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.

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.

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.

(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.

(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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

(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.

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.

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.

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.

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.

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.

(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.