HB-4209, As Passed House, October 7, 2015

 

 

 

 

 

 

 

 

 

 

 

SUBSTITUTE FOR

 

HOUSE BILL NO. 4209

 

 

 

 

 

 

 

 

 

 

 

 

 

A bill to license and regulate medical marihuana growers,

 

processors, provisioning centers, secure transporters, and safety

 

compliance facilities; to provide for the powers and duties of

 

certain state and local governmental officers and entities; to

 

create a medical marihuana licensing board; to create an advisory

 

panel; to provide immunity from prosecution for marihuana-related

 

offenses for persons engaging in marihuana-related activities in

 

compliance with this act; to prescribe civil fines and sanctions

 

and provide remedies; to provide for taxes, fees, and assessments;

 

to make an appropriation; and to require the promulgation of rules.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

PART 1. GENERAL PROVISIONS

 

Sec. 101. This act shall be known and may be cited as the

 


"medical marihuana facilities licensing act".

 

Sec. 102. As used in this act:

 

(a) "Advisory panel" or "panel" means the marihuana advisory

 

panel created in section 801.

 

(b) "Affiliate" means any person that controls, is controlled

 

by, or is under common control with; is in a partnership or joint

 

venture relationship with; or is a co-shareholder of a corporation,

 

a co-member of a limited liability company, or a co-partner in a

 

limited liability partnership with a licensee or applicant.

 

(c) "Applicant" means a person who applies for a state

 

operating license. With respect to disclosures in an application,

 

or for purposes of ineligibility for a license under section

 

402(2), the term applicant includes an officer, director, or

 

managerial employee of the applicant or a person who holds a

 

greater than 1% direct or indirect ownership interest in the

 

applicant.

 

(d) "Board" means the medical marihuana licensing board

 

created in section 301.

 

(e) "Department" means the department of licensing and

 

regulatory affairs.

 

(f) "Grower" means a licensee that is a commercial entity

 

located in this state that cultivates, dries, trims, or cures and

 

packages marihuana for sale to a processor or provisioning center.

 

(g) "Licensee" means a person holding a state operating

 

license.

 

(h) "Marihuana" means that term as defined in section 7106 of

 

the public health code, 1978 PA 368, MCL 333.7106.

 


(i) "Marihuana facility" means a location from which any of

 

the following license holders operate:

 

(i) A grower.

 

(ii) A processor.

 

(iii) A secure transporter.

 

(iv) A provisioning center.

 

(v) A safety compliance facility.

 

(j) "Marihuana-infused product" means a topical formulation,

 

tincture, beverage, edible substance, or similar product containing

 

marihuana that is intended for human consumption in a manner other

 

than smoke inhalation.

 

(k) "Michigan medical marihuana act" means the Michigan

 

medical marihuana act, 2008 IL 1, MCL 333.26421 to 333.26430.

 

(l) "Municipality" means a city, township, or village.

 

(m) "Paraphernalia" means any equipment, product, or material

 

of any kind that is designed for or used in growing, cultivating,

 

producing, manufacturing, compounding, converting, storing,

 

processing, preparing, transporting, injecting, smoking, ingesting,

 

inhaling, or otherwise introducing into the human body, marihuana.

 

(n) "Person" means an individual, corporation, limited

 

liability company, partnership, limited partnership, limited

 

liability partnership, limited liability limited partnership,

 

trust, or other legal entity.

 

(o) "Processor" means a licensee that is a commercial entity

 

located in this state that purchases marihuana from a grower and

 

that extracts resin from the marihuana or creates a marihuana-

 

infused product for sale and transfer in packaged form to a

 


provisioning center.

 

(p) "Provisioning center" means a licensee that is a

 

commercial entity located in this state that purchases marihuana

 

from a grower or processor and sells, supplies, or provides

 

marihuana to registered qualifying patients, directly or through

 

the patients' registered primary caregivers. Provisioning center

 

includes any commercial property where marihuana is sold at retail

 

to registered qualifying patients or registered primary caregivers.

 

A noncommercial location used by a primary caregiver to assist a

 

qualifying patient connected to the caregiver through the

 

department's marihuana registration process in accordance with the

 

Michigan medical marihuana act is not a provisioning center for

 

purposes of this act.

 

(q) "Registered primary caregiver" means a primary caregiver

 

who has been issued a current registry identification card under

 

the Michigan medical marihuana act.

 

(r) "Registered qualifying patient" means a qualifying patient

 

who has been issued a current registry identification card under

 

the Michigan medical marihuana act or a visiting qualifying patient

 

as that term is defined in section 3 of the Michigan medical

 

marihuana act, MCL 333.26423.

 

(s) "Registry identification card" means that term as defined

 

in section 3 of the Michigan medical marihuana act, MCL 333.26423.

 

(t) "Rules" means rules promulgated under the administrative

 

procedures act of 1969, 1969 PA 306, MCL 24.201 to 24.328, by the

 

department in consultation with the board to implement this act.

 

(u) "Safety compliance facility" means a licensee that is a

 


commercial entity that receives marihuana from a marihuana facility

 

or a registered qualifying patient or a registered primary

 

caregiver, tests it for contaminants and for tetrahydrocannabinol

 

and other cannabinoids, and returns it to the marihuana facility or

 

a registered qualifying patient or registered primary caregiver

 

with the test results.

 

(v) "Secure transporter" means a licensee that is a commercial

 

entity located in this state that stores marihuana and transports

 

marihuana between marihuana facilities for a fee.

 

(w) "State operating license" or, unless the context requires

 

a different meaning, "license" means a license that is issued under

 

this act that, except for a secure transporter authorized for

 

mobile operations at multiple sites, allows the licensee to operate

 

at a single site as any of the following, specified in the license:

 

(i) A grower.

 

(ii) A processor.

 

(iii) A secure transporter.

 

(iv) A provisioning center.

 

(v) A safety compliance facility.

 

PART 2. APPLICATION OF OTHER LAWS

 

Sec. 201. (1) Except as otherwise provided in this act, if a

 

person has been granted a state operating license and is operating

 

within the scope of the license, the licensee and its agents are

 

not subject to any of the following for engaging in activities

 

described in subsection (2):

 

(a) Criminal penalties under state law or local ordinances

 

regulating marihuana.

 


(b) State or local criminal prosecution for a marihuana-

 

related offense.

 

(c) State or local civil prosecution for a marihuana-related

 

offense.

 

(d) Search or inspection, except for an inspection authorized

 

under this act by law enforcement officers, the municipality, or

 

the department.

 

(e) Seizure of marihuana, real property, personal property, or

 

any thing of value based on a marihuana-related offense.

 

(f) Any sanction, including disciplinary action or denial of a

 

right or privilege, by a business or occupational or professional

 

licensing board or bureau based on a marihuana-related offense.

 

(2) The following activities are protected under subsection

 

(1) if performed under a state operating license within the scope

 

of that license and in accord with this act, rules, and any

 

ordinance adopted under section 205:

 

(a) Growing marihuana.

 

(b) Purchasing, receiving, selling, transporting, or

 

transferring marihuana from or to a licensee, a licensee's agent, a

 

registered qualifying patient, or a registered primary caregiver.

 

(c) Possessing marihuana.

 

(d) Possessing or manufacturing marihuana paraphernalia for

 

medical use.

 

(e) Processing marihuana.

 

(f) Transporting marihuana.

 

(g) Testing, transferring, infusing, extracting, altering, or

 

studying marihuana.

 


(h) Receiving or providing compensation for products or

 

services.

 

(3) Except as otherwise provided in this act, a person who

 

owns or leases real property upon which a licensed facility is

 

located and who has no knowledge that the licensee violated this

 

act is not subject to any of the following for owning, leasing, or

 

permitting the operation of a licensed facility on the real

 

property:

 

(a) Criminal penalties under state law or local ordinances

 

regulating marihuana.

 

(b) State or local civil prosecution based on a marihuana-

 

related offense.

 

(c) State or local criminal prosecution based on a marihuana-

 

related offense.

 

(d) Search or inspection, except for an inspection authorized

 

under this act by law enforcement officers, the municipality, or

 

the department.

 

(e) Seizure of any real or personal property or any thing of

 

value based on a marihuana-related offense.

 

(f) Any sanction, including disciplinary action or denial of a

 

right or privilege, by a business or occupational or professional

 

licensing board or bureau.

 

(4) Any other state law that is inconsistent with this act

 

does not apply to a marihuana facility operating in compliance with

 

this act.

 

Sec. 203. A registered qualifying patient or registered

 

primary caregiver is not subject to criminal prosecution or

 


sanctions for purchasing marihuana from a provisioning center if

 

the quantity purchased is within the limits established under the

 

Michigan medical marihuana act.

 

Sec. 204. This act does not limit the medical purpose defense

 

provided in section 8 of the Michigan medical marihuana act, 2008

 

IL 1, MCL 333.26428, to any prosecution involving marihuana.

 

Sec. 205. A municipality may adopt an ordinance to authorize 1

 

or more types of marihuana facilities within its boundaries and to

 

limit the number of each type of marihuana facility. A marihuana

 

facility shall not be licensed unless the municipality in which the

 

marihuana facility is located has adopted an authorizing ordinance.

 

The ordinance may establish an annual, nonrefundable licensing fee

 

of not more than $5,000.00 to help defray administrative and

 

enforcement costs associated with the operation of a marihuana

 

facility in the municipality. A municipality may adopt other

 

ordinances relating to marihuana facilities within its

 

jurisdiction, including zoning regulations, but shall not impose

 

regulations that would interfere or conflict with uniform statewide

 

regulation of licensees. A municipality must approve an applicant

 

for a new state operating license within its boundaries before the

 

board may consider the application. Information obtained by a

 

municipality from an applicant under this section is exempt from

 

disclosure under the freedom of information act, 1976 PA 442, MCL

 

15.231 to 15.246.

 

Sec. 206. The department, in consultation with the board,

 

shall promulgate rules and emergency rules as necessary to

 

implement, administer, and enforce this act. The rules shall ensure

 


the safety, security, and integrity of the operation of marihuana

 

facilities, and shall include, but are not limited to, rules to do

 

the following:

 

(a) Set appropriate standards for marihuana facilities and

 

associated equipment.

 

(b) Establish minimum levels of insurance that licensees must

 

maintain.

 

(c) Establish operating regulations for each category of

 

license to ensure the health, safety, and security of the public

 

and the integrity of marihuana facility operations.

 

(d) Establish qualifications and restrictions for persons

 

participating in or involved with operating marihuana facilities.

 

(e) Establish testing standards, procedures, and requirements

 

for marihuana sold through provisioning centers.

 

(f) Provide for the levy and collection of fines for a

 

violation of this act or rules.

 

(g) Prescribe use of a statewide database to track all

 

marihuana transfers, as provided in the marihuana tracking act.

 

(h) Establish quality control standards, procedures, and

 

requirements for marihuana facilities.

 

(i) Establish chain of custody standards, procedures, and

 

requirements for marihuana facilities.

 

(j) Establish standards, procedures, and requirements for

 

waste product disposal and storage by marihuana facilities.

 

(k) Establish chemical storage standards, procedures, and

 

requirements for marihuana facilities.

 

(l) Establish standards, procedures, and requirements for

 


House Bill No. 4209 as amended October 7, 2015

securely and safely transporting marihuana between marihuana

 

facilities.

 

(m) Establish standards, procedures, and requirements for the

 

storage of marihuana by marihuana facilities.

 

(n) Establish labeling and packaging standards, procedures,

 

and requirements for marihuana sold or transferred through

 

provisioning centers, including a prohibition on labeling or

 

packaging that is intended to appeal to or has the effect of

 

appealing to minors.

 

(o) Establish daily purchasing limits at provisioning centers

 

for registered qualifying patients and registered primary

 

caregivers to ensure compliance with the Michigan medical marihuana

 

act.

 

(p) Establish marketing and advertising restrictions for

 

marihuana products and marihuana facilities.

 

(q) Establish maximum tetrahydrocannabinol levels for

 

marihuana-infused products sold or transferred through provisioning

 

centers.

[(r) Establish restrictions on edible marihuana-infused products to prohibit shapes that would appeal to minors.]

PART 3. MEDICAL MARIHUANA LICENSING BOARD

 

Sec. 301. (1) The medical marihuana licensing board is created

 

within the department of licensing and regulatory affairs.

 

(2) The board consists of 5 members who are residents of this

 

state, not more than 3 of whom are members of the same political

 

party. The governor shall appoint the members. One of the members

 

shall be appointed from 3 nominees submitted by the senate majority

 

leader and 1 from 3 nominees submitted by the speaker of the house.

 

The governor shall designate 1 of the members as chairperson.

 


(3) The members shall be appointed for terms of 4 years,

 

except, of those who are first appointed, 1 member shall be

 

appointed for a term of 2 years and 2 members shall be appointed

 

for a term of 3 years. A member's term expires on December 31 of

 

the last year of the member's term. If a vacancy occurs, the

 

governor shall appoint a successor to fill the unexpired term in

 

the manner of the original appointment.

 

(4) Each member of the board shall be reimbursed for all

 

actual and necessary expenses and disbursements incurred in

 

carrying out official duties.

 

(5) A board member shall not hold any other public office for

 

which he or she receives compensation other than necessary travel

 

or other incidental expenses.

 

(6) A person who is not of good moral character or who has

 

been indicted for, charged with, or convicted of, pled guilty or

 

nolo contendere to, or forfeited bail concerning any felony or a

 

misdemeanor involving a controlled substance violation, theft,

 

dishonesty, or fraud under the laws of this state, any other state,

 

or the United States or a local ordinance in any state involving a

 

controlled substance violation, dishonesty, theft, or fraud that

 

substantially corresponds to a misdemeanor in that state is not

 

eligible to serve on the board.

 

(7) The governor may remove any member of the board for

 

neglect of duty, misfeasance, malfeasance, nonfeasance, or any

 

other just cause.

 

(8) The department in conjunction with the board shall employ

 

an executive director and other personnel as necessary to assist

 


the board in carrying out its duties. The executive director shall

 

devote his or her full time to the duties of the office and shall

 

not hold any other office or employment.

 

(9) The board shall not appoint or employ an individual if any

 

of the following circumstances exist:

 

(a) During the 3 years immediately preceding appointment or

 

employment, the individual held any direct or indirect interest in,

 

or was employed by, a person who is licensed to operate under this

 

act or under a corresponding license in another jurisdiction or a

 

person with an application for an operating license pending before

 

the board or in any other jurisdiction. The board shall not employ

 

an individual if his or her interest in a licensee or marihuana

 

facility constitutes a controlling interest in that licensee or

 

facility. However, an individual may be employed if his or her

 

interest in any licensee or marihuana facility is not a controlling

 

interest and would not, in the opinion of the board, interfere with

 

the objective discharge of the individual's employment obligations.

 

(b) The individual or his or her spouse, parent, child,

 

child's spouse, sibling, or spouse of a sibling has an application

 

for a license pending before the board or is a member of the board

 

of directors of, or an individual financially interested in, any

 

licensee or marihuana facility.

 

(10) Each member of the board, the executive director, and

 

each key employee as determined by the department shall file with

 

the governor a financial disclosure statement listing all assets

 

and liabilities, property and business interests, and sources of

 

income of the member, executive director, and key employee and his

 


or her spouse, if any, affirming that the member, executive

 

director, and key employee are in compliance with subsection (9)(a)

 

and (b). The financial disclosure statement shall be made under

 

oath and filed at the time of employment and annually thereafter.

 

(11) Each employee of the board shall file with the board a

 

financial disclosure statement listing all assets and liabilities,

 

property and business interests, and sources of income of the

 

employee and his or her spouse. This subsection does not apply to

 

the executive director or a key employee.

 

(12) A member of the board, executive director, or key

 

employee shall not hold any direct or indirect interest in, be

 

employed by, or enter into a contract for services with an

 

applicant, a board licensee, or a marihuana facility for a period

 

of 4 years after the date his or her employment or membership on

 

the board terminates. The department in consultation with the board

 

shall define the term "direct or indirect interest" by rule.

 

(13) For 2 years after the date his or her employment with the

 

board is terminated, an employee of the board shall not acquire any

 

direct or indirect interest in, be employed by, or enter into a

 

contract for services with any applicant, licensee, or marihuana

 

facility.

 

(14) For 2 years after the termination of his or her office or

 

employment with the board, a board member or an individual employed

 

by the board shall not represent any person or party other than

 

this state before or against the board.

 

(15) A business entity in which a former board member or

 

employee or agent has an interest, or any partner, officer, or

 


employee of the business entity, shall not make any appearance or

 

represent a party that the former member, employee, or agent is

 

prohibited from appearing for or representing. As used in this

 

subsection, "business entity" means a corporation, limited

 

liability company, partnership, limited liability partnership,

 

association, trust, or other form of legal entity.

 

Sec. 302. The board has general responsibility for

 

implementing this act. The board has the powers and duties

 

specified in this act and all other powers necessary and proper to

 

fully and effectively implement and administer this act for the

 

purpose of licensing, regulating, and enforcing the licensing and

 

regulation system established under this act for marihuana growth,

 

processing, testing, and transporting. The board is subject to the

 

administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to

 

24.328. The board's duties include, but are not limited to, all of

 

the following:

 

(a) Granting or denying each application for a state operating

 

license within a reasonable time.

 

(b) Deciding all license applications in reasonable order.

 

(c) Conducting its public meetings in compliance with the open

 

meetings act, 1976 PA 267, MCL 15.231 to 15.246.

 

(d) Consulting with the department in promulgating rules and

 

emergency rules as necessary to implement, administer, and enforce

 

this act.

 

(e) Implementing and collecting the application fee described

 

in section 401 and, in conjunction with the department of treasury,

 

the tax described in section 601 and regulatory assessment

 


described in section 603.

 

(f) Providing for the levy and collection of fines for a

 

violation of this act or rules.

 

(g) Providing oversight of a marihuana facility through the

 

board's inspectors, agents, and auditors and through the state

 

police or attorney general for the purpose of certifying the

 

revenue, receiving complaints from the public, or conducting

 

investigations into the operation of the marihuana facility as the

 

board considers necessary and proper to ensure compliance with this

 

act and rules and to protect and promote the overall safety,

 

security, and integrity of the operation of a marihuana facility.

 

(h) Reviewing and ruling on any complaint by a licensee

 

regarding any investigative procedures of this state that are

 

believed to be unnecessarily disruptive of marihuana facility

 

operations. The need to inspect and investigate is presumed at all

 

times. The board may delegate authority to hear, review, or rule on

 

licensee complaints to a subcommittee of the board. To prevail on

 

the complaint, a licensee must establish by a preponderance of the

 

evidence that the procedures unreasonably disrupted its marihuana

 

facility operations.

 

(i) Holding at least 2 public meetings each year. Upon 72

 

hours' written notice to each member, the chairperson or any 2

 

board members may call a special meeting. Three members of the

 

board constitute a quorum, including when making determinations on

 

an application for a license. Three votes are required in support

 

of final determinations of the board on applications for licenses

 

and all other licensing determinations, except that 4 votes are

 


required in support of a determination to suspend or revoke a

 

license. The board shall keep a complete and accurate record of all

 

of its meetings and hearings. Upon order of the board, 1 of the

 

board members or a hearing officer designated by the board may

 

conduct any hearing provided for under this act or by rules and may

 

recommend findings and decisions to the board. The board member or

 

hearing officer conducting the hearing has all powers and rights

 

regarding the conduct of hearings granted to the board under this

 

act. The record made at the time of the hearing shall be reviewed

 

by the board or a majority of the board, and the findings and

 

decision of the majority of the board are the order of the board in

 

the case.

 

(j) Maintaining records that are separate and distinct from

 

the records of any other state board. The records shall be made

 

available for public inspection subject to the limitations of this

 

act and shall accurately reflect all board proceedings.

 

(k) Reviewing the patterns of marihuana transfers by the

 

licensees under this act as recorded in a statewide database

 

established for use in administering and enforcing this act and

 

making recommendations to the governor and the legislature in a

 

written annual report to the governor and the legislature and

 

additional reports that the governor requests. The annual report

 

shall be submitted by April 15 of each year and shall include the

 

report required under section 702, a statement of receipts and

 

disbursements by the board, the actions taken by the board, and any

 

additional information and recommendations that the board considers

 

appropriate or that the governor requests.

 


(l) Except as otherwise provided in this act, all information,

 

records, interviews, reports, statements, memoranda, or other data

 

supplied to or used by the board are subject to the freedom of

 

information act, 1976 PA 442, MCL 15.231 to 15.246, except for the

 

following:

 

(i) Unless presented during a public hearing or requested by

 

the licensee or applicant who is the sole subject of the data, all

 

of the information, records, interviews, reports, statements,

 

memoranda, or other data supplied to, created by, or used by the

 

board related to background investigation of applicants or

 

licensees and to trade secrets, internal controls, and security

 

measures of the licensees or applicants.

 

(ii) All information, records, interviews, reports, statements,

 

memoranda, or other data supplied to or used by the board that have

 

been received from another jurisdiction or local, state, or federal

 

agency under a promise of confidentiality or if the release of the

 

information is otherwise barred by the statutes, rules, or

 

regulations of that jurisdiction or agency or by an

 

intergovernmental agreement.

 

(iii) All information in the statewide database of marihuana

 

transactions.

 

Sec. 303. (1) The board has jurisdiction over the operation of

 

all marihuana facilities. The board has all powers necessary and

 

proper to fully and effectively oversee the operation of marihuana

 

facilities, including, but not limited to, the authority to do all

 

of the following:

 

(a) Investigate applicants for state operating licenses,

 


determine the eligibility for licenses, and grant licenses to

 

applicants in accordance with this act and the rules.

 

(b) Investigate all individuals employed by marihuana

 

facilities.

 

(c) At any time, through its investigators, agents, auditors,

 

or the state police, without a warrant and without notice to the

 

licensee, enter the premises, offices, facilities, or other places

 

of business of a licensee, if evidence of compliance or

 

noncompliance with this act or rules is likely to be found and

 

consistent with constitutional limitations, for the following

 

purposes:

 

(i) To inspect and examine all premises of marihuana

 

facilities.

 

(ii) To inspect, examine, and audit relevant records of the

 

license, and, if the licensee fails to cooperate with an

 

investigation, impound, seize, assume physical control of, or

 

summarily remove from the premises all books, ledgers, documents,

 

writings, photocopies, correspondence, records, videotapes,

 

including electronically stored records, money receptacles, other

 

containers and their contents, or equipment in which the records

 

are stored.

 

(iii) To inspect the person, and inspect or examine personal

 

effects present in a marihuana facility, of any holder of a state

 

operating license while that person is present in a licensed

 

facility.

 

(iv) To investigate alleged violations of this act or rules.

 

(d) Investigate alleged violations of this act or rules and

 


take appropriate disciplinary action against a licensee.

 

(e) Consult with the department in adopting rules to establish

 

appropriate standards for marihuana facilities and associated

 

equipment.

 

(f) Require all relevant records of licensees, including

 

financial or other statements, to be kept on the premises

 

authorized for operation of the marihuana facility of the licensee

 

or in the manner prescribed by the board.

 

(g) Require that each licensee of a marihuana facility submit

 

to the board a list of the stockholders or other persons having a

 

1% or greater beneficial interest in the facility in addition to

 

any other information the board considers necessary to effectively

 

administer this act and rules, orders, and final decisions made

 

under this act.

 

(h) Eject, or exclude or authorize the ejection or exclusion

 

of, an individual from a facility if the individual violates this

 

act, rules, or final orders of the board. However, the propriety of

 

the ejection or exclusion is subject to a subsequent hearing by the

 

board.

 

(i) Conduct periodic audits of facilities licensed under this

 

act.

 

(j) Consult with the department in establishing minimum levels

 

of insurance that licensees must maintain.

 

(k) Delegate the execution of any of its powers that are not

 

specifically and exclusively reserved to the board under this act

 

for the purpose of administering and enforcing this act and rules.

 

(l) Take disciplinary action as the board considers appropriate

 


to prevent practices that violate this act and rules.

 

(m) Review a licensee if that licensee is under review or the

 

subject of discipline by a regulatory body in any other

 

jurisdiction for a violation of a controlled substance or marihuana

 

law or regulation in that jurisdiction.

 

(n) Take any other reasonable or appropriate action to enforce

 

this act and rules.

 

(2) The board may seek and shall receive the cooperation and

 

assistance of the department of state police and department of

 

attorney general in conducting background investigations of

 

applicants and in fulfilling its responsibilities under this act.

 

Sec. 305. (1) By January 31 of each year, each member of the

 

board shall prepare and file with the governor's office and the

 

board a disclosure form in which the member does all of the

 

following:

 

(a) Affirms that the member or the member's spouse, parent,

 

child, or child's spouse is not a member of the board of directors

 

of, financially interested in, or employed by a licensee or

 

applicant.

 

(b) Affirms that the member continues to meet any other

 

criteria for board membership under this act or the rules

 

promulgated by the board.

 

(c) Discloses any legal or beneficial interests in any real

 

property that is or that may be directly or indirectly involved

 

with operations authorized by this act.

 

(d) Discloses any other information as may be required to

 

ensure that the integrity of the board and its work is maintained.

 


(2) By January 31 of each year, each employee of the board

 

shall prepare and file with the board an employee disclosure form

 

in which the employee does all of the following:

 

(a) Affirms the absence of financial interests prohibited by

 

this act.

 

(b) Discloses any legal or beneficial interests in any real

 

property that is or that may be directly or indirectly involved

 

with operations authorized by this act.

 

(c) Discloses whether the employee or the employee's spouse,

 

parent, child, or child's spouse is financially interested in or

 

employed by a licensee or an applicant for a license under this

 

act.

 

(d) Discloses such other matters as may be required to ensure

 

that the integrity of the board and its work is maintained.

 

(3) A member, employee, or agent of the board who becomes

 

aware that the member, employee, or agent of the board or his or

 

her spouse, parent, or child is a member of the board of directors

 

of, financially interested in, or employed by a licensee or an

 

applicant shall immediately provide detailed written notice thereof

 

to the chairperson.

 

(4) A member, employee, or agent of the board who within the

 

previous 10 years has been indicted for, charged with, or convicted

 

of, pled guilty or nolo contendere to, or forfeited bail concerning

 

a misdemeanor involving controlled substances, dishonesty, theft,

 

or fraud or a local ordinance in any state involving controlled

 

substances, dishonesty, theft, or fraud that substantially

 

corresponds to a misdemeanor in that state, or a felony under

 


Michigan law, the laws of any other state, or the laws of the

 

United States or any other jurisdiction shall immediately provide

 

detailed written notice of the conviction or charge to the

 

chairperson.

 

(5) Any member, employee, or agent of the board who is

 

negotiating for, or acquires by any means, any interest in any

 

person who is a licensee or an applicant, or any person affiliated

 

with such a person, shall immediately provide written notice of the

 

details of the interest to the chairperson. The member, employee,

 

or agent of the board shall not act on behalf of the board with

 

respect to that person.

 

(6) A member, employee, or agent of the board shall not enter

 

into any negotiations for employment with any person or affiliate

 

of any person who is a licensee or an applicant and shall

 

immediately provide written notice of the details of any such

 

negotiations or discussions in progress to the chairperson. The

 

member, employee, or agent of the board shall not take action on

 

behalf of the board with respect to that person.

 

(7) Any member, employee, or agent of the board who receives

 

an invitation, written or oral, to initiate a discussion concerning

 

employment or the possibility of employment with a person or

 

affiliate of a person who is a licensee or an applicant shall

 

immediately report that he or she received the invitation to the

 

chairperson. The member, employee, or agent of the board shall not

 

take action on behalf of the board with respect to the person.

 

(8) A licensee or applicant shall not knowingly initiate a

 

negotiation for or discussion of employment with a member,

 


employee, or agent of the board. A licensee or applicant who

 

initiates a negotiation or discussion about employment shall

 

immediately provide written notice of the details of the

 

negotiation or discussion to the chairperson as soon as he or she

 

becomes aware that the negotiation or discussion has been initiated

 

with a member, employee, or agent of the board.

 

(9) A member, employee, or agent of the board, or former

 

member, employee, or agent of the board, shall not disseminate or

 

otherwise disclose any material or information in the possession of

 

the board that the board considers confidential unless specifically

 

authorized to do so by the chairperson or the board.

 

(10) A member, employee, or agent of the board or a parent,

 

spouse, sibling, spouse of a sibling, child, or spouse of a child

 

of a member, employee, or agent of the board shall not accept any

 

gift, gratuity, compensation, travel, lodging, or anything of

 

value, directly or indirectly, from any licensee or any applicant

 

or affiliate or representative of a licensee or applicant, unless

 

the acceptance conforms to a written policy or directive that is

 

issued by the chairperson or the board. Any member, employee, or

 

agent of the board who is offered or receives any gift, gratuity,

 

compensation, travel, lodging, or anything of value, directly or

 

indirectly, from any licensee or any applicant or affiliate or

 

representative of an applicant or licensee shall immediately

 

provide written notification of the details to the chairperson.

 

(11) A licensee or applicant, or an affiliate or

 

representative of an applicant or licensee, shall not, directly or

 

indirectly, give or offer to give any gift, gratuity, compensation,

 


travel, lodging, or anything of value to any member, employee, or

 

agent of the board that the member, employee, or agent of the board

 

is prohibited from accepting under subsection (10).

 

(12) A member, employee, or agent of the board shall not

 

engage in any conduct that constitutes a conflict of interest and

 

shall immediately advise the chairperson in writing of the details

 

of any incident or circumstances that would present the existence

 

of a conflict of interest with respect to performing board-related

 

work or duties.

 

(13) A member, employee, or agent of the board who is

 

approached and offered a bribe as described in section 118 of the

 

Michigan penal code, 1931 PA 328, MCL 750.118, or this act shall

 

immediately provide written account of the details of the incident

 

to the chairperson and to a law enforcement officer of a law

 

enforcement agency having jurisdiction.

 

(14) A member, employee, or agent of the board shall disclose

 

his or her past involvement with any marihuana enterprise in the

 

past 5 years and shall not engage in political activity or

 

politically related activity during the duration of his or her

 

appointment or employment.

 

(15) A former member, employee, or agent of the board may

 

appear before the board as a fact witness about matters or actions

 

handled by the member, employee, or agent during his or her tenure

 

as a member, employee, or agent of the board. The member, employee,

 

or agent of the board shall not receive compensation for such an

 

appearance other than a standard witness fee and reimbursement for

 

travel expenses as established by statute or court rule.

 


(16) A licensee or applicant or any affiliate or

 

representative of an applicant or licensee shall not engage in ex

 

parte communications with a member of the board. A member of the

 

board shall not engage in any ex parte communications with a

 

licensee or an applicant or with any affiliate or representative of

 

an applicant or licensee.

 

(17) Any board member, licensee, or applicant or affiliate or

 

representative of a board member, licensee, or applicant who

 

receives any ex parte communication in violation of subsection

 

(16), or who is aware of an attempted communication in violation of

 

subsection (16), shall immediately report details of the

 

communication or attempted communication in writing to the

 

chairperson.

 

(18) Any member of the board who receives an ex parte

 

communication in an attempt to influence that member's official

 

action shall disclose the source and content of the communication

 

to the chairperson. The chairperson may investigate or initiate an

 

investigation of the matter with the assistance of the attorney

 

general and state police to determine if the communication violates

 

subsection (16) or subsection (17) or other state law. The

 

disclosure under this section and the investigation are

 

confidential. Following an investigation, the chairperson shall

 

advise the governor or the board, or both, of the results of the

 

investigation and may recommend action as the chairperson considers

 

appropriate. If the chairperson receives such an ex parte

 

communication, he or she shall report the communication to the

 

governor's office for appropriate action.

 


(19) A new or current employee or agent of the board shall

 

obtain written permission from the executive director before

 

continuing outside employment held at the time the employee begins

 

to work for the board. Permission shall be denied, or permission

 

previously granted shall be revoked, if the executive director

 

considers the nature of the work to create a possible conflict of

 

interest or if it would otherwise interfere with the duties of the

 

employee or agent for the board.

 

(20) An employee or agent of the board granted permission for

 

outside employment shall not conduct any business or perform any

 

activities, including solicitation, related to outside employment

 

on premises used by the board or during the employee's working

 

hours for the board.

 

(21) The chairperson shall report any action he or she has

 

taken or proposes to take under this section with respect to an

 

employee or agent or former employee or former agent to the board

 

at the next meeting of the board. The board may direct the

 

executive director to take additional or different action.

 

(22) Except as allowed under the Michigan medical marihuana

 

act, a member, employee, or agent of the board shall not enter into

 

any personal transaction involving marihuana with a licensee or

 

applicant.

 

(23) If a licensee or applicant, or an affiliate or

 

representative of a licensee or applicant, violates this section,

 

the board may deny a license application, revoke or suspend a

 

license, or take other disciplinary action as provided in section

 

407.

 


(24) Violation of this section by a member of the board may

 

result in disqualification or constitute cause for removal under

 

section 301(7) or other disciplinary action as recommended by the

 

board to the governor.

 

(25) A violation of this section by an employee or agent of

 

the board need not result in termination of employment if the board

 

determines that the conduct involved does not violate the purpose

 

of this act. However, all of the following apply:

 

(a) If, after being offered employment or beginning employment

 

with the board, the employee or agent intentionally acquires a

 

financial interest in a licensee or an applicant, or an affiliate

 

or representative of a licensee or applicant, the offer or

 

employment with the board shall be terminated.

 

(b) If a financial interest in a licensee or an applicant, or

 

an affiliate or representative of a licensee or applicant, is

 

acquired by an employee or agent that has been offered employment

 

with the board, an employee of the board, or the employee's or

 

agent's spouse, parent, or child, through no intentional action of

 

the employee or agent, the individual shall have up to 30 days to

 

divest or terminate the financial interest. Employment may be

 

terminated if the interest has not been divested after 30 days.

 

(c) Employment shall be terminated if the employee or agent is

 

a spouse, parent, child, or spouse of a child of a board member.

 

(26) Violation of this section does not create a civil cause

 

of action.

 

(27) As used in this section:

 

(a) "Outside employment", in addition to employment by a third

 


party, includes, but is not limited to, the following:

 

(i) Operation of a proprietorship.

 

(ii) Participation in a partnership or group business

 

enterprise.

 

(iii) Performance as a director or corporate officer of any for-

 

profit or nonprofit corporation or banking or credit institution.

 

(iv) Performance as a manager of a limited liability company.

 

(b) "Political activity" or "politically related activity"

 

includes all of the following:

 

(i) Using his or her official authority or influence for the

 

purpose of interfering with or affecting the result of an election.

 

(ii) Knowingly soliciting, accepting, or receiving a political

 

contribution from any person.

 

(iii) Running for the nomination or as a candidate for election

 

to a partisan political office.

 

(iv) Knowingly soliciting or discouraging the participation in

 

any political activity of any person who is either of the

 

following:

 

(A) Applying for any compensation, grant, contract, ruling,

 

license, permit, or certificate pending before the board.

 

(B) The subject of or a participant in an ongoing audit,

 

investigation, or enforcement action being carried out by the

 

board.

 

PART 4. LICENSING

 

Sec. 401. (1) Beginning 180 days after the effective date of

 

this act, a person may apply to the board for state operating

 

licenses in the categories of class A, B, or C grower; processor;

 


provisioning center; secure transporter; and safety compliance

 

facility as provided in this act. The application shall be made

 

under oath on a form provided by the board and shall contain

 

information as prescribed by the board, including, but not limited

 

to, all of the following:

 

(a) The name, business address, business telephone number,

 

social security number, and, if applicable, federal tax

 

identification number of the applicant.

 

(b) The identity of every person having a greater than 1%

 

direct or indirect ownership interest in the applicant with respect

 

to which the license is sought. If the disclosed entity is a trust,

 

the application shall disclose the names and addresses of the

 

beneficiaries; if a corporation, the names and addresses of all

 

shareholders, officers, and directors; if a partnership or limited

 

liability partnership, the names and addresses of all partners; if

 

a limited partnership or limited liability limited partnership, the

 

names of all partners, both general and limited; or if a limited

 

liability company, the names and addresses of all members and

 

managers.

 

(c) An identification of any business that is directly or

 

indirectly involved in the growing, processing, testing,

 

transporting, or sale of marihuana, including, if applicable, the

 

state of incorporation or registration, in which an applicant or,

 

if the applicant is an individual, the applicant's spouse, parent,

 

or child has an equity interest of more than 5%. If an applicant is

 

a corporation, partnership, or other business entity, the applicant

 

shall identify any other corporation, partnership, or other

 


business entity that is directly or indirectly involved in the

 

growing, processing, testing, transporting, or sale of marihuana in

 

which it has an equity interest of 5% or more, including, if

 

applicable, the state of incorporation or registration. An

 

applicant may comply with this subdivision by filing a copy of the

 

applicant's registration with the Securities and Exchange

 

Commission if the registration contains the information required by

 

this subdivision.

 

(d) Whether an applicant has been indicted for, charged with,

 

arrested for, or convicted of, pled guilty or nolo contendere to,

 

forfeited bail concerning any criminal offense under the laws of

 

any jurisdiction, either felony or controlled-substance-related

 

misdemeanor, not including traffic violations, regardless of

 

whether the offense has been reversed on appeal or otherwise,

 

including the date, the name and location of the court, arresting

 

agency, and prosecuting agency, the case caption, the docket

 

number, the offense, the disposition, and the location and length

 

of incarceration.

 

(e) Whether an applicant has ever applied for or has been

 

granted any commercial license or certificate issued by a licensing

 

authority in Michigan or any other jurisdiction that has been

 

denied, restricted, suspended, revoked, or not renewed and a

 

statement describing the facts and circumstances concerning the

 

application, denial, restriction, suspension, revocation, or

 

nonrenewal, including the licensing authority, the date each action

 

was taken, and the reason for each action.

 

(f) Whether an applicant has filed, or been served with, a

 


complaint or other notice filed with any public body, regarding the

 

delinquency in the payment of, or a dispute over the filings

 

concerning the payment of, any tax required under federal, state,

 

or local law, including the amount, type of tax, taxing agency, and

 

time periods involved.

 

(g) A statement listing the names and titles of all public

 

officials or officers of any unit of government, and the spouses,

 

parents, and children of those public officials or officers, who,

 

directly or indirectly, own any financial interest in, have any

 

beneficial interest in, are the creditors of or hold any debt

 

instrument issued by, or hold or have any interest in any

 

contractual or service relationship with an applicant. As used in

 

this subdivision, public official or officer does not include a

 

person who would have to be listed solely because of his or her

 

state or federal military service.

 

(h) A description of the type of marihuana facility; written

 

approval of the marihuana facility location from the municipality;

 

anticipated or actual number of employees; and projected or actual

 

gross receipts.

 

(i) Financial information in the manner and form prescribed by

 

the board.

 

(j) A paper copy or electronic posting website reference for

 

the ordinance that the municipality adopted to authorize operation

 

of 1 or more licensed marihuana facilities in the municipality.

 

(k) Any other information the department requires by rule.

 

(2) The board shall use information provided on the

 

application as a basis to conduct a thorough background

 


investigation on the applicant. A false application is cause for

 

the board to deny a license. The board shall not consider an

 

incomplete application but shall, within a reasonable time, return

 

the application to the applicant with notification of the

 

deficiency and instructions for submitting a corrected application.

 

Information the board obtains from the background investigation is

 

exempt from disclosure under the freedom of information act, 1976

 

PA 442, MCL 15.231 to 15.246.

 

(3) An applicant must provide written consent to the

 

inspections, examinations, searches, and seizures provided for in

 

section 303(1)(c)(i) to (iv) and to disclosure to the board and its

 

agents of otherwise confidential records, including tax records

 

held by any federal, state, or local agency, or credit bureau or

 

financial institution, while applying for or holding a license.

 

Information the board receives under this subsection is exempt from

 

disclosure under the freedom of information act, 1976 PA 442, MCL

 

15.231 to 15.246.

 

(4) An applicant must certify that the applicant does not have

 

an interest in any other state operating license that is prohibited

 

under this act.

 

(5) A nonrefundable application fee must be paid at the time

 

of filing to defray the costs associated with the background

 

investigation conducted by the board. The department in

 

consultation with the board shall set the amount of the application

 

fee for each category and class of license by rule. If the costs of

 

the investigation and processing the application exceed the

 

application fee, the applicant shall pay the additional amount to

 


the board. All information, records, interviews, reports,

 

statements, memoranda, or other data supplied to or used by the

 

board in the course of its review or investigation of an

 

application for a license under this act shall be disclosed only in

 

accordance with this act. The information, records, interviews,

 

reports, statements, memoranda, or other data are not admissible as

 

evidence or discoverable in any action of any kind in any court or

 

before any tribunal, board, agency, or person, except for any

 

action considered necessary by the board.

 

Sec. 402. (1) The board shall issue a license to an applicant

 

who submits a complete application and pays both the nonrefundable

 

application fee required under section 401(5) and the regulatory

 

assessment established by the board for the first year of

 

operation, if the board determines that the applicant is qualified

 

to receive a license under this act.

 

(2) An applicant is ineligible to receive a license if any of

 

the following circumstances exist:

 

(a) The applicant has been convicted of or released from

 

incarceration for a felony under the laws of this state, any other

 

state, or the United States within the past 5 years or has been

 

convicted of a controlled substance-related felony within the past

 

10 years.

 

(b) Within the past 5 years the applicant has been convicted

 

of a misdemeanor involving a controlled substance, theft,

 

dishonesty, or fraud in any state or been found responsible for

 

violating a local ordinance in any state involving a controlled

 

substance, dishonesty, theft, or fraud that substantially

 


corresponds to a misdemeanor in that state.

 

(c) The applicant has knowingly submitted an application for a

 

license under this act that contains false information.

 

(d) The applicant is a member of the board.

 

(e) The applicant fails to demonstrate the applicant's ability

 

to maintain adequate premises liability and casualty insurance for

 

its proposed facility.

 

(f) The applicant holds an elective office of a governmental

 

unit of this state, another state, or the federal government; is a

 

member of or employed by a regulatory body of a governmental unit

 

in this state, another state, or the federal government; or is

 

employed by a governmental unit of this state. This subdivision

 

does not apply to an elected officer of or employee of a federally

 

recognized Indian tribe or to an elected precinct delegate.

 

(g) The applicant fails to meet other criteria established by

 

rule.

 

(3) In determining whether to grant a license to an applicant,

 

the board may also consider all of the following:

 

(a) The integrity, moral character, and reputation; personal

 

and business probity; financial ability and experience; and

 

responsibility or means to operate or maintain a facility of the

 

applicant and of any other person that either:

 

(i) Controls, directly or indirectly, the applicant.

 

(ii) Is controlled, directly or indirectly, by the applicant or

 

by a person who controls, directly or indirectly, the applicant.

 

(b) The financial ability of the applicant to purchase and

 

maintain adequate liability and casualty insurance.

 


(c) The sources and total amount of the applicant's

 

capitalization to operate and maintain the proposed facility.

 

(d) Whether the applicant has been indicted for, charged with,

 

arrested for, or convicted of, pled guilty or nolo contendere to,

 

forfeited bail concerning, or had expunged any relevant criminal

 

offense under the laws of any jurisdiction, either felony or

 

misdemeanor, not including traffic violations, regardless of

 

whether the offense has been expunged, pardoned, or reversed on

 

appeal or otherwise.

 

(e) Whether the applicant has filed, or had filed against it,

 

a proceeding for bankruptcy within the past 7 years.

 

(f) Whether the applicant has been served with a complaint or

 

other notice filed with any public body regarding payment of any

 

tax required under federal, state, or local law that has been

 

delinquent for 1 or more years.

 

(g) Whether the applicant has a history of noncompliance with

 

any regulatory requirements in this state or any other

 

jurisdiction.

 

(h) Whether at the time of application the applicant is a

 

defendant in litigation involving its business practices.

 

(i) Whether the applicant meets other standards in rules

 

applicable to the license category.

 

(4) Each applicant shall submit with its application, on forms

 

provided by the board, a passport quality photograph and 1 set of

 

fingerprints for each person having a greater than 1% direct or

 

indirect ownership interest in the facility and each person who is

 

an officer, director, or managerial employee of the applicant.

 


(5) The board shall review all applications for licenses and

 

shall inform each applicant of the board's decision.

 

(6) A license shall be issued for a 1-year period and is

 

renewable annually. Except as otherwise provided in this act, the

 

board shall renew a license if all of the following requirements

 

are met:

 

(a) The licensee applies to the board on a renewal form

 

provided by the board that requires information prescribed in

 

rules.

 

(b) The application is received by the board on or before the

 

expiration date of the current license.

 

(c) The licensee pays the regulatory assessment under section

 

603.

 

(d) The licensee meets any other renewal requirements set

 

forth in rules.

 

(7) The department shall notify the licensee by mail or

 

electronic mail at the last known address on file with the board

 

advising of the time, procedure, and regulatory assessment under

 

section 603. The failure of the licensee to receive notice under

 

this subsection does not relieve the licensee of the responsibility

 

for renewing the license.

 

(8) If a license renewal application is not submitted by the

 

license expiration date, the license may be renewed within 60 days

 

after its expiration date upon application, payment of the

 

regulatory assessment under section 603, and satisfaction of any

 

renewal requirement and late fee set forth in rules. The licensee

 

may continue to operate during the 60 days after the license

 


expiration date if the license is renewed by the end of the 60-day

 

period.

 

(9) License expiration does not terminate the board's

 

authority to impose sanctions on a licensee whose license has

 

expired.

 

(10) In its decision on an application for renewal, the board

 

shall consider any specific written input it receives from an

 

individual or entity within the local unit of government in which

 

the applicant for renewal is located.

 

(11) A licensee must consent in writing to inspections,

 

examinations, searches, and seizures that are permitted under this

 

act and must provide a handwriting exemplar, fingerprints,

 

photographs, and information as authorized in this act or by rules.

 

(12) An applicant or licensee has a continuing duty to provide

 

information requested by the board and to cooperate in any

 

investigation, inquiry, or hearing conducted by the board.

 

Sec. 403. If the board identifies a deficiency in an

 

application, the board shall provide the applicant with a

 

reasonable period of time to correct the deficiency.

 

Sec. 404. (1) The board shall issue a license only in the name

 

of the true party of interest.

 

(2) For the following true parties of interest, information

 

concerning the indicated individuals must be included in the

 

disclosures required of an applicant or licensee:

 

(a) For an individual or sole proprietorship: the proprietor

 

and spouse.

 

(b) For a partnership and limited liability partnership: all

 


partners and their spouses. For a limited partnership and limited

 

liability limited partnership: all general and limited partners and

 

their spouses. For a limited liability company: all members,

 

managers, and their spouses.

 

(c) For a privately held corporation: all corporate officers

 

or persons with equivalent titles and their spouses and all

 

stockholders and their spouses.

 

(d) For a publicly held corporation: all corporate officers or

 

persons with equivalent titles and their spouses.

 

(e) For a multilevel ownership enterprise: any entity or

 

person that receives or has the right to receive a percentage of

 

the gross or net profit from the enterprise during any full or

 

partial calendar or fiscal year.

 

(f) For a nonprofit corporation: all individuals and entities

 

with membership or shareholder rights in accordance with the

 

articles of incorporation or the bylaws and their spouses.

 

(3) For purposes of this section, "true party of interest"

 

does not mean:

 

(a) A person or entity receiving reasonable payment for rent

 

on a fixed basis under a bona fide lease or rental obligation,

 

unless the lessor or property manager exercises control over or

 

participates in the management of the business.

 

(b) A person who receives a bonus as an employee if the

 

employee is on a fixed wage or salary and the bonus is not more

 

than 25% of the employee's prebonus annual compensation or if the

 

bonus is based on a written incentive/bonus program that is not out

 

of the ordinary for the services rendered.

 


Sec. 405. Subject to the laws of this state, before hiring a

 

prospective employee, the holder of a license shall conduct a

 

background check of the prospective employee. If the background

 

check indicates a pending charge or conviction within the past 5

 

years for a controlled substance-related felony, a licensee shall

 

not hire the prospective employee without written permission of the

 

board.

 

Sec. 406. Each license is exclusive to the licensee, and a

 

licensee or any other person must apply for and receive the board's

 

approval before a license is transferred, sold, or purchased. The

 

attempted transfer, sale, or other conveyance of an interest of

 

more than 1% in a license without prior board approval is grounds

 

for suspension or revocation of the license or for other sanction

 

considered appropriate by the board.

 

Sec. 407. (1) If an applicant or licensee fails to comply with

 

this act or rules, if a licensee fails to comply with the marihuana

 

tracking act, if a licensee no longer meets the eligibility

 

requirements for a license under this act, or if an applicant or

 

licensee fails to provide information the board requests to assist

 

in any investigation, inquiry, or board hearing, the board may

 

deny, suspend, revoke, or restrict a license. The board may

 

suspend, revoke, or restrict a license and require the removal of a

 

licensee or an employee of a licensee for a violation of this act,

 

rules, the marihuana tracking act, or any ordinance adopted under

 

section 205. The board may impose civil fines of up to $5,000.00

 

against an individual and up to $10,000.00 or an amount equal to

 

the daily gross receipts, whichever is greater, against a licensee

 


for each violation of this act, rules, or an order of the board.

 

(2) The board shall comply with the administrative procedures

 

act of 1969, 1969 PA 306, MCL 24.201 to 24.328, when denying,

 

revoking, suspending, or restricting a license or imposing a fine.

 

The board may suspend a license without notice or hearing upon a

 

determination that the safety or health of patrons or employees is

 

jeopardized by continuing a marihuana facility's operation. If the

 

board suspends a license under this subsection without notice or

 

hearing, a prompt postsuspension hearing must be held to determine

 

if the suspension should remain in effect. The suspension may

 

remain in effect until the board determines that the cause for

 

suspension has been abated. The board may revoke the license or

 

approve a transfer or sale of the license upon a determination that

 

the licensee has not made satisfactory progress toward abating the

 

hazard.

 

(3) After denying an application for a license, the board

 

shall, upon request, provide a public investigative hearing at

 

which the applicant is given the opportunity to present testimony

 

and evidence to establish its suitability for a license. Other

 

testimony and evidence may be presented at the hearing, but the

 

board's decision must be based on the whole record before the board

 

and is not limited to testimony and evidence submitted at the

 

public investigative hearing.

 

(4) Except for license applicants who may be granted a hearing

 

at the discretion of the board under subsection (3), any party

 

aggrieved by an action of the board suspending, revoking,

 

restricting, or refusing to renew a license, or imposing a fine,

 


shall be given a hearing before the board upon request. A request

 

for a hearing must be made to the board in writing within 21 days

 

after service of notice of the action of the board. Notice of the

 

action of the board must be served either by personal delivery or

 

by certified mail, postage prepaid, to the aggrieved party. Notice

 

served by certified mail is considered complete on the business day

 

following the date of the mailing.

 

(5) The board may conduct investigative and contested case

 

hearings; issue subpoenas for the attendance of witnesses; issue

 

subpoenas duces tecum for the production of books, ledgers,

 

records, memoranda, electronically retrievable data, and other

 

pertinent documents; and administer oaths and affirmations to

 

witnesses as appropriate to exercise and discharge the powers and

 

duties of the board under this act. The executive director or his

 

or her designee may issue subpoenas and administer oaths and

 

affirmations to witnesses.

 

Sec. 408. Alcoholic beverages shall not be sold, distributed,

 

or consumed on the premises of a provisioning center.

 

PART 5. LICENSEES

 

Sec. 501. (1) A grower license authorizes the grower to grow

 

not more than the following number of plants under the indicated

 

license class:

 

(a) Class A 500 plants.

 

(b) Class B 1,000 plants.

 

(c) Class C 1,500 plants.

 

(2) A grower license authorizes sale of marihuana seeds or

 

seedlings only to a grower by means of a secure transporter and

 


purchase of marihuana seeds or seedlings only from a grower,

 

registered qualifying patient, or registered primary caregiver.

 

(3) A grower license authorizes sale of marihuana, other than

 

seeds or seedlings, only to a processor or provisioning center.

 

(4) Except as provided in subsection (5), a grower license

 

authorizes the grower to transfer marihuana only by means of a

 

secure transporter.

 

(5) A grower license authorizes the grower to transfer

 

marihuana to and from a safety compliance facility for testing or

 

to or from a processor or provisioning center located within the

 

same marihuana facility.

 

(6) To be eligible for a grower license, the applicant and

 

each investor in the grower must not have a greater than 10%

 

interest in a secure transporter or a safety compliance facility.

 

(7) A grower shall comply with all of the following:

 

(a) Until December 31, 2021, have, or have as an active

 

employee an individual who has, a minimum of 2 years' experience as

 

a registered primary caregiver.

 

(b) While holding a license as a grower, not be a registered

 

primary caregiver and not employ an individual who is

 

simultaneously a registered primary caregiver.

 

(c) Enter each transfer of marihuana into this state's

 

database for marihuana tracking, as provided in the marihuana

 

tracking act.

 

Sec. 502. (1) A processor license authorizes purchase of

 

marihuana only from a grower and sale of processed marihuana or

 

marihuana-infused products only to a provisioning center.

 


(2) Except as provided in subsection (3), a processor license

 

authorizes the processor to transfer marihuana only by means of a

 

secure transporter.

 

(3) A processor license authorizes the processor to transfer

 

marihuana to and from a safety compliance facility for testing or

 

to or from a grower or provisioning center located within the same

 

marihuana facility.

 

(4) To be eligible for a processor license, the applicant and

 

each investor in the processor must not have a greater than 10%

 

interest in a secure transporter or safety compliance facility.

 

(5) A processor shall comply with all of the following:

 

(a) Until December 31, 2021, have, or have as an active

 

employee an individual who has, a minimum of 2 years' experience as

 

a registered primary caregiver.

 

(b) While holding a license as a processor, not be a

 

registered primary caregiver and not employ an individual who is

 

simultaneously a registered primary caregiver.

 

(c) Enter each transfer of marihuana into this state's

 

database for marihuana tracking, as provided in the marihuana

 

tracking act.

 

Sec. 503. (1) A secure transporter license authorizes the

 

licensee to store and transport marihuana and money associated with

 

the purchase or sale of marihuana between marihuana facilities for

 

a fee upon request of a person with legal custody of that marihuana

 

or money.

 

(2) To be eligible for a secure transporter license, the

 

applicant and each investor with a greater than 10% interest in the

 


secure transporter must not have a greater than 10% interest in a

 

grower, processor, provisioning center, or safety compliance

 

facility.

 

(3) A secure transporter shall enter each transfer of

 

marihuana into this state's database for marihuana tracking, as

 

provided in the marihuana tracking act.

 

Sec. 504. (1) A provisioning center license authorizes the

 

purchase or transfer of marihuana only from a grower or processor

 

and sale or transfer to only a registered qualifying patient or

 

registered primary caregiver. Except as provided in subsection (2),

 

all transfers of marihuana to a provisioning center from a separate

 

marihuana facility shall be by means of a secure transporter.

 

(2) A provisioning center license authorizes the provisioning

 

center to transfer marihuana to or from a safety compliance

 

facility for testing.

 

(3) To be eligible for a provisioning center license, the

 

applicant and each investor in the provisioning center must not

 

have a greater than 10% interest in a secure transporter or safety

 

compliance facility.

 

(4) A provisioning center shall comply with all of the

 

following:

 

(a) Sell or transfer marihuana to a registered qualifying

 

patient or registered primary caregiver only after it has been

 

tested and bears the label required for retail sale.

 

(b) Enter each transfer of marihuana into this state's

 

database for marihuana tracking as provided in the marihuana

 

tracking act.

 


Sec. 505. (1) A safety compliance facility license authorizes

 

the facility to receive, test, and return marihuana.

 

(2) A safety compliance facility must be accredited by an

 

entity approved by the board by 1 year after the date the license

 

is issued. The board may grant a variance from this requirement

 

upon a finding that the variance is necessary to protect and

 

preserve the public health, safety, or welfare.

 

(3) To be eligible for a safety compliance facility license,

 

the applicant and each investor with a greater than 10% interest in

 

the safety compliance facility must not have a greater than 10%

 

interest in a grower, secure transporter, processor, or

 

provisioning center.

 

(4) A safety compliance facility shall comply with all of the

 

following:

 

(a) Perform tests to certify that marihuana is reasonably free

 

of chemical residues such as fungicides and insecticides.

 

(b) Use validated test methods to determine

 

tetrahydrocannabinol, tetrahydrocannabinol acid, cannabidiol, and

 

cannabidiol acid levels.

 

(c) Perform tests that determine whether marihuana complies

 

with the standards the department establishes for microbial and

 

mycotoxin contents.

 

(d) Perform other tests necessary to determine compliance with

 

any other good manufacturing practices as prescribed in rules.

 

(e) Enter each transfer of marihuana into this state's

 

database for marihuana tracking, as provided in the marihuana

 

tracking act, along with test results.

 


PART 6. TAXES AND FEES

 

Sec. 601. (1) A tax is imposed on each provisioning center at

 

the rate of 3% of the provisioning center's gross retail income. If

 

a law authorizing the recreational or non-medical use of marihuana

 

in this state is enacted, this section does not apply beginning 90

 

days after the effective date of that law.

 

(2) The taxes imposed under this section shall be administered

 

by the department of treasury in accordance with 1941 PA 122, MCL

 

205.1 to 205.31, and this act. In case of conflict between the

 

provisions of 1941 PA 122, MCL 205.1 to 205.31, and this act, the

 

provisions of this act prevail.

 

Sec. 602. (1) The medical marihuana excise fund is created in

 

the state treasury.

 

(2) Except for the application fee under section 401, the

 

regulatory assessment under section 603, and any local licensing

 

fees, all money collected under section 601 and all other fees,

 

fines, and charges, imposed under this act shall be deposited in

 

the medical marihuana excise fund. The state treasurer shall direct

 

the investment of the fund. The state treasurer shall credit to the

 

fund interest and earnings from fund investments.

 

(3) Money in the medical marihuana excise fund at the close of

 

the fiscal year shall remain in the fund and shall not lapse to the

 

general fund.

 

(4) The department shall be the administrator of the medical

 

marihuana excise fund for auditing purposes.

 

(5) The money in the medical marihuana excise fund shall be

 

allocated, upon appropriation, as follows:

 


(a) 30% to municipalities in which a marihuana facility is

 

located, allocated in proportion to the number of marihuana

 

facilities within the municipality.

 

(b) 40% to counties in which a marihuana facility is located,

 

allocated in proportion to the number of marihuana facilities

 

within the county.

 

(c) 5% to counties in which a marihuana facility is located,

 

allocated in proportion to the number of marihuana facilities

 

within the county. Money allocated under this subdivision shall be

 

used exclusively to support the county sheriffs and shall be in

 

addition to and not in replacement of any other funding received by

 

the county sheriffs.

 

(d) 25% to this state to be deposited in the state general

 

fund.

 

Sec. 603. (1) A regulatory assessment is imposed on certain

 

licensees as provided in this section. All of the following shall

 

be included in establishing the total amount of the regulatory

 

assessment established under this section:

 

(a) The department's costs to implement, administer, and

 

enforce this act, except for the costs to process and investigate

 

applications for licenses supported with the application fee

 

described in section 401.

 

(b) Expenses of medical-marihuana-related legal services

 

provided to the department by the department of attorney general.

 

(c) Expenses of medical-marihuana-related services provided to

 

the department by the department of state police.

 

(d) $500,000.00 to be allocated to the department for

 


expenditures of the department for licensing substance use disorder

 

programs.

 

(e) An amount equal to 5% of the sum of the amounts provided

 

for under subdivisions (a) to (d) to be allocated to the department

 

of health and human services for marihuana-related expenditures

 

including, but not limited to, substance use disorder prevention,

 

education, and treatment programs.

 

(2) The regulatory assessment is in addition to the

 

application fee described in section 401, the tax described in

 

section 601, and any local licensing fees.

 

(3) The regulatory assessment shall be collected annually from

 

licensed growers, processors, provisioning centers, and secure

 

transporters. The regulatory assessment for a class A grower

 

license shall not exceed $10,000.00.

 

(4) Beginning in the first year marihuana facilities are

 

authorized to operate in this state, and annually thereafter, the

 

department, in consultation with the board, shall establish the

 

total regulatory assessment at an amount that is estimated to be

 

sufficient to cover the actual costs and support the expenditures

 

listed in subsection (1).

 

(5) On or before the date the licensee begins operating and

 

annually thereafter, each grower, processor, provisioning center,

 

and secure transporter shall pay to the state treasurer an amount

 

determined by the department to reasonably reflect the licensee's

 

share of the total regulatory assessment established under

 

subsection (4).

 

Sec. 604. (1) The marihuana regulatory fund is created in the

 


state treasury.

 

(2) The application fee collected under section 401 and the

 

regulatory assessment collected under section 603 shall be

 

deposited in the marihuana regulatory fund. The state treasurer

 

shall direct the investment of the fund. The state treasurer shall

 

credit to the fund interest and earnings from fund investments.

 

(3) Money in the marihuana regulatory fund at the close of the

 

fiscal year shall remain in the fund and shall not lapse to the

 

general fund.

 

(4) The state treasurer shall be the administrator of the

 

marihuana regulatory fund for auditing purposes.

 

(5) Except as provided in section 603(1)(d) and (e), the

 

department shall expend money from the marihuana regulatory fund,

 

upon appropriation, only for implementing, administering, and

 

enforcing this act.

 

Sec. 605. There is appropriated to the department for the

 

fiscal year ending September 30, 2016 $8,500,000.00 from the

 

marihuana regulatory fund for the purpose of funding the operations

 

of the department and the board in implementing, administering, and

 

enforcing this act.

 

PART 7. REPORTS

 

Sec. 701. By 30 days after the end of each state fiscal year,

 

each licensee shall transmit to the board and to the municipality

 

compiled financial statements of the licensee's total operations.

 

The financial statements shall be compiled by a certified public

 

accountant in a manner and form prescribed by the board. The

 

certified public accountant must be licensed in this state under

 


article 7 of the occupational code, 1980 PA 299, MCL 339.720 to

 

339.736. The compensation for the certified public accountant shall

 

be paid directly by the licensee to the certified public

 

accountant.

 

Sec. 702. The board shall submit with the annual report to the

 

governor under section 302(k) and to the chairs of the legislative

 

committees that govern issues related to marihuana facilities a

 

report covering the previous year. The report shall include an

 

account of the board actions, its financial position, results of

 

operation under this act, and any recommendations for legislation

 

that the board considers advisable.

 

PART 8. MARIHUANA ADVISORY PANEL

 

Sec. 801. (1) The marihuana advisory panel is created within

 

the department.

 

(2) The marihuana advisory panel shall consist of 15 members,

 

including the director of state police or his or her designee, the

 

director of this state's department of health and human services or

 

his or her designee, the director of the department of licensing

 

and regulatory affairs or his or her designee, the attorney general

 

or his or her designee, the director of the department of

 

agriculture and rural development or his or her designee, and the

 

following members appointed by the governor:

 

(a) One registered medical marihuana patient or medical

 

marihuana primary caregiver.

 

(b) One representative of growers.

 

(c) One representative of provisioning centers.

 

(d) One representative of safety compliance facilities.

 


(e) One representative of townships.

 

(f) One representative of cities and villages.

 

(g) One representative of counties.

 

(h) One representative of sheriffs.

 

(i) One representative of local police.

 

(j) One physician licensed under article 15 of the public

 

health code, 1978 PA 368, MCL 333.16101 to 333.18838.

 

(3) The members first appointed to the panel shall be

 

appointed within 3 months after the effective date of this act and

 

shall serve at the pleasure of the governor. Appointed members of

 

the panel shall serve for terms of 3 years or until a successor is

 

appointed, whichever is later.

 

(4) If a vacancy occurs on the advisory panel, the governor

 

shall make an appointment for the unexpired term in the same manner

 

as the original appointment.

 

(5) The first meeting of the panel shall be called by the

 

director of the department or his or her designee within 1 month

 

after the advisory panel is appointed. At the first meeting, the

 

panel shall elect from among its members a chairperson and any

 

other officers it considers necessary or appropriate. After the

 

first meeting, the panel shall meet at least 2 times each year, or

 

more frequently at the call of the chairperson.

 

(6) A majority of the members of the panel constitute a quorum

 

for the transaction of business. A majority of the members present

 

and serving are required for official action of the panel.

 

(7) The business that the panel performs shall be conducted at

 

a public meeting held in compliance with the open meetings act,

 


1976 PA 267, MCL 15.261 to 15.275.

 

(8) A writing prepared, owned, used, in the possession of, or

 

retained by the panel in the performance of an official function is

 

subject to the freedom of information act, 1976 PA 442, MCL 15.231

 

to 15.246.

 

(9) Members of the panel shall serve without compensation.

 

However, members of the panel may be reimbursed for their actual

 

and necessary expenses incurred in the performance of their

 

official duties as members of the panel.

 

(10) The panel shall make recommendations to the board

 

concerning promulgation of rules and, as requested by the board or

 

the department, the administration of this act.

 

(11) State departments and agencies shall cooperate with the

 

panel and, upon request, provide it with meeting space and other

 

necessary resources to assist it in the performance of its duties.

 

Enacting section 1. This act takes effect 90 days after the

 

date it is enacted into law.

 

Enacting section 2. The legislature finds that the necessity

 

for access to safe sources of marihuana for medical use and the

 

immediate need for growers, processors, secure transporters,

 

provisioning centers, and safety compliance facilities to operate

 

under clear requirements establish the need to promulgate emergency

 

rules to preserve the public health, safety, or welfare.

 

Enacting section 3. This act does not take effect unless House

 

Bill No. 4827 of the 98th Legislature is enacted into law.