The competition between Michigan and California in the cannabis industry extends beyond regulated recreational sales. Michigan's operators also rank high in terms of unpaid invoices, posing significant financial challenges within the market. According to Brett Gelfand, managing partner at Cannabiz Collects and founder of the Cannabiz Credit Association, Michigan is emerging as one of the most problematic states for unpaid debts in the regulated cannabis industry.
Gelfand noted that while Oregon and Colorado were previously significant markets for debt collection, many companies in those states have been "weeded out," leading to a decrease in collection activity. However, new markets like Michigan are increasingly contributing to the issue.
Whitney Economics, an Oregon-based cannabis data and research company, forecasts that delinquent payments in the U.S. cannabis industry could exceed $4 billion in 2024.
A primary factor contributing to unpaid invoices in the cannabis industry is the lack of access to traditional banking and capital. Unlike other businesses, cannabis operators often cannot obtain credit cards or standard operating capital. This forces them to rely on trade credit, effectively making them act as banks without the necessary expertise or safeguards.
When cannabis companies extend net-15 or net-30 terms, they take on the role of financial institutions but without the recourse available to banks, such as credit checks or liens. This puts them at a disadvantage, as they feel compelled to extend credit to secure sales, risking financial instability.
The retail sector is most notorious for nonpayment, triggering a domino effect across the supply chain. Retailers' unpaid debts affect producers and brands, which in turn delay payments to testing labs and other service providers. Larger ancillary companies, such as grow-supply and lighting businesses, are generally more cautious and less likely to extend credit freely due to their experience in the industry.
To mitigate financial risks, cannabis companies should implement several best practices:
Dedicated Collections Role: Assign someone responsible for collecting payments to ensure accountability and follow-through.
Clear Policies and Procedures: Document and enforce a comprehensive policy for managing accounts receivable.
Customer Analysis: Evaluate a company's creditworthiness before extending credit terms.
Onboarding Agreements: Use legally reviewed agreements with default clauses to protect against nonpayment.
Personal Guarantees: Secure personal guarantees for significant credit extensions to safeguard against default.
With many retail chains struggling financially, vendors are often left with little recovery, emphasizing the need for these protective measures.
Many cannabis operators hesitate to report default accounts to collections due to concerns about their reputation. They fear being perceived negatively in the industry. However, Gelfand argues that this mindset needs to change. Not fulfilling payment obligations can lead to severe consequences for other businesses, potentially causing them to fail.
Operators must also be cautious about informal reporting through Facebook or WhatsApp groups dedicated to exposing delinquent companies. While well-intentioned, these groups can violate antitrust laws, especially if they deter sales to specific businesses. It's crucial for industry participants to share information in a regulated manner to avoid legal repercussions.
A 15-year-old from Royal Oak was arrested in connection with two break-ins, including one at a cannabis dispensary. According to police, the incident occurred early Saturday morning at the Gatsby Cannabis Company on Meijer Drive near 14 Mile and Coolidge.
The police reported that the teenager smashed a window to gain entry into the dispensary and proceeded to ransack the building. The suspect stole more than $100,000 worth of cannabis and related products.
During a search of the teen's home, investigators discovered the stolen cannabis products and related merchandise. The teen is also suspected of fleeing from a Royal Oak officer in a high-speed chase before the dispensary burglary.
Authorities have charged the teenager with breaking and entering a business and third-degree fleeing and eluding. He is currently detained at Oakland County Children's Village. If convicted of the charges, the teen faces up to 10 years in prison for the break-in and an additional five years for fleeing and eluding.
Investigators also believe that the teen was involved in a home burglary on July 26th in the 800 block of McLean. However, no charges related to the home invasion have been announced yet.
"Our investigators quickly identified the suspect in this case and worked as a team to safely arrest this juvenile suspect and recover an astounding amount of evidence," said Royal Oak Police Chief Michael Moore.
Pinckney moved forward with plans for two recreational cannabis businesses on Monday, but not without some hesitation from local officials.
The Pinckney Planning Commission re-approved the final site plan for The Means Project, a cannabis retail, growing, and processing facility located at the former Pinckney Elementary at 935 M-36. Additionally, the commission gave preliminary approval to Essence, a proposed marijuana microbusiness that will include a retail showroom, grow room, storage, and processing facility. This development is planned for a vacant plot at 1268 E. M-36, between Wendy's and Taco Bell. Essence will need final site plan approval in the future.
Initially, the commission voted 4-2 against The Means Project without explanation, with Vice Chair Joe Hartman and Council President Linda Lavey voting in favor. Later in the meeting, Hartman encouraged a re-vote after discussing some commissioners' concerns, resulting in a 5-1 vote to approve with contingencies. Chair Christine Oliver voted "no" the second time.
The previously approved site plan for The Means Project expired due to construction delays and a legal dispute, with no changes made to the plans in the interim.
Jacob Kahn, an attorney for The Means Project, was surprised by the initial denial, citing that village officials had already extended a special land use permit, which was a prerequisite for final site plan approval.
"We are not actually allowed to vote 'no'; that would be illegal," Hartman explained later in the meeting.
"It would probably get us sued," added Lavey. "I also hate that marijuana has come to town, but people voted, so it's here. It's a legal business. They have a site plan that was already approved. So, what's stopping us tonight?"
Commissioners Oliver and Alex Smith expressed concerns about the project's completion, given its history of delays.
"Given the history and the track record, that's where my concerns come from," Smith noted.
Commissioner Trisha Wagner cited traffic concerns as her reason for initially voting "no."
Village Zoning Administrator Julie Durkin reminded the commission that The Means Project has a new general contractor and a performance guarantee in place. She also noted that the Michigan Department of Transportation oversees traffic on M-36.
The commission then voted to approve the project.
Marco Lytwyn, representing Pinckney Developments, LLC, proposed Essence, a 3,200-square-foot Class A microbusiness. In Michigan, such microbusinesses can grow up to 300 plants on-site to process and sell.
While some commissioners expressed reluctance, the commission approved the proposal with a 5-1 vote, with Smith voting against.
Commissioner Deborah Grischke voiced concerns about traffic, questioning a report predicting about 100 vehicles a day. She also sought more information about potential impacts on the watershed after public concerns about nearby Honey Creek.
Lytwyn must address contingencies, including a third-party traffic study and county approval of a drainage plan, among other conditions.
In the rapidly expanding cannabis industry, ensuring robust fire safety measures is critical for protecting both facilities and personnel. Currently, cannabis growers and processors adhere to the fire safety requirements outlined in the National Fire Protection Association (NFPA) 1, 2021 edition. This includes specific guidelines detailed in Chapter 38, which focuses on cannabis facilities. Recognizing the need for more comprehensive standards due to the industry's growth, the NFPA has initiated the development of a new standard: NFPA 420. This upcoming standard aims to specifically address the fire protection needs of cannabis growing and processing facilities.
The proposed NFPA 420 standard, titled "Fire Protection of Cannabis Growing and Processing Facilities," is set to provide targeted guidelines for the cannabis industry. The creation of a new NFPA standard involves an extensive and meticulous process, requiring collaboration among various stakeholders, including industry professionals, architects, fire safety officials, and code enforcers. The aim is to ensure that the standard comprehensively addresses the unique fire safety challenges faced by cannabis facilities.
NFPA 420 is currently projected to be released in 2027. Once finalized, it could become a key document referenced by the Cannabis Regulatory Agency (CRA) rules, potentially replacing or complementing the existing NFPA 1 standards. The ongoing development of NFPA 420 highlights the NFPA's commitment to adapting fire safety regulations to the evolving needs of the cannabis industry.
The development process for NFPA 420 has reached the Public Input stage, allowing stakeholders and the public to contribute their insights and suggestions to enhance the draft standard. This is a crucial phase where diverse perspectives can help shape the final document, ensuring it effectively addresses all aspects of fire safety for cannabis facilities.
Interested parties are encouraged to review the draft standard and submit their input via the NFPA website. To access the draft and provide feedback, individuals must create a free NFPA online account using a valid email address and password. Once logged in, users can view the entire draft, including its table of contents and detailed chapters.
Feedback can be submitted online at nfpa.org/420next, where a link labeled "Submit Public Input Online" is available for contributors. The NFPA urges stakeholders to participate in this process, as their feedback can significantly impact the standard's development and effectiveness.
As the cannabis industry continues to grow, the establishment of NFPA 420 will play a vital role in enhancing fire safety practices within cannabis facilities. By incorporating insights from a wide range of stakeholders, the NFPA aims to create a comprehensive standard that addresses the unique fire protection challenges faced by cannabis growers and processors.
For those involved in the cannabis industry, staying informed and engaged with the development of NFPA 420 is essential. By contributing to the public input process, stakeholders can help shape a standard that promotes safer working environments and supports the sustainable growth of the industry.
Port Huron may soon see another cannabis retail store, this time at a former bank site on 10th Street. The proposal is set to be discussed during Tuesday's Port Huron planning commission meeting, where an application for a special use permit and rezoning of an adjacent lot will be reviewed.
The applicant, MS Industries, LLC, is planning to develop what would be the sixth cannabis establishment to initiate operations in Port Huron over the past 18 months. As of Friday, representatives from MS Industries had not responded to requests for comments, leaving the timeline for opening uncertain.
According to the application, the proposed site at 1814 10th Street has been vacant for eight years. Previously a Flagstar Bank, the 2,300-square-foot property features a drive-thru window. The new cannabis store is tentatively named Leaf and Bud Port Huron.
The plan includes a request to rezone a lot immediately north of the former bank, at the corner of 10th and Division streets. This lot is currently designated as an R-1 district for single- and two-family homes but would be changed to a C-1 district for general business use. The vacant site is intended for parking, providing 39 parking spaces for the establishment.
The proposed floor plan for the store features a public entrance vestibule, a waiting area, and two restrooms. The sales area will have a U-shaped restricted counter separated by swing doors, along with offices and employee spaces. There will also be stairs leading to a secure vault. Exterior plans show a Paige façade with black fiberglass roof shingles and insulated glass windows with aluminum frames.
Local landowner Keith Gurnsey has owned the 10th Street site since 2018. According to documents in Tuesday's agenda, he has entered a real estate purchase agreement with Michigan Wellness Partners, LLC, which has a contingent lease with MS Industries.
MS Industries was not the original holder of the provisional license for the 10th Street address. That was Portage Acquisitions, which can transfer the license to another entity under a city ordinance approved by voters in 2020. The license for 1814 10th Street was initially granted to Portage Acquisitions, LLC, which also had other potential cannabis store locations, including 515 Wall Street.
In May, planning commissioners approved a special use permit for the Wall Street site, with work appearing to be underway on this long-vacant property near downtown.
Additionally, permits have been granted for two other cannabis entities at 10th Street and Lapeer Avenue, as well as 1033 River Street. The latter, called the Exhibit, was planning an opening this month after a fire delayed its launch late last year.
Other recent cannabis store openings in Port Huron include JARS Cannabis at Quay Street and Huron Avenue, which opened last winter, and Moses Roses at 1600 Pine Grove Avenue, which began operations this spring.
The Port Huron planning commission will meet at 6 p.m. on Tuesday in the meeting chambers of the Municipal Office Center at 100 McMorran Boulevard. For more information, agenda materials are available online at the city's official website.
The Michigan Supreme Court recently issued an opinion in the case of Pinebrook Warren LLC vs. City of Warren, overturning a decision by the Court of Appeals and affirming the Macomb County Circuit Court's ruling. The case centers on the medical cannabis licensing process in Warren and the actions of the city's Marijuana Review Committee.
The Marijuana Review Committee was responsible for reviewing and scoring applications for medical cannabis licenses. The main issue in the case was whether this committee functioned as a decision-making public body subject to the Open Meetings Act (OMA). The Supreme Court ruled that the committee violated the OMA by conducting multiple closed-door meetings to review and score over 60 applications for medical cannabis licenses.
Based on the committee's recommendations, the Warren City Council awarded licenses to 15 applicants. However, several companies that were not awarded licenses filed lawsuits in Macomb County Circuit Court. They claimed the committee's scoring system was flawed and that it violated the OMA by holding 13 meetings that were not open to the public.
Judge Carl Marlinga of the Macomb County Circuit Court ruled in April 2020 that the committee had indeed violated the OMA, rendering all licenses issued by the committee invalid. Despite this, the Warren City Council approved a settlement in August 2021 allowing the originally awarded 15 licenses to remain and added three more licenses, bringing the total to 18. Judge Marlinga reiterated his decision in September 2021, stating that the settlement violated his order and declared the licenses void, which led to the case moving to the appellate court.
On July 31st, 2024, the Michigan Supreme Court determined that the Marijuana Review Committee acted as a "governing body" because it effectively ranked and decided which applicants would receive licenses, a role not performed by the city council. As a result, the committee was required to comply with the OMA.
The Supreme Court remanded the case to the Court of Appeals to assess whether the meetings that complied with the OMA sufficiently addressed the violations and to consider other issues preserved by the parties involved.
The five-member Marijuana Review Committee included Warren City Council President Cecil St. Pierre, former councilmen Ron Papandra and Steve Warner, former city attorney Ethan Vinson, and former public service director Richard Sabaugh. Former council members Robert Boccomino and Keith Sadowski served as alternates.
Reni George, vice president of government affairs for Pure Roots LLC, one of the plaintiffs, expressed approval of the Supreme Court's decision. He expressed hope that this ruling would allow Pure Roots to establish a location in Warren.
"We would like to figure out how to move forward and talk to our legal counsel and figure out what the city is going to do with regard to recreational marijuana," said George. "We will work with the current administration and city council and invest more dollars to try and make this business happen in Warren."
Pure Roots currently operates in Lansing, Ann Arbor, Battle Creek, and Center Line. George emphasized the importance of transparency in the licensing process, stating, "We are happy because we believe there was a violation of the OMA. Proceedings should be an open process based on merit, the ability to invest dollars in Warren, build a facility and remain compliant."
He added, "It should not be about people who have made political donations to members of the city council or have had previous interactions with the city."
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