Michigan judge stops state from closing 98 medical pot businesses

Michigan Court of Claims Judge Stephen Borrello issued an injunction Thursday against the state’s new medical marijuana rules that would have resulted in the closure of 98 medical marijuana facilities in Michigan.

Borrello's brief ruling ordered the state to extend the deadline to Dec. 15 for all facilities temporarily operating under emergency rules and stop "treating temporarily operating medical marijuana businesses differently based on whether the business filed a Step 2 application more than 90 days in the past." 

The state on Tuesday issued emergency rules that barred some temporarily operating facilities from doing business after Saturday if those businesses had not filed a final, secondary application by June 15. 

The injunction — issued in response to a claim filed by attorney Denise Pollicella on behalf of Montrowe LLC — came as some medical marijuana provisioning centers pleaded with the state to reconsider its new emergency rules that would force their shutdown. They argued that municipal delays prevented their filing of applications by June 15. 

Lansing Mayor Andy Schor wrote Gov. Rick Snyder Wednesday, asking him to issue new emergency rules because the city had yet to issue the forms local dispensaries need to submit a complete application to the state.

“As such, many temporarily operating businesses throughout our communities and the state will be forced to shutter, leaving many employees jobless and many medical marihuana patients without reliable access to the substance that provides them palliative relief from their debilitating medical conditions,” Schor wrote.

In a statement issued prior to the judge's ruling, a Snyder spokeswoman said the governor appreciated Schor’s input, “but does not plan to issue a new emergency rule at this time." A Department of Licensing and Regulatory Affairs spokesman said the agency would comply with the judge's order while officials "determine the best way forward for both patients and the business community."

Hundreds of existing provisioning centers were given a break earlier this year when the state issued emergency rules allowing them to continue operating while seeking a state license. The window was meant to ensure patient access to medical marijuana during the licensing period.

Businesses that filed a pre-qualification application by Feb. 15 could continue operating without a license through June 15 under the initial rules. That deadline later was pushed to Sept. 15, then Dec. 15 — but with some caveats.

Only those businesses that had filed an initial application by February and a final, secondary application by June 15 would be able to continue operating past Saturday. The extension meant that about 108 applicants could continue operating.

Prior to the judge's ruling, another 98 medical marijuana businesses would have been issued cease-and-desist letters by the state if they continued operating without a license past Saturday.

In her motion for an injunction, Pollicella said Montrowe LLC, a Jackson area dispensary, would have to divest $500,000 worth of product by Sept. 16 to comply with the rules. The company, which filed its secondary application on Aug. 16, said the state's retroactive rules requiring the application to be filed prior to June 15 violated its due process and would lead to irreparable harm.

"The only rationale for the implementation of this rule is for it to be an attempt to close as many facilities as possible in one action," Pollicella wrote. 

Provisioning centers earlier Thursday also argued that the state did not clarify the role the June 15 deadline would play in future emergency rules. Even if it did, many applications submitted before that day would have been incomplete as some cities had not yet started issuing required forms that confirmed local ordinance and zoning approvals, said Paula Givens, a cannabis lawyer representing several provisioning centers.  

Detroit and Flint didn’t have ordinances on the books at the time so they couldn’t sign attestation forms indicating otherwise, Givens said. Lansing had adopted a local ordinance by June 15, but has yet to issue any of the local approval forms referred to as Attestation I. 

Many applicants were led to believe they couldn't apply without those forms because their applications would be incomplete, Givens said. 

“If I had known that they didn’t care about complete applications, all of my clients would have filed an incomplete application,” she said.

Applicants were able to submit an incomplete application prior to June 15 and file the attestation later, said David Harns, a spokesman for the Department of Licensing and Regulatory Affairs.

The allowance is listed in a May 3 bulletin from the agency that says those applying for state operating licenses should turn in applications that are “as complete as possible.”  

Additionally, “anybody that asked about” the admissibility of an incomplete application was told that the attestation form was not immediately required with the application, Harns said.

“Many applicants across the state had, in fact, done that by the June 15 deadline and therefore are eligible to remain open after the September 15 deadline passes,” Harns said in an email prior to the judge's ruling.

Lawyers representing medical marijuana patients have been mindful of deadlines, Givens said, but “aren’t in the business of filing incomplete work.”

“What you have is a state agency giving an advantage to people who ring them up and ask,” Givens said. “If that was the policy, why didn’t they tell that to everyone?”

eleblanc@detroitnews.com

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