A growing business

Legal ambiguities and the future of Michigan marijuana.

May 21, 2014 at 12:00 am

If The Graduate came out today, Michael Komorn suggests a famous bit of dialogue might go like this:

Mr. McGuire: I want to say one word to you. Just one word.
Benjamin: Yes, sir.
Mr. McGuire: Are you listening?
Benjamin: Yes, I am.
Mr. McGuire: Marijuana.
Benjamin: Exactly how do you mean?
Mr. McGuire: There’s a great future in marijuana. Think about it. Will you think about it?

In The Graduate, of course, that word was “plastics.” But Komorn, a Southfield-based attorney, sees that kind of potential today in marijuana. Komorn should know. At komornlaw.com, you’ll find a giant banner at the top of the page proclaiming that “Since November 2008, Komorn Law has focused on protecting and defending the rights of medical marijuana patients and caregivers.” 

It stands to reason that the Michigan Medical Marihuana Act has opened a new line of legal focus and another revenue stream for lawyers. But that’s only the most obvious tip of the iceberg. Komorn likens it to a feeding frenzy.

“It’s the equivalent of watching a shark tank,” he says. “There are smart people with business savvy who want to get involved in an up-and-coming industry with great demand. There are thousands of bright, smart ideas about how to facilitate the supply and the demand. The idea of a new industry is exciting to a lot of people.”

The supply and demand isn’t just about how much marijuana can be sold to how many people. I recently listened in on a teleconference about the Colorado Cannabis Summit, which takes place in Denver May 22. It’s an eye-opener if you’ve been snoozing on cannabis. I’ve talked to folks in Michigan about how medical marijuana affects businesses such as grow suppliers, electricians, carpenters, and the like, but Colorado is eons beyond Michigan in industry sophistication. Colorado voters legalized recreational marijuana in the fall of 2012. Legalization was rolled out Jan. 1 this year, and so far it’s been a bonanza.

Folks on this phone conference were representing business sectors — real estate, construction, security, technology, testing labs, law, government relations, infused products, medical, retail, and, well, growing marijuana. There was even a participant talking about developing a TV show about marijuana, just like we see cable shows about home renovations, restaurants, and fashion. 

“Colorado has the opportunity to be the Silicon Valley of cannabusiness,” says summit CEO Stan Wagner.

There’s a general sense among the participants that the whole world is watching and they need to get it right to be a model for a policy that will work its way across the nation state by state until the federal government is forced to act in accord with the changes.

That’s where Komorn and others in Michigan come in. They’re preparing for a future where cannabis is business as usual. Right now the activists and medical marijuana get most of the headlines, but Komorn has been contacted by a host of interests.

“The types of business are provisioning centers, growing, the process of manufacturing, labeling, different machines that help; they’re expensive,” he says. “People are willing to invest in those [machines] innate to the medical use of cannabis to make sure products are the most pure, clean, lacking contaminants and whatnot — all in the consciousness of an industry that’s going to need health and safety services. I get it from all over. People who have owned buildings for years who want to sublet or lease them out. … I’ve had people from out of state who are on the stock market side, hedge funds to the wealthy, nouveau chic commodities people, people who want to put money into existing dispensaries that are being tolerated. They want to take their model, increase their patient base, and take it to other states and franchise them.”

The quiet money is betting on marijuana. As of early May, the state of Colorado has collected some $25 million in taxes, licenses, and fees since the vote for legalization, the lion’s share of that since recreational sales began. But it’s not just the state that’s cashing in. 

“I think that what you find most intriguing in the marketplace is that since the first quarter, lease rates have quadrupled, going from about $4.50 per square foot to some of the more recent investors in our marketplace leasing their facilities up to $20 a square foot for grow facilities,” says Phillip Walker, director of business development at Foothills Commercial Builders in the Denver area. “And that’s brought a lot of instate investors into the marketplace because there’s actually some sustainability to it.”

There are all kinds of issues popping up, such as standardized testing from facility to facility. People who have lived with an underground industry where nothing is regulated or standardized have huge changes to consider in a legal environment. There are people who don’t want to enter that ballpark, but when you step out of home grows and into manufactured products, that’s the field you’re playing on. Shellene Suemori, head of science for Dixie Elixirs and Edibles, underscored the need for uniformity in testing facilities during the teleconference: 

“We want to be sure those results are accurate and they are consistent and reliable, no matter which labs they’ve been taken to,” she said. “And that is important for our consumers and the predictability of their experience. From a manufacturer’s standpoint, that’s enormously important. An inaccurate test could cause our products to be destroyed, which is an enormous loss, obviously, to our business, as well, and it’s important to lab owners and also important to the industry overall as we set the standards for states coming on after Colorado.”

It’s not as simple as slapping your money down on the barrelhead and going into business, and Michigan has huge issues as a medical-marijuana state where government and law enforcement aren’t necessarily on board with the idea.

“Before we have any discussion about what they need to open a business, basically I read them the riot act,” says Komorn. “I make it clear that it’s very challenging because of what the law is and the politics. As soon as they understand it, then we talk about steps to be taken.”

Even with all the legal ambiguity, people are opening up facilities where medical marijuana can be accessed, if for no other reason than they want to be out front when Michigan “comes after Colorado” someday in the future. If and when that happens, the infrastructure will appear a lot faster than most people realize. Komorn has been talking to some of the people standing on the sidelines trying to get into the game.

“They want to trademark, they want to come out and get it done right,” he says. “They want to work. They want to do it legally. They want to pay taxes. They want to register with the state. That’s the thing, there’s the desire of people to work in Michigan. … It’s fascinating. It shows the great will of the people of Michigan who want to work.”

Have you noticed the signs for marijuana businesses popping up in your neighborhood? Anyone who thinks they can turn back the tide to absolute prohibition is just plain wrong.