Recreational pot drive

April 1, 2016

Approaching the eighth anniversary of the Michigan Medical Marijuana Act (MMMA), overwhelmingly approved by Michigan voters, the current political battle over cannabis centers not so much on whether or not the state should legalize recreational marijuana, but rather, it poses the question of when legalization will take effect, and who will control and profit from the million dollar industry.

Fighting to appear on Michigan’s November 2016 ballot are three initiatives, each outlining a distinctly different approach to legalized recreational marijuana. At press time, only MILegalize and Abrogate Prohibition Michigan, two of the three groups that come from opposing schools of thought, were reaching out for support from the public and actively circulating petitions. 

The capital of the U.S., and four states – Oregon, Alaska, Washington, and Colorado – have already legalized marijuana for recreational use. Additionally, multiple cities around the country have passed ordinances decriminalizing the substance, effectively diluting the penalty of possession from a misdemeanor or felony, to a civil infraction. 

Ann Arbor was the first city in Michigan to decriminalize it in 1972. More than 30 years later, following the 2008 passage of the MMMA, an additional 17 municipalities followed suit, each crafting their own ordinance that defines the amount of marijuana to be in the bracket of civil infraction. Seven cities within Oakland County did so, namely, Huntington Woods, Pleasant Ridge, Berkley, Ferndale, Keego Harbor, Hazel Park, and Oak Park. Other areas in Michigan with decriminalization ordinances on the books include Detroit, Lansing, East Lansing, Grand Rapids, and Flint. 

Despite growing acceptance of studies illustrating the effects of marijuana as a medical treatment, and increasing social approval of recreational use, the federal government maintains its classification of marijuana as a Schedule I controlled substance, a category defined by the drug enforcement agency as “the most dangerous class of drugs with a high potential for abuse and potentially severe psychological and/or physical dependence.” Heroin, LSD, ecstasy and peyote are listed next to cannabis. Comparatively, the second most dangerous category, Schedule II, includes cocaine, methamphetamine, Adderall, Ritalin, and Vicodin. 

“I certainly think it (marijuana) ought to be rescheduled,” said former Attorney General Eric Holder in an interview with P.B.S., recorded last September and released in February. “You know, we treat marijuana in the same way that we treat heroin now, and that clearly is not appropriate. So at a minimum, I think congress needs to do that. Then, I think we need to look at what happens in Colorado and what happens in Washington,” referring to two states that have profited immensely from legalized marijuana. 

“In June, recreational marijuana sales hit $50 million for the first time, then in July sales rose over $55 million. If you add in medical marijuana sales, the total comes to $96 million for July, also higher than June’s total of $85 million. The portion of these sales in July that is earmarked for school construction projects is $3 million,” wrote Debra Borchardt in Forbes Magazine last fall of Colorado sales. Colorado voters approved recreational marijuana in 2012, the same year as Washington. “According to the Colorado Department of Revenue,” Borchardt’s article read, “the state has received nearly $70 million in tax revenue from marijuana from July 1, 2014 through June 30, 2015, easily beating the nearly $42 million in taxes on alcohol.”

The most publicized, and seemingly viable, legalization effort afoot in Michigan today is coordinated by the group known as MILegalize, led by Lansing-based attorney Jeffrey Hank, who projects the act will generate “hundreds of millions in new tax revenue. We’re likely to save the state $300 million per year, generating a couple hundred million in new tax revenue.”

MILegalize is petitioning for the Michigan Marijuana Legalization, Regulation, and Economic Stimulus Act, drafted by the Michigan Comprehensive Cannabis Law Reform Committee, composed of a number of the state’s top medical marijuana lawyers. Approved for circulation by the Secretary of State last June, the ballot initiative, if passed, would go into effect on March 1, 2017. 

Under the act, any individual, age 21 and up, would be permitted to grow up to 12 mature cannabis plants at home, and allowed to possess the amount of marijuana processed from 12 plants. “Under ours, there would be no possession limit under state law,” stated Nick Zettell, campaign manager for Oakland County MILegalize.

Section 11 of the act states, “Localities may adopt rules necessary to implement this act and may allow or prohibit the operation of marijuana establishments.” For commercial businesses, localities would be responsible for licensing of facilities for marijuana testing, product manufacturing, and retail. The structure of the licensing allows for an interwoven industry that gives, for example, a grower the ability to sell, and a processor to grow.

Required labeling includes the number of 10 mg servings of tetrahydrocannabinol (THC) in each product, which is the chemical primarily responsible for marijuana’s effect.

A hemp industry is permitted with guidance from the department of agriculture, but the act notes that “the department may not adopt rules based on the legal status of hemp under federal law, or which creates an unreasonably impractical burden upon a Michigan farmer.”

The act does not supersede the MMMA, but rather increases patient access to more palatable forms of the drug, including oils, extractions and/or “edibles,” food items infused with marijuana, which are currently prohibited under the MMMA. Supporters of medical marijuana, including some lawmakers, encourage legalization of alternative methods for medial marijuana ingestion, which currently must be smoked or otherwise inhaled.

The second, and more freewheeling, group currently petitioning is Abrogate Prohibition Michigan (APM), which advocates full repeal of cannabis prohibition, and proposes a constitutional amendment that would take effect this December, said APM spokesman Timothy Locke, who filed the petition with the Secretary of State at the end of last year.

The first line of the sweeping proposal, which permits a hemp industry, states, “the agricultural, personal, recreation, medicinal, commercial, and industrial use of cannabis in any form by any person shall be a lawful activity…Use by any person who is the ward of an adult, enrolled in K-12 school, a minor, shall be lawful activity requiring only parental or legal guardian authorization.”

Essentially, the amendment changes the state’s treatment of cannabis to that of a “tomato plant,” said Locke. The amendment prohibits any regulation to diminish use and makes it unlawful to tax or impose fines for cannabis in any form.

The third and mostly silent group, Michigan Cannabis Coalition, dropped out of the petition field months ago, though an inside source said a resurgence of the petitioning effort may be on the horizon, pending funding.

Composed of two Republican operatives, Matt Marsden and Dennis Darnoi, the group has received roughly 71 percent of funding from Revsix, the Pontiac-based data gathering company founded by Darnoi and Marsden a few years prior. MCC treasurer Lisa Farnum, who declined to comment to Downtown Publications, cut a check on behalf of MCC for $252,000 to pay for signature gathering services from Lee Albright’s firm, National Petition Management, out of Brighton, which put paid petitioners on the street for a stint in the late summer and early fall. 

“There’s value for us in the data,” said Darnoi “Having a known universe of voters that support a particular topic, there’s great value in that. Look at Ben Carson, his list is valued at $4 million, all the data he collected, he can sell that. Usually campaigns rent lists.” Noting the monetary value of the data collected in a campaign, Darnoi said the company “decided it was a worthwhile investment. At the time, there was no other initiative in the field.”

A source close to MCC, who requested anonymity, said the group had two contingency plans, if donors pull through. They may hit the streets at the end of March and collect signatures for the next four months, or hold off until May and do one major signature gathering push. 

MCC’s proposed act, like that of MILegalize, restricts recreational marijuana use to the 21-and-up crowd, though home growers can cultivate significantly less plants. Two mature plants are permitted under the act, “regardless of the number of residents living in a dwelling who are at least 21 year of age or older, no more than two flowering marijuana plants may be present at any given time in any one dwelling.” That said, local governments are given the authority to increase that number to four, or choose to impose ordinances that outlaw home growing all together. 

While the act supported by MILegalize clearly defines an excise tax maximum, the Michigan Cannabis Control and Revenue Act, put forth by the MCC, mandates the state legislature to set the excise tax rate, which may be amended by a three-fourths vote of the legislature. A source close to MCC said an initial rate of 24 to 27 percent is expected. It would not be applied to medical marijuana.

The lion's share of regulatory and licensing decisions, from the amount of marijuana an individual may possess, to who is awarded a license to operate commercially, would lie with the Michigan Cannabis Control Board. The five-person appointed board is to be established before the first sales are permitted on January 1, 2018. Three of five salaried board members are to be appointed by the governor, one by the Senate majority leader, and one by the speaker of the House. Notably, term-lengths are not clarified, but rather set by the board itself. 

Felons are strictly prohibited from opening or working at a marijuana facility, and criteria for applicants seeking a license for a marijuana facility “shall include integrity, personal and business probity, financial ability, and ability to operate a marijuana facility,” states the language of the act, drafted by John Pirich, Michigan State University professor, and partner at Honigman, Miller, Schwartz, and Cohn. 

MCC’s proposal also varies from that of MILegalize in the structure of the market. Whereas MILegalize allows for commingled growing and selling, MCC stipulates that a marijuana retail facility can only sell marijuana grown at an enclosed, licensed cultivation center. MCC’s act prohibits an individual from holding more than one license at once, though when an individual’s license expires, a different type of license can be applied for. Nothing grown at home may be sold.

Within the first year of sales, MCC hypothesizes the industry would generate $400 million, said a source close to the group.

It takes money, time and manpower to get a citizen-initiated proposal onto the ballot. “People petition because the issues they want enacted won’t go through the legislature,” said Lee Albright of National Petition Management, the group who was hired by MCC to gather signatures. “Any group who doesn’t try to get the issue through the legislature isn’t very smart because first, you see if the issue is something that will be picked up, and if that method is extinguished, then they have the initiative referendum process to try to get it on the ballot.” 

MILegalize and MCC, which are proposing legislative initiatives, have until the first of June to collect and submit 252,523 valid signatures to be a contender for the November ballot. APM, vying for a constitution amendment in what many would consider an unorganized way, must collect an additional 61,131 signatures, for a whopping total of 315,654 by July 11. 

Time is quickly running out, and each group seems to have a unique strategy for getting their proposal to the ballot. 

“We have at least 100 petition sheets, 12 (signatures) a sheet. I’m going to say we have 1,500 signatures, but I don’t know,” said Locke of a mid-February estimate for APM, which kicked off signature gathering on January 13. “We need 22-and-a-half signatures every day, in every county, for 180 days. It sounds like a big number, and 315,000 is – it’s big, but very doable. We’re coming at this from a grounded, real grassroots effort. Everyone has something to offer. We’re putting (rallies) out there and hoping people show up. The communication is out there, but there’s no rigid structure. We’re not paying anyone, we don’t anticipate paying anyone,” Locke said. According to their February 2016 finance report, APM raised a svelte $1,818 in total, throughout the current election cycle.

In mid-March a source close to MCC said the group had 170,000 stale and void signatures, and about 15-20,000 active signatures, noting that “by mid-August, (MCC) got bogged down with the medical marijuana bills in Lansing. We knew that the medical marijuana bills would fail in the Senate, and we are banking on people who wanted that.” Indeed, the package of house bills aimed at further defining the MMMA and creating a more detailed structure has been sitting in the Senate judiciary committee since October. Whether or not supporters of more regulations for medical marijuana will contribute financially to MCC’s petition is yet to be determined. The group also has eyes on investors in other states, including Illinois, New York, Florida, and California. The February 2016 finance report states MCC raised $351,420, though the last direct contribution was made in October 2015, when Premiere Land Services donated $75,000. The Traverse City-based company specializes in leasing land for the development of oil, gas, wind, and solar energy, as well as servicing the telecom industry and conducting pipeline acquisition.

MILegalize has not let up since they began fundraising in February 2015, four months before the petition was filed with the state. The March 8 primary marked a ‘The Great Petition Push’ for the group, who took advantage of a day that was swarming with registered voters throughout the state. “We’ve unified the cannabis community for the most part; we have widespread support,” said Hank, a lead player in the ballot initiative. “We’ve had over 600 people donate, and collected approaching 250,000 signatures. It’s a well-supported effort by a lot of people,” said Hank in mid-March. 

The February quarterly finance report states MILegalize has raised over $610,000. Roughly 55 percent came from Kevin McCaffery, president of RKB Enterprises, Inc., based in Ann Arbor. “He has no involvement in the industry” said Zettell. “He believes in us and was impressed with the initial fundraiser we had in Ann Arbor, and impressed with our board of directors (for the Michigan Comprehensive Cannabis Law Reform Committee). He said he believes it should be legal in Michigan, and believes this is the way to do it.”

Other notable, albeit significantly smaller direct donations, came from Rep. Jeff Irwin (D-Ann Arbor) who gave $500, and introduced House Bill 4877 last fall, designed to regulate and legalize marijuana in Michigan; Dennis Schornack, former aide to Gov. Rick Snyder and former chairman of the International Joint Commission; and Mark Meadows, East Lansing city council member. Other contributions came from seasoned marijuana activist, Charles “Chuck” Ream, a retired teacher who also sits on the board for the group who drafted the ballot initiative; the Ann Arbor Cannabis Guild; the Kalamazoo branch of the National Organization for the Reform of Marijuana Laws (NORML); and attorneys Matt Abel of Cannabis Counsel; Michael Komorn, president of the Michigan Medical Marijuana Association; Bruce Leach at Kirsch, Leach and Associates, which has a location in Birmingham specializing in medical marijuana. There were a handful of out of state contributions in the amount of $1,000 or less. 

“Some of our absolute best and most dedicated volunteers are in Oakland County,” said Zettell. “There’s a number of venues in Oakland County that have been receptive, allowing us to table and collect signatures there. People are supportive in Oakland County probably because they’ve seen the court in Oakland County be so adversarial dealing with medical marijuana, and they’re fed up with that. There’s some prosecutors who have been unfavorable to medical marijuana.”

Looking at our neighbor, Ohio, it’s clear that voters have no interest in promoting a marijuana monopoly as a means to get legal bud. In the fall of 2015, Ohioans witnessed an initiative to legalize recreational marijuana reach the ballot, but fail to pass. The group, Responsible Ohio, put forth Issue 3, which would have permitted a legal marijuana industry, but would have restricted commercial growth of cannabis to just ten specific parcels of land. 

Regrouping after last year, marijuana activists have switched gears on the political front, and are narrowing their focus to medical marijuana. Ohioans for Medical Marijuana is expected to begin signature gathering in April. The committee was registered with the state by the national Marijuana Policy Project, a non-profit based in Washington D.C. that has a track record for initiating and analyzing legalization efforts around the country.

Chris Lindsey, senior legislative analyst for the Marijuana Policy Project, discussed the issues facing the petition efforts in Michigan. “There’s a couple interesting issues they (MILegalize) are dealing with. They’re trying to get clear guidance on whether the board of canvassers will allow them to capture the signatures caught outside the six-month window,” he said, referring to the rebuttal presumption found in the Michigan election code, MCL 168.472a.

The six-month window of time is counted backwards from the date the committee submits their signature-laden petition to the state. Unlike Florida, which allows citizens two years to collect the necessary number of signatures, only verified signatures that are collected 180 days prior to when the committee submits are considered valid in Michigan. Signatures collected outside the window are presumed to be stale and void, unless the group files a rebuttal and proves that the signatures captured outside the window were indeed signed by people who were, at the time they signed, registered to vote, and, who were also registered voters at some point during the six-month window. 

Challenging the six-month window, as it stands, is no small feat. “There’s been 14 statutory initiatives since 1908 that qualified and have been enacted (after filing a rebuttal), so one a decade,” said Hank, chairman of the 15-person board that drafted MILegalize’s ballot initiative. “There’s only a handful of attorneys who work in this area of law.”

Senate Bill 776, introduced on February 24, 2016, by Sen. David Robertson (R- Grand Blanc) would remove the rebuttal presumption from the law and close what some legislators consider to be a “loophole” in the law. “This is like having a belt and wearing suspenders,” said Senate Majority Floor Leader Mike Kowall (R-White Lake). “It’s making sure what’s in front of the board of canvassers is valid.” 

The legislature picked up the issue after attorney Hank, on behalf of MILegalize, filed an official request with the state board of canvassers to revisit the law, calling attention to the modernized practices of verifying signatures, which he said no longer necessitate the 180-day window, because now there is a database that can be accessed for voter files, rather than relying on each local clerk to provide that information. At the end of November, Hank filed a formal request to the Board of Canvassers to reconsider the policy. 

Introduced on February 10th by Sen. Dave Robertson, SB 776 would amend that section of the law, removing the clause that provides a possibility for any group to file a rebuttal. According to Fred Woodhams, spokesperson for the Secretary of State, the original language set forth that the bill would take effect on January 1, 2017. However, when SB 776 was up for discussion on the senate floor on March 10, Kowall made a motion, approved by a two-thirds vote, that the bill would take effect immediately upon passage. The bill was sent to the House of Representatives on March 10, where it was referred to the elections committee. 

“It’s what the majority wanted, to take effect, based on what’s going on right now, that’s what I would presume,” said Kowall. “I believe once the House of Representatives agrees to it, and they may do it next week, it could be on the governor’s desk a week from today (March 11). It’s due to the marijuana issue – its controversial. It’s been that way since the '20s. It’s a very controversial subject, and people don’t like talking about it. It’s a bipartisan thing. There’s some people that agree and some that don’t, and that has nothing to do with politics. That’s just personal beliefs.”

Finding this political maneuver unjust, Sen. Steve Bieda (D-Warren) spoke to the floor. “Everyone in this room knows that it’s extremely challenging to overcome a rebuttal presumption, but it is possible. And that possibility, however slim, gives people a slightly better chance to get their issue on the ballot… Let’s be honest here – a “yes” votes isn’t to clarify existing law; it’s to halt policy changes that would make it easier to use signatures collected beyond the 180-day window… It’s time to make it easier, not harder for voter issues to hit the ballot.”

Hank will not back down. “(Citizens) have four years to petition (for ballot initiatives.) The four-year period is set by the Michigan Constitution and can’t be changed without a vote of the people. The state just treats the signatures different because if the signatures are within the 180-day window they’re assumed to be valid, but if outside that window, most will still be valid per the constitution’s four-year statue. If they’re outside 180 days, they’re presumed invalid because sometimes the person died, someone moved and changed voter registration (to another state), or, they’re (gathered) outside the four-year petition period. So what the Senate is doing with SB 776, eliminates the additional three-and-a-half years that any campaign out there have to petition, which (the legislature) couldn’t do because its in conflict with Article Two, Section Nine of the constitution.”

Fellow naysayer to SB 776 is Sen. Coleman Young, Jr. (D-Detroit) who, at the end of February, introduced Senate Bill 813, referred to in its language as the “non-medical marijuana code.” The proposed act is written to legalize, regulate, and tax recreational marijuana. 

“In the interest of allowing law enforcement to focus on violent and property crimes, generating revenue for education and other public purposes, and individual freedom,” SB 813 states, “the legislature finds and declares that the use of marijuana should be legal for individuals 21 years of age and older and taxed in a manner similar to alcohol.”

Since it’s introduction, the bill remains stagnant in the Senate judiciary committee – its only hope of moving forward rests with the committee chairman, and former Eaton County Sheriff, Rick Jones (R-Grand Ledge), who has the ability to give the bill a nudge and put it on the agenda of committee. “I don’t think you’ll see any movement in that (SB 813) at all,” said Sen. Kowall. The bill is tie-barred with a Senate joint resolution (SJR O ’16) to amend the 1963 state constitution to decriminalize the possession and use of marijuana. 

Under SB 813, anyone 21 and older may possess up to one ounce, or five plants. The excise tax, which would be adjusted by the state treasurer annually to reflect the change in the consumer price index, is established as $50 per ounce of marijuana bud, $25 for each ounce of immature plant, and $15 per ounce of leaf. Of the tax revenue, 50 percent goes to the state general fund; 30 percent to the Department of Education; ten percent to the Department of Health and Human Services, earmarked for alcohol/drug abuse treatment programs; and another ten percent to the department of community health, designated for educating the public on the risks associated with marijuana, alcohol, and tobacco.

Rep. Jeff Irwin (D-Ann Arbor), who contributed to the MILegalize campaign, also sponsored a bill outlining a plan to legalize and regulate marijuana. He introduced House Bill 4877 on September 17, the same day it was referred to the judiciary committee, where it hasn’t moved since. 

The bill would decriminalize and regulate marijuana cultivation, production, testing, sale, possession, and use for non-medical purposes; would license cultivation facilities, retail stores and distributors who would sell to retail stores. A person 21 and up could possess up to one ounce of marijuana, and 12 plants that measure 12 inches in either height and diameter. The Department of Licensing and Regulatory Affairs (LARA) would begin accepting and processing applications on the first day of 2017. 

For the first year, the excise tax, collected by the Department of the Treasury, would be set at 5 percent, with an increase of 1 percent every following January 1, until it reaches 10 percent. The bill outlines criteria to be considered by LARA in determining approval of licenses, including prior experience producing or distributing marijuana in the municipality where the applicant seeks license and consistent compliance with state statutes. Half of the license fee would go to the locality where the marijuana establishment exists.

Notably, Irwin’s proposed bill stipulates that LARA may not require a retail facility to track the information of it’s consumers, “other than information typically required in a financial transaction at a retail liquor store.” Like other proposals, HB 4877 gives local government the right to adopt an ordinance that prohibits the operation of marijuana cultivation, manufacturing, testing, and/or retail facilities. However, prohibiting any of the above would require a vote of the people at a general election. 

On the other side of the aisle stands Rep. Mike Webber, (R-Rochester, Rochester Hills). “I’m not supportive of (legalization). I think it’s something that will go to a ballot initiative, and, looking at the polling, it would suggest it would pass,” said Webber. “Really, it’s how much money the group can raise to pay people to get it on the ballot.”

If more than one initiative for legalized marijuana were to reach the ballot, and election day voters pass more than one, it would come down to a numbers game. 

“If they’re considered to be conflicting, the one that would go into effect is the one that receive the most votes,” said Woodhams of the Secretary of State's office. “If MILegalize got the most votes, then MCC (if their initiative made the ballot) would not go into effect even if approved by voters, per the state constitution.” ­

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