijuana, but I think it would be foolish to not look at the future market in the state as well.

Another implication of the lack of availability of legal marijuana is that it can lead to an increase in the black market. There is, however, a fine line between not enough available legal marijuana and too much.  Too much can reduce prices to a point where business can no longer operate - which is a situation some states are now facing, and no access to marijuana will drive people to the black market.

What does the lack of licensing mean if recreational marijuana is legalized in November?

Being granted a medical marijuana license is a direct pathway to recreational cannabis license.  Connie Maxim-Sparrow said “a business without an MMJ license would have to wait until 2022 before it could apply to enter the new market.  Because the state will only accept applications in the first two years with those who already have a medical marijuana license, and this application process will begin a year after the effective date of the law.”  The exception, according to the initiative, is if the state determines that additional licenses are necessary to minimize the illegal market, to meet demand or to provide better access to marijuana in rural areas.

Will the state be able to issue more licenses by the September 15 deadline?  Or, will the state extend the deadline which is something they had strenuously objected to?  We will find out in just a few days.