Recreational Marijuana Is Legal Tomorrow –What Does that Actually Mean and What Are the Benefits and Pitfalls of the New Law?

On its face, the passing of the Proposal seems simple enough – in a very short time, recreational marijuana will be legal in Michigan. However, it’s somewhat more convoluted than that, even if that is something to be expected for a new law that allows the lawful use of a substance that was so long classified as a dangerous drug. The new legislation has a long list of permitted and required activities, each with their own list of exceptions. So let’s break down what the new Michigan Regulation and Taxation of Marihuana Act (MRTMA) says and where it may bring some benefits or raise some concerns.

First and foremost, there are four main players in the MRTMA – (1) the individuals who smoke or otherwise ingest the marijuana, (2) the businesses who grow, process, transport, and sell the marijuana, (3) the State of Michigan Department of Licensing and Regulatory Affairs who implements the licensing policies for marijuana businesses, and (4) the municipalities who regulate the amount and conduct of marijuana businesses within their respective borders.

Individual Possession and Use

The General Rule

Individuals in the State of Michigan will now have the right to possess up to 2.5 ounces of marijuana on their person and store up to 10 ounces of marijuana and 12 plants in their residence without being subject to arrest, prosecution, or seizure and forfeiture. Additionally, residents will be able to give or transfer up to 2.5 ounces to another person, so long as there is no public advertisement and no cash consideration or other remuneration, and obviously use their marijuana in a non-public setting.

All of those Exceptions to the General Rule

Despite the above rights granted to possession of marijuana for any purpose, there remain many exceptions, including the following:

• Operating vehicles while under the influence of marijuana (similar to drunk driving, however, while development of new roadside tests continues, there is still no widely accepted test like the PBT for alcohol or a per se limit like the 0.08 blood alcohol limit)
• Consuming marijuana while operating or passenger of a motor vehicle, off-road vehicle, or boat (similar to open intoxicants in a vehicle)
• Cultivating marijuana plants visible to the public
• Possessing or using recreational marijuana under the age of 21
• Transferring marijuana to a person under the age of 21
• Possessing or using marijuana on K-12 school grounds
• Using marijuana in “public places” and smoking marijuana “where prohibited by the person who owns, occupies, or manages the property”
• Possessing more than 2.5 ounces in your residence outside of a lockbox

These aren’t actions that are necessarily made illegal by the law, they just aren’t “authorized” by the new law.

Violations of the Rules

While the MRTMA decriminalizes the possession and use of recreational marijuana, this is not absolute. As noted above, there are still rules determining who can have marijuana, where they can have it, how much they can have, and how they can use it. The vast majority of the penalties for violating these rules are civil infractions that will carry a small fine and, in some cases, seizure and forfeiture of marijuana.

However, there are still two circumstances in which an individual may be found guilty of a misdemeanor for violating the act:

1. An individual’s third or subsequent violation for possessing, cultivating, or transferring more than the allowed amount of marijuana (possessing more than 2.5 ounces or cultivating 12 plants) but not more than twice the allowed amount.
2. Any violation for possessing, cultivating, or transferring more than twice the allowed amount of marijuana (possessing more than 5 ounces or cultivating more than 24 plants), provided that the individual “shall not be subject to imprisonment unless the violation was habitual, willful, and for a commercial purpose or the violation involved violence.”

Employers

Despite the new law, employers may still discipline, fire, or refuse to hire employees based on marijuana possession and use, so don’t expect to walk into work smoking a joint without a very quick visit from your boss or HR department.

Leased Property

Landlords cannot prohibit tenants from possessing and using marijuana with the one glaring exception of smoking marijuana. Landlords may therefore claim a breach of a written lease if a tenant lights up marijuana contrary to the lease, but not if the tenant bakes the marijuana into brownies. I’m excitedly awaiting how the Supreme Court resolves the landmark case where a tenant overbakes weed brownies and accidentally ignites them into fire and smoke.

Tax Revenues from Marijuana Sales

The MRTMA will generate tax revenues through a 10% sales tax on marijuana sold by licensed marijuana retailers and microbusinesses. The tax revenues collected by the State of Michigan under this Act will be distributed in the following order:

1. The State will retain amounts necessary for implementation, administration, and enforcement of the law
2. Either until 2022 or for at least 2 years, LARA must provide $20 million annually to approved clinical trials researching marijuana in treatment of medical conditions of the United States armed service veterans and preventing veteran suicide
3. Any remaining balance of funds is then appropriated as follows:
   1. 15% to municipalities with marijuana retail stores or microbusinesses, allocated proportionately according to the number of stores each municipality has within its borders;
   2. 15% to counties in which a marijuana retail store or microbusiness is located, again allocated proportionately according to the number of stores each county has within its borders;
   3. 35% to the school aid fund to be used for K-12 education; and
   4. 35% to the Michigan transportation fund to be used for the repair and maintenance of roads and bridges.

Municipal Licensing

Similar to the Medical Marijuana Facilities Licensing Act, the MRTMA will allow for municipalities to regulate marijuana facilities such as retail stores, growers, transporters, processors, and safety compliance facilities. These marijuana businesses will similarly need to obtain a license from the State of Michigan Department of Licensing and Regulatory Affairs (LARA).

While the licensing scheme is very similar to the licensing scheme for medical marijuana facilities, it is an entirely separate license under an entirely separate process. LARA must begin accepting applications within a year of the MRTMA becoming effective, but will afford priority to applicants who are already licensed as a medical marijuana facility.

While LARA is responsible for promulgating the rules for licensure, it cannot promulgate any rules that are deemed “unreasonably impracticable.”

On the municipal side, the MRTMA again allows for municipalities to regulate or prohibit licensed marijuana establishments within their respective borders similar to the medical marijuana licensing system. However, there are a few key differences:

1. The medical marijuana facilities act, as a default rule, opted municipalities out of allowing medical marijuana facilities if the municipality didn’t take action. This is now reversed – if a municipality does not take action to prohibit marijuana establishments, it will be open season in that municipality for marijuana establishments to open up shop in any location and in any number.
2. Even if a municipality prohibits or limits the number of marijuana establishments within its boundaries, individuals may petition to remove the prohibition or limits and submit a new ordinance to the residents with a petition signed by 5% of its vote count in the previous gubernatorial election.

Therefore, even though licensing is expected to slowly roll out over the next year, if a municipality is not mindful of the new law and fails to prohibit marijuana establishments within its borders, there is nothing prohibiting marijuana establishments from getting a license from LARA and opening up shop in the municipality and claiming that a subsequent ordinance ban the establishment’s presence should not apply to them.

Once again, while municipalities are afforded the discretion to adopt ordinances regulating the activity and behavior of any licensed marijuana establishments within its boundaries, such ordinances cannot be “unreasonably impracticable.”

Potential Pitfalls of the New Law

You Can Get Some Marijuana, but You Can’t Buy Some Marijuana

The current setup of the law will result in a strange starting position for most people who want to get their hands on marijuana. In short, the law allows people to give you certain amounts of marijuana, but it does not allow you to pay them for it. The only authorized sellers of marijuana are potentially years away as the retail licensing system will move at a methodical pace, so you will have to get your hands on marijuana in one of two ways: (1) convince someone to give you some marijuana for free and start cultivating your own from there (i.e. what the law intends), or (2) purchase a random item from someone for an absurd price that comes along with a “free” gift bag of marijuana (i.e. not so much what the law intends). Other states who have legalized marijuana have dealt with forms of gift-based sales, and it remains unclear how it would turn out under Michigan law if you were to buy a package of cookies for $50 that has some free marijuana thrown in as a “thank you for your business gift.”

What is a “Public Place?”

While the new law states that marijuana is not to be consumed in a “public place,” there is no further guidance as to what constitutes a “public place.” Perhaps the most similar state law that defines a public place is the Public Health Code, which makes distinctions between government-owned property and privately-owned property, but lists several specific inclusions such as schools, hospitals, arenas, and other facilities used for the performing arts. However, recent case law in the area of medical marijuana stated that a public place “is generally understood to be any place that is open to or may be used by members of the community, or that is otherwise not restricted to the private use of a defined group of persons.”

So what is a public place when it comes to the use of recreational marijuana? The new law does not authorize “consuming marihuana in a public place or smoking marihuana where prohibited by the person who owns, occupies, or manages the property.” It’s easy enough to gather what this means for you if you’re smoking marijuana in a movie theater or while walking around the mall (you’re probably going to have a bad time), but what about your front porch? What about a banquet hall you have rented out for the night? What if you’re sitting in your car? There will be no shortage of unique situations that beg the question of whether the location is a public place that does not allow for the use of marijuana.

The “Unreasonably Impracticable” Standard

Perhaps one of the biggest questions in the MRTMA is the creation of a standard by which LARA and municipalities must abide, as both LARA’s implementations and municipalities’ ordinances must not be “unreasonably impracticable.” If you’re unfamiliar with this legal standard, it’s because no such standard exists in the State of Michigan. Quite literally, the phrase “unreasonably impracticable” has never appeared in a published Michigan case. However, the MRTMA defines it as follows:

“Unreasonably impracticable” means that the measures necessary to comply with the rules or ordinances adopted pursuant to this act subject licensees to unreasonable risk or require such a high investment of money, time, or any other resource or asset that a reasonably prudent businessperson would not operate the marihuana establishment.

To say this definition is subject to interpretation would be an understatement. What is an unreasonable risk? What is a high investment of money, time, or resources? What regulations should be acceptable to the reasonably prudent businessperson? These are questions that are very fact intensive inquiries that will likely lead to a great deal of litigation between marijuana businesses and the state or local governments. In short, growing pains are going to be unavoidable where a new law introduces a brand new legal standard, so lawsuits over state licensing requirements and ordinance restrictions on marijuana businesses are not only likely, but probably necessary to create the case law that clarifies what is and is not “unreasonably impracticable.”

What Happens If You Don’t Follow the New Law?

As the law currently stands, there is certain conduct that will result in a civil infraction or misdemeanor, such as possession of over 2.5 ounces of marijuana and possessing any amount under the age of 21. However, seemingly everything else falls between the cracks and is left in a state of uncertainty. For example, the law states it does not authorize using marijuana in a public place. So what happens if you are caught smoking a joint on the sidewalk in the middle of town? Under the MRTMA, nothing, really. The law simply says it does not authorize your behavior – it’s not actually illegal or prohibited in any way under the MRTMA. I guess you could say the law suggests that it is “frowned upon” at the very least, but there’s no guidance as to what would actually happen if you were smoking marijuana in public, giving marijuana to children, or doing anything else that falls in between the cracks of the "unauthorized" and "enforcement" provisions of the MRTMA.

With so many questions about where the boundaries of recreational marijuana lie and the law’s insistence on only authorizing certain activity and failing to prohibit activity that abuses the intent of the law, there are many gaps that will either be filled in by other state laws or municipal laws. Therefore, if the state fails to enact a valid law addressing what happens if you smoke marijuana in a public place, we could have a result where certain conduct on the fringes of the law are legal in some cities and illegal in others.

Regardless of the concerns, recreational marijuana is now here in Michigan, and we certainly cannot say that we didn’t expect growing pains as communities adjust. However, because of the way this new law is written in many respects (confusingly), I would venture a guess that people are going to arrive at very different conclusions in applying this law to their circumstances and everyone should prepare to see a healthy amount of litigation.