LEGAL GUIDE
Written by attorney Malika D. Ramsey-Heath | May 19, 2011

Medical Marihuana Businesses - Dispensaries, Growers, Delivery Services and other businesses

Considerations for Businesses Opening and Operating a Dispensary

In Michigan it is still illegal to buy or sell marihuana, even for medical purposes. Yet, dispensaries abound and plenty of forward thinking entrepreneurs are making money in this new economy. Dispensaries are one area of the Medical Marihuana maze where the law provides some answers and guidance.

Nonprofit vs. For Profit In Michigan, dispensaries must operate as private clubs not as retail businesses. Many people mistakenly believe that Michigan dispensaries must operate as nonprofit businesses because this has been the trend in some of the other states that have legalized marihuana for medical use. But, in Michigan dispensaries can earn a profit, just not from the sale of Marihuana. And, while a dispensary cannot technically sell marihuana, it can facilitate transfers between certified registered patients.

Opening a Dispensary - The Importance of Incorporation and Registration Some dispensaries attempt to operate under the radar, avoiding registration with the State of Michigan. In Michigan, the case law has made special mention that dispensaries that are operating legally pay their State of Michigan sales tax. But, it is unwise to simply fill out the paperwork for your dispensary and send it into the State. The State of Michigan Department of Labor and Economic Growth has made clear statements that they will not approve applications that appear to support selling marihuana for a profit. The wording of the description of your business in your State registration documents is vitally important and can have the immediate impact of causing your registration to be accepted or rejected.

Operating a Dispensary - Membership Applications In Michigan, dispensary operators must pay close attention to the membership process. The best way to stay within established law is to have every person who walks into the dispensary fill out an application at least once. Membership Application Process As a dispensary owner or operator it will be your responsibility to ensure that anyone who wishes to acquire product from your facility becomes a member first. You must verify that each applicant is a registered card-carrying patient and that each maintains control over their own supply while giving the dispensary authority to transfer it.

Remember, your dispensary members acquire medical marihuana from each other; the dispensary is merely the facilitator. One important aspect of this arrangement is access to the marihuana. A dispensary may accept patients and caregivers as members and the laws related to the amount that each may possess apply. Limiting access and amounts is vital to keeping your business legal. Patient to Patient transfer authorization forms will provide the dispensary with some protection in this area. However, there are a few other things you must keep in mind regarding access and amounts. The type of containers used to grow and store marihuana have been the subject of litigation in Michigan. The statute requires containers to be closed and locked. But, the case law has gone farther in describing more exact requirements for buildings and containers. Clones, seeds, and stalks and the ways in which they affect allowable amounts have also been the subject of litigation.

Dealing with Taxes Remember, to keep a dispensary legal you should pay taxes to the State of Michigan on earnings. Depending on the type of business entity selected the business and individual owners may also be liable for federal taxes. If you are considering owning and operating a dispensary you should consult a tax professional in this area.

Opening and Operating a Commercial Grow Anyone considering opening and operating a commercial grow operation in Michigan or anywhere else in the United States should exercise extreme caution. Recently, municipalities in Michigan as well as federal law enforcement has raided grow operations and cases are ongoing. Rules similar to dispensary operation apply with regard to quantity limitations, access to product, and payment of taxes.

Growing Contracts Commercial grow operations must operate in much the same way as dispensaries in Michigan. The law is still gray in this area so it is important to have agreements in place that identify the authority and responsibilities of the parties involved.

Keeping Records As a grower you are paid for your expertise and abilities. Customers expect your best efforts. Keeping grow records allows you to provide adequate reporting to customers and can protect you from liability in case of a bad grow.

What is Marihuana This simple and seemingly straightforward question is extremely important to anyone operating or contemplating operating a commercial grow. Under the Michigan code and the Michigan Medical Marihuana Statute Marihuana is defined in particular ways. For instance, seeds, seed cake, mature stalks, fiber, and roots are not marihuana.

Litigation is currently ongoing as to whether the unprocessed leaves of the plant are considered usable and thereby protected under the Michigan Medical Marihuana Act is unsettled at his time. But, at least some municipalities have viewed the leaves as usable and therefore protected under the Medical Marihuana Statute. The law regarding clones is also important and unsettled. At this time, most courts have held that clones count as a separate marihuana plant. It is important to be aware of this in order to avoid exceeding allowable limits. Commercial growers must also be acutely aware of federal law as penalties increase with the amount of marihuana in one's possession. Consultation with an attorney is an important part of starting a commercial grow.

Delivery and Mobile Operations Many people think of delivery operations as a way to start a business inexpensively. But, keeping delivery businesses legal is more difficult because owners and operators must be keenly aware of the laws of each municipality where the operation may go. As the owner or operator of a delivery operation you will also need to be mindful of legal requirements in terms of: 1. Background checks for drivers 2. Patient or Caregiver verification forms 3. Authorization forms 4. Securing the vehicle 5. Limitations on amounts 6. Local and municipal ordinances 7. Avoiding law enforcement attention to your vehicle 8. Special laws related to the search and seizure of vehicles 9. Applicable federal laws

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