As medical marijuana shrinks, Michigan mulls ‘clean merge’ with recreational

• Bipartisan effort seeks to merge Michigan medical, recreational marijuana licensing into one regulatory system
• Supporters say the proposal would be a ‘clean merge’ aimed at reducing regulatory hurdles, ease access for medical consumers 
• Change would require backing from 75% of state lawmakers to pass

Al Williams opened DaCut dispensaries in Detroit and Flint to exclusively serve medical marijuana patients — his only legal option at the time. 

But last year, his company expanded to become the first in Detroit to open its doors to anyone over the age of 21, ushering recreational marijuana into Michigan’s largest city following statewide approval of a 2018 ballot initiative. 

Soon, DaCut will be dropping medical sales entirely. 

“We've held on to our medical license for a long time, and it just really doesn't make a whole lot of sense anymore,” Williams told Bridge Michigan last week. “Those numbers are dwindling all over the state, have been for a long time.”

Michigan's medical marijuana industry — and its customer base — has shrunk dramatically in the years since voter-approved recreational marijuana sales began in late 2019. 

There were more than 450 medical provisioning centers in Michigan two years ago, but fewer than 200 today, according to state data. The number of patients — licensed for treatment due to chronic pain, arthritis and other ailments — has fallen from 251,000 in 2021 to fewer than 95,000.

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Now, sixteen years after Michigan voters first approved medical marijuana sales, lawmakers are pushing to combine an existing licensing system with the state’s newer recreational marijuana law, arguing it's time for a "clean merge” given market shifts and business needs. 

“What we prefer to do is one, streamlined option,” said Rep. Graham Filler, a Duplain Township Republican who is helping craft legislation that supporters contend would protect patient benefits while making it easier on operators and regulators alike. 

“This says to the industry and the people who want to invest that Michigan is forward thinking, trying to clear regulatory hurdles and burdens,” Filler said. 

A dual-track system 

It’s not the first time a merger has been tried, and supporters would need to clear a high bar — because both medical and recreational legalization were voter-initiated laws, any changes would require 75% of legislators to sign off on the measure instead of a simple majority vote.

And concerns remain that an industry consolidation could complicate matters for consumers who still use marijuana for medical purposes. 

“The nature of the corporate, commercial market is going in that direction anyways … there's less attention to specialty products and products that may be good for a particular disease or particular need of a patient,” said Michael Komorn, a Farmington Hills attorney who has represented many medical marijuana patients.

“I don't know that their focus is on sick people that come in and want to use cannabis.” 

Michigan voters legalized medical marijuana in 2008, kickstarting years of legal and logistical hurdles for consumers and providers alike that led to a 2016 law that established the current licensing requirements. 

Separate voter-initiated legislation that made Michigan the first state in the Midwest to legalize recreational marijuana use in 2018 created a dual-track system requiring separate licenses for medical and recreational operations.

Though consumers still have the option to obtain or maintain existing medical marijuana cards, more widespread accessibility and low prices of recreational marijuana products have prompted a swift decline on the medical side. 

At the same time, Michigan’s recreational marijuana sales have been soaring, bolstered in part by customers from neighboring states. 

Michigan’s roughly $3.2 billion recreational marijuana industry sometimes outpaces well-established markets like California and Colorado, though Ohio’s recent adoption of marijuana legalization could eventually cut into Michigan sales.

What the bills would do

House Bills 5884 and 5885, quietly introduced in June by Filler and Rep. Jimmie Wilson, D-Ypsilanti, aim to retain key aspects of the medical marijuana law while reducing fees and paperwork for businesses. 

Currently, operators at all steps of the marijuana industry must hold both medical and recreational licenses if they want to participate in both markets. Marijuana growers are allowed to shift products from medical to recreational markets, or vice versa. 

The bipartisan proposal would merge the state’s medical and recreational regulations into one licensing process for businesses seeking to grow, process, transport or sell marijuana products.  

As proposed, the bills wouldn’t make any changes to the patient-caregiver system and would retain the tax and dosage benefits allowed to medical marijuana users. 

Medical marijuana is not subject to the 10% excise tax levied on recreational marijuana, though all sales remain subject to the state’s 6% sales tax. Medical marijuana cardholders are also subject to different limits on total purchases. 

Most medical license holders would automatically become licensed under the new combined system, unless they’re dispensary operators in a municipality that only allows medical marijuana sales. 

Michigan’s marijuana laws give local governments the authority to opt in or stay out of the marijuana industry via voter approval. As of July 31, 172 municipalities have opted into medical marijuana sales, and 139 have opted into recreational.

Local governments that allow recreational marijuana have seen significant financial benefits: Last year, counties and municipalities got a combined $87 million from marijuana sales taxes. 

Some local governments — including Hazel Park, home to 10 marijuana retailers — require dispensaries to maintain both medical and recreational licenses to operate within their borders and impose local licensing fees of up to $5,000 per license. 

Hazel Park City Council member Luke Londo called the new bills a “no-brainer” for the state, but he wondered about the impact on local governments. 

“Municipalities are still working to understand how this is going to affect our local ordinances and funding streams,” he said. “While I’m supportive of what these bills aim to accomplish, I’m hopeful that communities will have the opportunity to shape the final legislation to ensure that everyone benefits.”

The state’s Cannabis Regulatory Agency hasn’t taken a formal position on the proposal, though proponents say agency officials have been involved in discussions.

What would it mean for medical users?

Supporters say the plan as introduced would have little impact on and perhaps even benefit medical consumers. 

Sen. Jeff Irwin, D-Ann Arbor, is working on companion legislation in the Senate. He told Bridge he’s hopeful that a new system, in addition to reducing paperwork, could also improve the lot of medical marijuana patients, who currently have to search for one of a “dwindling number” of medical suppliers. 

Under the proposed merger, those patients could buy products from what are currently recreational marijuana stores but still see a lower tax rate. 

“We could continue on as we are now, and we would still have the best cannabis reform law in the nation,” Irwin said. “But this is just one more way that we could improve it by doing something sensible.” 

For many who might see health benefits from marijuana use, dispensaries can likely help them find what they’re looking for regardless of whether it’s licensed as medical or not, said David Schulman, a former surgeon who now works with patients renewing or seeking new medical marijuana cards through his business Greenpath Holistic Medicine.

“I tell my patients that no matter how they ingest it, it's still just THC,” Schulman said. “Whether they smoke it, dab it, eat it, vape it, however they ingest it, the goal is to get some THC in their system to relieve the symptoms that they're having.” 

But some patients, such as minors with specific conditions approved for medical marijuana consumption or those who need doctor’s approval to continue using marijuana, benefit from Michigan’s medical marijuana system, he said. 

Schulman fears that a consolidated system could result in dispensaries not having employees on hand who are knowledgeable about specific medicinal uses of marijuana.

Komorn, the attorney, shared similar concerns, and also said lawmakers shouldn’t alter the medical law — which “was always about compassion” — solely to benefit the business community. 

Williams, the dispensary owner, said he has a lot of gratitude for his medical patients, who “kept us alive” before Detroit allowed recreational marijuana sales. He’s hopeful the proposed licensing changes go through, both for his customers’ sake and as an acknowledgement of marijuana as a legitimate industry. 

“We’re a real business, you know?” he said. “We're looking to make sure that there are some positive policy changes that not only make it safer for our customers, but more accessible and easier to operate.”