Article by ROWE Planner J. Douglas Piggott, AICP, Published in Planning Magazine

An article written by ROWE Professional Services Company Senior Planner J. Douglas Piggott, AICP,

was published in the September 2016 issue of Planning & Zoning News. The four-page article is titled

“Local Regulation Under the Michigan Medical Marihuana Act 2009-2016” and includes a detailed

description of the act and a thorough explanation of the various ways it may affect communities,

including examples.

Planning & Zoning News was created to provide state, regional, and local government staff and elected

officials, stakeholders, and citizens with education in the arenas of community planning, zoning, and

infrastructure development; economic, environmental, and social sustainability; and other contemporary

land use issues in Michigan. It is published in cooperation with Michigan State University’s Planning &

Zoning Center, Land Policy Institute, and Extension Service. The magazine is available in print only.

For information about receiving a copy, visit www.pznews.net.

Anyone with questions regarding the Michigan Medical Marihuana Act 2009-2016 can also contact

Doug Piggott directly at 800-837-9131 or DPiggott@rowepsc.com.

Following is the article in its entirety. Permission to download was granted by Planning & Zoning News

for posting on the ROWE Professional Services Company website, Nov. 2, 2016.

LOCAL REGULATION UNDER THE MICH?GAN

MEDICAL MARIHUANAACT 2009 - 2016By Doug Piggott, AICP, ROWE Professional Services Company, Flint

i n the 32 years I have spent working with Iocal municipalities onIplanning and zoning in Michigan, l have never experienced anissue that has generated such widespread confusion and frus-tration among Iocal government officials as regulation of medicalmarijuana. When the residents of the State of Michigan approvedInitiated Act 1 of 2008 in November of that year they placed themunicipalities in the state on a Iong journey. Cities, villages, town-ships and counties have struggled to find an appropriate path inthe regulation of medical marihuana. The purpose of this article isto help document their experience over the past 6 years.

The Iaw as approved by the voters in 2008 seemed to lay out afairly simple structure. A person with a doctor's verification that theperson suffers from a"debilitating medical condition" that wouldbenefit from the medicinal use of marihuana could apply to theMichigan Department of Community Health for a card iaentifyingthem as a qualifying patient which would protect them from p-ros-ecution under state or local Iaws or ordinances for the medical

use of marihuana. They were allowed to raise up to 12 marihuanaplants and possess up to 2.5 ounces of medical marihuana. Italso allowed an individual known as a primary caregiver to grow12 plants per patient on behalf of up to s qualirying patients.

But as Iocal municipalities began to investigate the nuances ofthe law they discovered several unanswered questions:a How were qualifying patients and primary caregivers to legally

obtain the seeds necessary to grow their initial crop?a The law required plants to be grown in an enclosed, locked

facility. What did that mean?- The state would create a list of people issued cards as qualify-

ing patients or primary caregivers. Would Iocal municipalitieshave access to that information?

a To what extent were Iocal ordinances preempted under theIaw?

Home OccupationAs communities came to grips with the MMMA, a general con-

sensus appeared to grow that local regulation of the qualifyingpatient was preempted by the law. A qualifying patient's right togrow and consume marihuana in their home seemed beyond thescope of local regulation. But what about the primary care giver?Although the MMMA stated that primary caregivers were allowedto be compensated for the cost associated with assisting a quali-fying patient, it also specified that'Any such compensation shallnot constitute the sale of controlled substances."

At the same time, the growing of medical marihuana appearedto be a commercial operation. So the initial response 6y manycommunities to this issue was to regulate primary caregivers ashome occupations. A prominent example was the City of GrandRapids, where the city's existing home occupation provisions inits zoning ordinance was amended to specifically allow the opera-tion of a primary caregiver. The provisions included limiting theuse to one primary caregiver per residence, Iocation in the "mainbuilding" (presumably the residence vs. a garage or other acces-

About the Author

D oug Piggott is a Senior Planner and Associate with ROWEProfessional Services Company in Flint Michigan. Hehas worked as a regional and county planner and municipalconsultant with local communities for 35 years, the last 32 inMichigan. He can be reached at dpiqqott@rowepsc.com; and8-10-341-7500.

sory building) and compliance with local codes related to building,electrical and other issues. The ordinance also required such ause to be located at Ieast 1,000 feet"from any school includingchild care or day care facilities," to ensure compliance with Fed-eral "Drug-Free School Zone" requirements. The city's regulation,also required the operation to obtain a Home Occupation - ClassB business Iicense, which was reviewed and renewed annually.

Some Michigan communities seriously considered this ap-proach to regulate primary caregivers, although it raised someissues. One was that many residents were uncomfortable withallowing these operations in their neighborhoods, due to con-cerns over such businesses attracting illegal activities. In addi-tion, many communities' existing home occupation provisions re-quired home occupations to get special land use approval, whichin turned required a public hearing, with notices in the paper andto surrounding properties. Primary caregivers objectea to theserequirements because they felt it made their residences vulner-able to criminals Iooking to steal the marihuana.

The Proliferation of Various Types of FacilitiesAs registration cards began to be issued following the adop-

tion of state administrative rules that took effect in April 2009,Iocal communities began to learn of operations that vtere not spe-cifically authorized under the MMMA. I remember hearing radioads about that time offering courses on how to make "hundredsof thousands of dollars" in the medical marihuana business, andthinking"what kind of businesses were they talking about?"

Grow shops - These establishments generally provide the ma-terials needed to grow medical marihuana, particularly indoors.They offer "grow lamps," containers, grow media, timers, waterpumps and other products. Although most identify their servicesas hydroponic shops serving the needs of indoor gardeners of alltypes, these operations proliferated as the number of qualifyingpatients and primary caregivers in the state grew. Commun!tiesrecognized that while some of these businesses directly associ-ated their operations with medical marihuana, through their nameor Iogo, the businesses vtere selling Iegal products and should betreated the same as any retail establishment

Compassion care clubs - Compassion care clubs began ap-pearing around the state almost as soon as the MMMA went intoeffect. They were designed to help address many of the holesthat existed in the medical marihuana "program" provided in thelaw and the administrative rules for the program adopted by thestate. The clubs are generally non-profit organizations designedto support qualifying patients and primary caregivers. They as-sisted potential qualifying patients with ptiysicians who might beable to diagnose their condition as one that met the definirion of"debilitating medical condition" in the act. They assisted qualifyingpatients that chose not to grow their own medical marihuana infinding primary caregivers that would grow it for them. They pro-vided information on the growing and processing of marihuana.And they educated qualifying patients and primary caregivers ontheir rights under the MMMA and the on-going -series of Iaws,court decisions and other determinations that could affect them.

Some communities would recognize these as Iegitimate activitiesof a "club" and would generally agree to regulate them under zon-ing regulations for that use.

More controversially, many of the clubs used their facilities forthe transfer of marihuana from caregiver to patient, and for con-sumption of the marihuana on the premises. Because these areprivate establishments, there is no way for a community or law en-forcement to verify that such "transfers" are occurring in compli-

Planning & Zoning News@/September 201 6 9

ance with the MMMA or that they were not operating as non-profitdispensaries. Smoking marihuana in"any public place" is explic-itly prohibited in the MMMA (Section 7 (b) (3) (B)) but becausethese are private clubs, the case was made that club memberswere permitted to "light-up" at their "club." But communities wereconcerned that allowing smoking in the clubs was not within theintent of the Iaw.

? - Another type of establishment that appeared in theearly days of the MMMA were for profit operations that providedthe same type of services as the compassionate care clubs, butfor a fee. Communities could regulate these facilities as profes-sional offices or medical clinics depending on the range of ser-vices provided, although they raised the same issues as compas-sionate care clubs.

Cooperative qrow facilities - Shortly after the adoption of theadministrative rules regarding medical marihuana in April 2009,I received a call from a young man convinced that the law pro-vided an opportunity both for a new business opportunity and away to reuse some of the vacant industrial buildings in his com-munity. He was proposing a cooperative grow operation in whichmultiple caregivers and qualifying patients would pay the facil-ity to grow their medical marihuana. I explained that I thoughtsuch an operation was beyond the scope of the MMMA. He couldnot understand how the Iaw could not permit such a simple andstraightforward approach to producing medical marihuana. Hewas not alone. In the coming months, many of our client commu-nities received similar proposals for facilities under which primarycaregivers and qualifying patients "contracted ouf"the growing oftheir "medicine."

Dispensaries - The most visible new use appearing in the wakeof adoption of the MMMA was the dispensary, a facility that soldmedical marihuana to primary caregivers or to qualifying patients.Many operated using a "consignment shop" model. A primarycaregiver who grew more marihuana then they needed or a pri-mary caregiver who grew more than their patient needed wouldlease a Iocker at the facility to store the excess marihuana. Anoth-er primary caregiver or qualifying patient could then come to thedispensary and select the Iocker from which they wished to pur-chase the marihuana. The dispensary employee would retrievethe marihuana from that locker, replacing it with the payment fromthe purchaser (minus the dispensary's share). The dispensarymade money both from the Ieasing of the Iockers and their por-tion of the sale price. Another approach proposed was for severalprimary caregivers to join together to cooperatively serve theirrespective patients.

I was continually surprised by the conversations I had with in-dividuals proposing dispensaries and cooperative grow facilities.When I asked them why they thought such facilities were legal,they would simply point to other existing facilities in the state andsay, "They are allowed there, why not here?" And while manywould discuss the need to provide these facilities for the qualify-ing patients, others were much more direct. One individual pro-posing a facility told me, 'A friend of mine asked me to go in withhim on a ce// phone store a few years ago. / said'no' and now heowns five stores and is making all kinds of money. / told myself,the next new thing that came up / was going to go for it."

Other proponents of dispensaries and cooperative grow facili-ties would often address the issue of how they were Iegal with oneof two responses:aThey do it in California!-It's allowed under the MMMA as a medical use of marihuana.

The presumption that anything that was permitted in Califor-nia was also permitted in Michigan was based on the mistakenperception that the laws in the two states were the same or verysimilar. While there are many similarities between the two state'sIaws, there were two important differences. As noted previously,the MMMA specifically limits primary caregivers to five patients,while the California law placed no such Iimitation. In addition, theCalifornia Iaw specifically allowed cooperatives, while there wasno such authorization in the MMMA. So the 100+ dispensaries

in California in 2008 and their associated grow operations had abasis for their operation that was lacking in Michigan.

The other argument made by proponents of these facilities notspecifically called for in the MMMA involved the interpretation ofthe act. Section 3 (e) defines"medicaI use of marihuana" as"theacquisition, possession, cultivation, manufacture, use, internalpossession, delivery, transfet, or transportation of marihuana orparaphernalia relating to the administration of marihuana to treator alleviate a registered qualifying patient's debilitating medicalcondition or symptoms associated with the debilitating medicalcondition." In addition, Section 8 of the act allows for AffirmativeDefense and Dismissal for Medical Marihuana, specifying that"Except as provided in section 7, a patient and a patient's primarycaregiver, if any, may assert the medical purpose for using mari-huana as a defense to any prosecution involving marihuana, andthis defense shall be presumed valid where the evidence showsthat..." Proponents argued that operators of these various fa-cilities were immune from prosecution for violations of Iocal ordi-nances, including zoning ordinances, as long as they could provethat their operation constituted a valid medical use of marihuana.This argument served as the basis for several court cases.

To some extent these various facilities were a response to is-sues not adequately addressed in the MMMA. Among those isthat there is a delay between the time the qualifying patient or pri-mary caregiver is allowed to grow the plant and the point at whichuseable marihuana can be harvested. For a qualifyirig patientwith a chronic condition with other medical treatments this mightbe an inconvenience, but for a patient suffering from a severeand/or terminal illness who needs the medical marihuana now,the delay could be much more serious. The other potential issueis a poor "harvest" resulting in an insufficient amount of the medi-cal marihuana for the patient. Proponents of dispensaries andcooperative grow facilities point to them as a necessary "safetynet" to address these issues.

Give Us Some Direction!Local communities soon turned to the state to ask for help in

determining what they could and could not do. There vtere fourpotential sources of direction:

The State Department of Community Health was identified asthe administrative agency in the MMMA, However the responsibil-ities of the department were clearly defined as promulgating ruleson how the department was to consider the addition of medicalconditions or treatments to the Iist of debilitating medical condi-tions listed in the act and the procedure for review and approvalof requests for registry identification cards for qualifying patientsand primary caregivers. In addition, the department was identi-fied as the body responsible for issuance (and revocation) of thecards and maintenance of a confidential Iist of card holders. Thedepartment viewed its role as prescribed by these responsibilitiesand although it publicly stated that it did not believe dispensarieswere authorized under the MMMA, it did not see its role as thestate's "cop" in determining whether or not specific operationswere allowed under the act.

The state Iegislature was also Iooked upon as a source of clari-fication of the Iaw. The difficulty here was that the original law wasinitiated by petition. It was not drafted or approved by the Iegis-Iature. They were being asked to fix a Iaw they did not write, andbecause it was an initiated Iaw it could only be amended by a %vote of both houses. In addition, the Iegislature appeared hesitantto modify a law that had been approved by 63% of the voters inthe 2008 election. Initial legislative fixes did not appear to directlyclarify the type of facilities that were allowed under the act.

The Michigan Attorney General was another potential source ofclarification. However, during the first two years of the Iaws imple-mentation the AG issued only one opinion, that dealing with theState Department of Community Health's ability to hire an outsidecontractor to assist in the administration of the Medical MarihuanaProgram.

That left it to the courts. Cases seemed to be initiated almostimmediately on various issues related to local enforcement of the

to Planning & Zoning News@/September 201 6

law and what its provision meant. However, it took time for casesto make their way through the court system to the state Court ofAppeals and the Michigan Supreme Court.

Moratorium

As confusion continued to reign in Iocal communities over whatthey could and what they should do, they continued to receiverequests for approval of various type of facilities or saw these es-tablishments simply pop up, without any previous approval. Somemunicipalities took the approach that if the state was not going totell them these facilities were prohibited, they would allow them, insome cases due to concerns that to attempt to block them mightexpose them to Iegal Iiability. But a Iarge number of municipalitieschose to adopt moratoriums.

Generally, moratoriums are adopted to provide a communitywith "breathing room" while they attempt to address an issue. Anexample would be a moratorium on building permits to providethe Iocal jurisdiction with the time needed to prepare an ordinanceor conduct a study. The key is that the community controls theIength of time they need to figure out the appropriate course ofaction. In this case communities were adopting moratoriums ofmedical marihuana facilities until the state"figured it out." I recallmany discussions with Iocal elected official and their anger at theposition they felt the Iaw and the initial response to it by "the state"put them and their residents in. Many of them seemed to take asmall bit of satisfaction in using the moratorium discussions to lettheir residents know who, in their opinion, had put them in this fix.

Prohibiting Illegal UsesJust as the move towards adoption of moratoriums began to

gather momentum, another potential approach began to be con-sidered by municipalities throughout the state. This approach wasbased on the fact that the MMMA did not legalize the medical useof marihuana, it simply granted a person immunity from prosecu-tion under state or local Iaws and ordinances. The growing, trans-fer and consumption was (and is) still illegal under federal law.So communities began adopting a provision in their Iocal zoningordinance that prohibited any use that was prohibited under stateor federal Iaw. Many communities have Iong had that provisionin their zoning ordinance. Since any use involving the growing,transfer or consumption of marihuana would violate federal Iaw, itwould be prohibited under the zoning ordinance. The amendmentwas generally one or two Iines in the general provisions section ofthe zoning ordinance.

Concerns were raised over the use of this approach, particu-larly if it vtere strictly enforced. Technically it would not only pro-hibit many of the facilities that were of concern to the commu-nities but it would also prohibit primary caregivers and qualifiedpatients from operating within the scope of the MMMA. None ofthe communities I spoke with that considered adopting this typeof amendment seemed to intend to enforce their ordinance to pro-hibit qualifying patients or primary caregivers, but the ordinancelanguage would imply that they could.

That approach was closed to municipalities by the Ter Beek vthe City of Wyoming Court of Appeals case issued in July 2012(297 Mich App 446). In the Ter Beek case the courts ruled thatthe approach was preempted under the MMMA because it would"prohibit conduct permitted by the Michigan Medical MarihuanaAct." The Court further ruled that the MMMA was not in turn pre-empted by the federal Controlled Substances Act (CSA), becausethe MMMA did not presume to legalize medical marihuana, butsimply protected individuals from prosecution under state and lo-cal laws and ordinances. The Michigan Supreme Court affirmedthis decision in February 20"l4.

In the face of the Ter Beek case, many communities repealedtheir amendment and re-established their moratorium.

Finally, Some Direction!Two decisions, one in 2011 and the other early in 2013 helped

to provide clarity to communities. In 2011 the Attorney Generalissued an opinion that the MMMA "prohibits the joint cooperative

cultivation or sharing of marihuana plants because each patient'splants must be grown and maintained in a separate enclosed,locked facility that is only accessible to the registered patient orthe patient's registered primary caregiver"

Then on February 8, 2013 the Michigan Supreme Court ruledin the case of the State of Michigan v McQueen (493 Mich 135).The Court ruled that the dispensary operation using the consign-ment model did not constitute the medical use of marihuana and

was not protected under the MMMA. In other words, they were il-Iegal operations that did not have to be permitted in any Michiganmunicipality.

These two decisions provided support for communities thatwished to prohibit cooperative grow operations and dispensaries.The major focus of many of our clients now returned to how toregulate primary caregivers.

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Allowing Commercial UsesBy May 2013 there were 26,875 primary caregivers registered

with the State of Michigan. Communities were concerned aboutthe growth of these facilities within their communities and waysto regulate them. As noted earlier, some communities had con-cerns with a "home occupation" approach to their regulation. Withthe decisions by the AG and State Supreme Court, the concernwith large scale commercial operations faded. Why not restrictprimary caregivers in commercial zoning districts? Because suchoperations would be limited to serving five patients, there wouldbe no need for their operators to adopt a high profile, and thisapproach would keep them out of residential districts. This con-tinues to be a popular option for communities we work with inaddressing primary caregivers.

It's Not a Dispensary, It's a Provisioning CenterFive days after the Supreme Court's decision in State of Mich-

igan v McQueen, House Bill 4271, The Medical Marihuana Pro-visioning Center Regulation Act was introduced in the MichiganIegislature. The bill would have allowed for the establishment of"provisioning centers." Under the proposed Iaw these facilitieswould be allowed to purchase or sell medical marihuana from orto primary caregivers, patients or other provisioning centers andto grow medical marihuana, without prosecution under state orIocal ordinance. The bill would also allow for safety compliancefacilities to grow and test medical marihuana. However, the billspecifically permitted municipalities to prohibit provisioning cen-ters and safety compliance facilities in their jurisdictions.

In December 2013, the bill cleared the House of Representa-tives by a vote of 95 to 14 and went to the Senate. With that vote,the proponents of commercial transactions of medical marihuanawere back. Numerous communities began to receive calls fromindividuals wanting to know if they were going to allow provision-ing centers and safety compliance facilities. It seemed as thoughthe passage of the bill was a forgone conclusion. At least one of

Planning & Zoning News@/September 201 6 11

ourclientsmovedaheadwithadoptionofanordinanceandbegan processanddistributemedicalmarihuana.Individualqualifyinglicensing provisioning centers in ariticipation of the passage of HB patients may still grow their own plants and primary caregivers4271 .

Then the bill stalled in the Senate. At the end of December,2014 an effort to get the bill out of committee and on to the floorfor a vote failed and with the expiration of the Iegislative sessionthe bill died.

In February 2015, the bill was re-introduced as HB 4209. Asmodified duririg its journey through the Iegislature its name waschanged to the Medical Marihuana Facilities Licensing Act andits scope was revised to address separate provisioning centers,grow facilities, testing Iabs, processing facilities and secure trans-port operations, rather than regulating all of the uses under theterm "provisioning center."

Despite House Bill 4271's defeat in 2014, medical marihuanaproponents continued to be confident that the bill's adoption wasa matter of time and continued to approach local communitiesabout permitting provisioning centers. An element of urgency wasadded when rumors spread that a Iimit on the number of facilitieswould be included in the bill with a first come first serve approachto be adopted in issuing the Iicenses. One of our communitieswas approached by a supporter of the legislation with a draft med-ical marihuana facilities ordinance for them to adopt, even thoughthe bill was still sitting in the Senate after having been overwhelm-ingly approved by the House in 2015. Another community whichhad adopted an ordinance Iimiting primary caregiver operations totheir commercial districts was approached by a caregiver wishingapproval for use of a commercial storefront. The applicant freelyadmitted that they could not make a profit serving s patients out ofthe facility but hoped to be "first jn ljne" for a state license once theMedical Marihuana Facilities Licensing Act was adopted.

may still grow plants for up to five patients. Questions for Iocalcommunities include: will primary caregivers choose to do so orwill they rely on the provisioning centers for their medical mari-huana? Or will primary caregivers simply supplement the medi-cal marihuana they grow with marihuana they can purchase at aprovisioning center?

An important element of the new Iaw is the requirement that fa-cilities cannot be licensed in a municipality unless the municipalityhas adopted an ordinance allowing for that facility. And munici-palities may choose to permit some but not all types of facilities intheir community, so they might allow secure transport, processingand testing facilities, but not allow provisioning or growing facili-ties. Another important element is the financial incentive providedto communities hosting a facility, Municipalitaies are allowed toIevy a fee of up to $5,000 annually for each facility, and share in3% tax Ievied on the gross receipts of the Iicensed provisioningcenters in the state.

On a side note, the Iaw did not set a limit on the number offacilities that could be granted a Iicense and in fact Section 302(d) of the Medical Marihuana Facilities Licensing Act specificallyprohibits the Department of Licensing and Regulatory Affairs fromadopting rules that establish a limit.

So communities throughout the state have a new set of ques-tions to ariswer regarding medical marihuana. Do they allow oneor more types of facilities? If so, which ones? What provisionsdo they include in their local regulations? This is Ieft fairly open-ended in the act with the proviso that Iocal regulations cannotinclude rules that conflict with state Iicensing requirements or thataddress the purity or pricing of marihuana. The scope of the statelicensing regulations as outlined in Section 206 deal primarily withoperational issues such as irisurance, chain of custody, labelingand packaging, storage and advertising.

As with all other aspects of local medical marihuana, the extentof local regulation of medical marihuana facilities under PA 281will probably take time to work out. It appears clear that Iocali-ties may identify the zoning districts that various types of facilities

may be Iocated in as well as setbacks

JF and buffering they may require. Sepa-ration distances from other uses suchas schools and daycare facilities donot appear to be excluded. Some op-:':- -,j.%i.lllB. erational issues that do not appear tobe part of the scope of the Iicensing!L ffi regulations such as hours of operationmay be allowed.I assume many communities will

:-? H view these new laws as an improve-ment over the current medical mari-huana structure. It helps to address.3, many of the concerns of qualifying"'?

patients over access to medical mari-iil'ilin'l-lJ*lW i'!-.ilQilii ? huana. If most qualifying patients andl mll=-:mi?l"'Illl'l"li primary caregivers abandon growingplants themselves, it could significant-11, flMr'!,.? o l§'-lJ'l' jll ly reduce the number of grow and dis-tribution facilities that the communityneeds to keep track of. And the new

seed to sale tracking system required.'d for all of the facilities will help to ad-

d dress concerns over diversion of mari-?r -??a?" ? -AW- - .. ? -f -. . ?' l al# 7*,l-'w? huana for non-medical purposes.7? 7?In any case, l suspect communitiesM ?1N?-? ?. ? ? 'ffi' will continue on this wild ride for atIeast a few more years. Q

Medical Marihuana Part 2?On September 21, 2016 the Governor signed PA 281 (formerly

HB 4209), the Medical Marihuana Facilities Licensing Act, alongwith two companion bills. These bills do not replace the MMMAbut create an additional regulatory structure for facilities to grow,

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