Michigan Recalls Vaping Products for Heavy Metals Including Arsenic

The Michigan Marijuana Regulatory Agency issued a recall of four (4) products that were tested by Iron Laboratories. The MRA suspended the testing facilities license on August 16, 2019. The recalled products include vaping cartridges that failed testing requirements for high levels of Chromium and Arsenic. The products are being sold in over 30 dispensaries across the state.

The Public Health and Safety Bulletin warns users that potential medical symptoms and issues could include coughing, wheezing, decreased pulmonary function, nausea, vomiting, abnormal heart rhythm, and damage to blood vessels. Consumers should return items on the list to the medical dispensary where it was purchased.

As of August 27, 2019, the CDC reports that there are over 215 cases of pulmonary illnesses reported in 25 states that are in many cases being attributed to e-cigarettes containing THC and CBD products. The CDC is working with the states to identify the name of the products, the manufacturer and where the products are being sold. The CDC indicates that, to date, it does not appear that there is one product responsible for these cases.

Michigan Suspends Testing Facility License for Inaccurate Results

The Michigan Marijuana Regulatory authority suspended the license of Iron Laboratories, a Walled Lake testing facility, on August 16, 2019 due to inaccurate results and unreliable testing and reporting practices. Michigan warned consumers to be careful using products that were tested by Iron Laboratories as the tests may be unreliable.

This is the second testing facility that the MRA has identified as issuing inaccurate results. Last week, the MRA issued a warning that The Spott, a licensed medical cannabis testing facility in Kalamazoo, MI, issued inaccurate potency test results from May 3, 2019 through July 11, 2019. Michigan has not required the recall of these items at this time.

Michigan Testing Facility Issues Inaccurate Potency Results

The Michigan Regulatory Agency issued a warning that The Spott, a licensed medical cannabis testing facility in Kalamazoo, MI, issued inaccurate potency test results from May 3, 2019 through July 11, 2019. Michigan has not required the recall of these items at this time.

The Michigan regulator is working with The Spott to identify products that were impacted by this problem. Patients are cautioned to use care when ingesting medical cannabis that was tested by the facility as the potency on the label may be higher or lower than the number indicated. The regulator is also working with the facility to establish stronger controls that would prevent this problem from happening in the future.

Michigan Launches Social Equity Site for Adult-Use Cannabis

Michigan launched a Social Equity Program page on its website last week to provide resources and educational information on how the state will ensure that minorities and those individuals who have been disproportionately impacted by prior cannabis laws and policies will participate in the adult-use cannabis market. Michigan identified 19 cities whose residents qualify for participation.

Michigan's rules require each applicant for an adult-use cannabis license to submit a social equity plan that outlines how the business will include persons from these cities in the licensed business. Michigan’s approach to social equity is different from other states that will provide licensing priority and funding for a set number of qualifying social equity applicants. Michigan will help to establish partnerships between applicants and qualifying individuals in order to boost employment or to obtain assistance from partners to help social equity applicants to become a licensed cannabis business. The state will hold educational and outreach sessions in the 19 identified cities.

Michigan’s approach may be a better solution to launching the industry quickly and in ensuring appropriate partnership between capital providers and social equity licensees. The proposal would provide experienced out-of-state businesses with the ability to partner qualified persons in establishing an adult-use business. Michigan residents can gain the operation experience, branding, and capital that may be available. This might be a better result than states that offer a license but without adequate funding or guidance.

Michigan's Adult-Use Regulations Will Shape a Robust Industry

Michigan’s Marijuana Regulatory Agency released the emergency adult use cannabis regulations last week, which allows the agency to begin accepting applications prior to December 6, 2019. Local cities and prospective business owners have been waiting for the state to release the rules prior to finalizing plans for participating in the adult-use market.

To date, a significant number of local municipalities have opted of the adult use cannabis market. Other cities delayed the decision to opt in until the MRA’s release of the adult use regulations. These cities must quickly enact ordinances that permit establishments to engage in adult use cannabis activities so that businesses may locate available property ahead of the opening of the application window.

The state’s recreational market may be saddled with the same growing pains that the medical marijuana market is currently experiencing including a limited number of cities offering licenses, inadequate inventory from the limited number of licensed grow facilities, and the complexities associated with a nascent industry. State regulators will need to manage the public’s expectations in order to ensure a smooth rollout of the recreational market.

Michigan’ rules are forward thinking and encompass the newest license types that are being adopted by Colorado and California including marijuana event organizers, consumption lounges, and temporary events, which will allow the state to quickly build out a mid-west cannabis tourism scene. The rules also allow the inflow of capital to build out the market by permitting out-of-state investors and limiting the residency requirements to microbusiness and Class A growers.

Michigan’s rules permit institutional investors and establish thresholds for investor suitability reviews that are in line with other states. However, the requirements around franchise arrangements are more stringent in that it limits the franchiser’s ability to obtain a royalty based on a percentage of sales. A franchiser that enters into an arrangement other than a fixed fee may be considered an applicant under the regulations.

Like Illinois, Michigan will provide medical marijuana license holders with priority in the application process. The state will continue to use its two-step application process that requires applicants to be prequalified prior to providing final approval. Businesses that decide to obtain property in a city that requires applicants to be prequalified may be further delayed in building out their businesses.

Finally, Michigan’s rules require all adult-use applicants to include a social equity plan in their application. The social equity plan must describe how the business will encourage persons that have been impacted by the illegal marijuana laws to participate in the industry and positively impact the communities.

The rollout of Michigan’s adult-use market poses a significant risk to early entrants that are not currently in the medical marijuana market. Businesses will need capital and perseverance to successfully make it through the lengthy approval process, local permitting, early inventory shortages, and costly build out. We look forward to the real-time comparison of the different approaches to establishing an adult use market being used by Illinois and Michigan.

Michigan Opens Up investment Opportunities in Marijuana Businesses

The Michigan Legislature passed a bill on April 11, 2019 that will open up investment opportunities in marijuana establishments. The bill will become law if it is signed by Governor Whitmer. Currently, Michigan marijuana regulators will deny a marijuana business a license if any investor discloses a prior criminal conviction or other disqualifying factor. Under the bill, Michigan marijuana regulators will only evaluate the suitability of investors that own more than 10%. Investors that own 10% or less will avoid the disclosure requirements so long as the investor does not manage or exert control over the marijuana business. The new law would ease the administrative burden faced by state regulators as they begin implementing Michigan’s recreational marketplace. The change will also bring more investors into the marijuana industry. Public companies or hedge funds can attract additional money due to the lowered standards for potential investors.

Michigan Destroys Cannabis Vape Cartridges Containing Lead and Other Heavy Metals

The Michigan Bureau of Marijuana Regulation has issued a warning that vape users are inhaling lead and other heavy metals that are leaking from e-cigarette heating coils. The BMR stated that ceramic vape cartridges do not appear to raise the same health issues. The regulators located and destroyed the contaminated products being sold in the state.

Michigan cites a study on the dangers of e-cigarettes conducted by the John Hopkins Bloomberg School of Public Health. The study indicates that chronic use of a contaminated e-cigarette can cause lung, liver, immune, cardiovascular and brain damage. The study tested the e-cigarette devices of 56 daily users, including the e-liquid and aerosol, for heavy metals. Researchers found heavy metals in aerosol produced by e-liquid heated through coils. Almost half of the samples contained lead concentrations that were higher than the health standards issued by the Environmental Protection Agency.

The BMR has encouraged dispensaries to test vape cartridges for heavy metals. Michigan customers may also get vape cartridges tested by going to a licensed cannabis testing facility.

Free Cannabis Legislative Tracker For 20 States: Access THC, Hemp And CBD Bills

Access our free legislative trackers for Arizona, California, Colorado, Connecticut, Florida, Illinois, Kentucky, Massachusetts, Maine, Michigan, Missouri, North Dakota, New Hampshire, New Jersey, New Mexico, New York, Oregon, Tennessee, Utah and Washington. Review and access the cannabis & hemp bills introduced by the State Legislatures in the 2019-2020 session. The trackers include a summary description of the legislation, status and link to the full legislative text. The legislative trackers will be updated on a weekly basis.

Trick question: What is the difference between hemp seed oil and CBD? (psst one is legal)

Two Michigan regulatory agencies announced in guidance that selling CBD-infused food and drinks, or as a dietary supplement, is illegal, however, using hemp seed oil to infuse food and drinks is legal. Why?

In guidance issued Friday, March 29, 2019 by the Bureau of Marijuana Regulation and the Michigan Dept of Agriculture & Rural Development, they noted that the Food and Drug Administration (FDA) has not approved CBD in food or beverages or as a dietary supplement. Without FDA approval, selling these products in Michigan is illegal.

Other states have issued similar guidance. Washington State noted in December that CBD infused alcohol is illegal as it must be approved by the US Tax and Trade Bureau. In August, Ohio noted in that only licensed medical dispensaries could sell CBD oil so long as it had been tested by an Ohio licensee. Michigan has similarly indicated that CBD used in edible marijuana products must be sourced from growers or processors currently licensed in the state.

This news is alarming given the vast number of CBD-infused food, beverage, and dietary supplement products that are currently in the marketplace.

Certain states, such as Maine, are trying to fix this problem by enacting legislation to clarify that products infused with CBD are not adulterated, and may be sold in that state without FDA approval. This legislation may not be able to protect nationwide distributors that engage in interstate commerce.

Hemp seed oil can be used though, as it is currently on the FDA’s list of products considered generally regarded as safe. However, since it does not contain cannabinoids, consumers may not find it as beneficial to their health.

So what would stop unscrupulous industry participants from relabeling CBD products as hemp oil? Not much. The industry is in a grey zone right now with more stringent regulation right around the corner. CBD is not yet subject to rigorous testing or labeling requirements. A CBD manufacturer can presently obtain a certificate of analysis without testing the product for cannabinoids.

CBD producers considering this route should consider the serious consequences including criminal charges, product seizures and civil fines. A greater consideration is the industry’s credibility. The industry should consider how it can mobilize, and work with the regulators to address this issue before the enforcement process begins.

Groundhog Day: Michigan Did NOT Close Unlicensed Pot Shops on March 31st

Michigan is facing another legal action over the closing of unlicensed medical marijuana facilities on March 31, 2019. For a third time, the Michigan Department of Licensing and Regulatory Affairs has announced that it will hold off on the mass shut down until it receives a court order to do so. The shut down has been a long process as the impacted parties sued Michigan twice before. Michigan originally attempted to shut down the unlicensed entities on September 12, 2018. Effected parties brought an action against the state, and the court agreed to stop the shuttering process. The parties were to return to court on December 15, 2018 to continue the proceedings. Michigan then adopted emergency rules that accelerated the closure date to October 31, 2018 before another lawsuit stopped the state from enforcing this deadline.