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Lansing — Medical marijuana businesses that operate without a license would be banned from getting an operating license for one year under a proposed law that gained unanimous support Wednesday from the House Government Operations Committee.

The bill, proposed by Rep. Jim Lilly, R-Park Township, would amend the Legislature’s 2016 Medical Marihuana Facilities Licensing Act to crack down on medical pot business scofflaws who continue to operate without going through the financial and regulatory rigors of the licensing application process.

“There is a strategy here among many folks that are unlicensed to use sort of a delay tactic to maintain that advantageous economic model relative to the regulated market,” Lilly said.

It is not clear whether the proposed law would take precedence over court injunctions currently in place on other state medical marijuana licensing deadlines. 

Under the legislation, temporarily operating medical marijuana facilities in the licensing process and other illegally operating facilities would need to be licensed by June 1 or risk a one-year delay on the consideration of their licensing application.

An amendment introduced Wednesday would require the Department of Licensing and Regulatory Affairs to make a best effort to resolve pending appeals on license denials by the June 1 deadline.

“What’s important is that we have a clear line in the sand in terms of what that deadline is so that essentially everybody involved in this space can make the appropriate economic investment decisions,” Lilly said.

The department submitted a card opposing the bill but could not comment on the reasoning because of ongoing litigation.

Several licensed facilities supported the bill, noting that they have been at a financial disadvantage in the medical marijuana market because of the gray market in which the unlicensed facilities continue to operate.

Green Peak Innovations has invested roughly $46 million into its operation, has 13 active state licenses and employs roughly 160 people. But the company’s investment is in jeopardy because of the continuous deadline extensions that have allowed unlicensed facilities to operate, said Joe Neller of Green Peak.

“Instead of implementing the MMFLA as passed by the Legislature, Michigan has created a bifurcated market that provides a competitive advantage to companies that do not abide by the law as it is written,” Neller told lawmakers Wednesday.

The Michigan Cannabis Industry Association was neutral on the bill. Executive Director Robin Schneider said she was sympathetic to both sides of the argument, including the unlicensed facilities still operating while appealing overly litigious denials by the Medical Marihuana Licensing Board.

“Those people were denied for the most ridiculous things imaginable,” Schneider told lawmakers.

The bill comes a little more than a week after an appellate judge stopped the department from enforcing a March 31 deadline for temporarily operating facilities to either get licensed or risk licensing sanctions later on. The deadline would have affected roughly 50 businesses that had been temporarily operating while going through the licensing process.

The judge’s injunction is the latest of several court orders and lawsuits that have frustrated the state’s efforts to set a hard deadline for facilities to get licensed.

Lilly deferred questions about the interplay of the court injunction and the proposed law to legal counsel, but argued his bill may be the best option available to legislators who wanted to set a hard and fast deadline.

“My job as a legislator is to look at the levers that we have the ability to pull,” he said.

eleblanc@detroitnews.com

(517) 371-3661

 

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