Big money will be made when Michigan’s medical marijuana industry goes legit — but who will make it?

Big money will be made when Michigan’s medical marijuana industry goes legit — but who will make it?

I've been making money off marijuana these past several years by writing about the stuff. The bottom line in the media is, whether you are for or against it, anytime you bring up marijuana you are making money off of it. The folks at Project SAM (Smart Approaches to Marijuana) — pretty much an anti-marijuana organization — are making money off people's fear of marijuana.

There's lots of money on both sides of the issue. Law enforcement agencies make plenty of money off of marijuana through federal grants and asset forfeiture — taking stuff from people they accuse of crimes. From Feb. 1 to Dec. 31, 2016, Michigan State Police report seizing $15.2 million in cash and property. Out of the 5,290 reported forfeiture cases, 4,955 of them were for controlled substances.

Lobbyists in Lansing are getting paid, too.

It seems like people give up the cash for marijuana. Despite its illegal status and perilous underground distribution system, Americans spent tens of billions of dollars on it each year in the early 2000s, before the modern wave of legalization.

In Michigan, dispensaries have been getting most of the attention in the battle over who will make the money in the state's new medical marijuana distribution system. Communities are fighting over whether to allow them, and if so, how many. The Michigan retail marijuana market — particularly if recreational use passes — is projected to be huge. But it's already big enough to have forced the hand of state legislators who were very reluctant to see any kind of legal distribution system.

"The retail market is the single largest revenue gatherer in the cannabis industry," says Rick Thompson founder of Michigan Cannabis Business Development Conferences, which conducts business conferences across the state. "No other business represents the potential income like retails."

In addition to retail, the marijuana market is vast — reaching into medical care, law, real estate, building, cuisine, communications, politics, etc. But it all is driven by the patients who walk in the door and put their money down.

How that happens will be known when the Medical Marihuana Licensing Board rolls out its rules Dec. 15. This is when we get to see how the money is going to be made. The Medical Marihuana Facilities Licensing Act sets up five different classes of business: grower, processor, safety compliance facility, secure transporter, and provisioning center. Each requires a different state license.

Provisioning centers (dispensaries) are what we have been seeing and what Detroiters have been fighting about — and what hasn't been allowed in Oakland County. But all these other categories are mostly new in the public eye.

The law sets up three different classes of growers. That seems pretty straightforward. Class A allows up to 500 plants, Class B 1,000 plants, and Class C 1,500 plants. Those numbers seem pretty modest in the face of claims of Big Marijuana coming to town. It looks like mom and pop shops in a cottage industry. But the new rules could go in another direction, particularly if a practice known as "stacking" is allowed. Stacking is a practice wherein one entity could hold a number of licenses. One grower or investment group could potentially hold licenses to grow any number of plants — 10,000, 20,000 — who knows. One company could hold licenses for a chain of storefronts.

"The idea was received well by Licensing and Regulatory Affairs, so I expect they will allow stacking to some degree," says Thompson, who is a board member for Michigan NORML.

The importance of that will depend on how many licenses the state is handing out and how many licenses one entity can have.

One seemingly sensible rule came out last week when the state Licensing and Regulatory Affairs office announced that so-called "all in one" facilities will be allowed where growing, processing, and sales can take place in the same building. Although it seems like a sane policy, it gets a little weird with having separate entrances for different licenses and you still have to provide secure transport from the part of the building that houses the growing to the part of the building that houses the processing.

There is some fear around the rules and licensing procedure among owners of existing dispensaries. Will those owners be penalized for running what many define as an illegal enterprise? Will they be cut out of the opportunity when licenses are handed out? At the very least it looks like places that are now open probably need to shut down by Dec. 1. This gives patients some planning time if they need to stock up on supplies or get a caregiver to tide them over until the marijuana system is up and running — although some places have already closed their doors in an effort to curry favor with LARA.

And then there are the folks who already know what the rules of their businesses are, they just need the new regulations to be set so that the wheels can start turning at the core of the marijuana industry.

There are the businesses that support the industry, such as real estate. Anybody with a big, empty warehouse might be thinking of renting to a marijuana grower. Of course that leads to work for electrical contractors and carpenters. Then you got the legal profession (which has been making money because of marijuana forever), the public relations companies, and I'm even hearing about insurance companies and bankers developing products to help get around federal rules. Oh, and there are security systems and building design. It's endless. I know somebody in Colorado who is leading newcomers to marijuana in various personal discovery events.

"All of the secondary businesses, those folks are eager, they are excited, they have their money ready," says Thompson. "Those folks don't need administrative rules from LARA to know how they can play."

Some are folks who see a new opportunity in an industry that didn't previously exist. Most of them will not get rich quick, but like any other industry a lot of people will be able to make a living (and some a good living) working within the economic halo of marijuana.

The age old baggie or brown envelope or film canister will have to be dressed up into fancier packaging with labels detailing the contents. That will be particularly important when it comes to edibles, salves, ointments, and other products made with marijuana extracts.

In the seemingly endless expanse of the marijuana halo, law enforcement won't have to end its war. They'll just have to gird themselves for the fight against the illegal marijuana that is sure to be around once the system of legal marijuana is set up. There's got to be some money in that.

About The Author

Larry Gabriel

Larry Gabriel covers cannabis for Metro Times. He also writes the Detroit Watch in the monthly Michigan Cannabis Industries Report. Larry's chapter "Rebirth of Tribe" in the book Heaven Was Detroit, from jazz to hip-hop and beyond chronicles the involvement of Marcus Belgrave, Wendell Harrison, Harold McKinney,...
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