SB-1262, As Passed House, December 21, 2018

 

 

 

 

 

 

 

 

 

 

 

HOUSE SUBSTITUTE FOR

 

SENATE BILL NO. 1262

 

 

 

 

 

 

 

 

 

 

 

 

 

     A bill to amend 2016 PA 281, entitled

 

"Medical marihuana facilities licensing act,"

 

by amending sections 102, 207, 301, 305, 401, 402, 406, 407, 409,

 

and 702 (MCL 333.27102, 333.27207, 333.27301, 333.27305, 333.27401,

 

333.27402, 333.27406, 333.27407, 333.27409, and 333.27702), section

 

102 as amended by 2018 PA 10 and section 402 as amended by 2017 PA

 

105, and by adding section 407a; and to repeal acts and parts of

 

acts.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 102. As used in this act:

 

     (a) "Advisory panel" or "panel" means the marihuana advisory

 

panel created in section 801.

 

     (b) "Affiliate" means any person that controls, is controlled

 

by, or is under common control with; is in a partnership or joint


venture relationship with; or is a co-shareholder of a corporation,

 

a co-member of a limited liability company, or a co-partner in a

 

limited liability partnership with a licensee or applicant.

 

     (c) "Applicant" means a person who applies for a state

 

operating license. With Applicant includes, with respect to

 

disclosures in an application, or for purposes of ineligibility for

 

a license under section 402, the term applicant includes an

 

officer, director, and managerial employee of the applicant and a

 

person who holds any direct or indirect ownership interest in the

 

applicant.or for purposes of prior board approval of a transfer of

 

interest under section 406, and only for applications submitted on

 

or after January 1, 2019, a managerial employee of the applicant, a

 

person holding an indirect ownership interest of 10% or more in the

 

applicant, and the following for each type of applicant:

 

     (i) For an individual or sole proprietorship: the proprietor

 

and spouse.

 

     (ii) For a partnership and limited liability partnership: all

 

partners and their spouses. For a limited partnership and limited

 

liability limited partnership: all general and limited partners,

 

not including a limited partner holding a direct or indirect

 

ownership interest of less than 10% and who does not exercise

 

control over or participate in the management of the partnership,

 

and their spouses. For a limited liability company: all members and

 

managers, not including a member holding a direct or indirect

 

ownership interest of less than 10% and who does not exercise

 

control over or participate in the management of the company, and

 

their spouses.


     (iii) For a privately held corporation: all corporate officers

 

or persons with equivalent titles and their spouses, all directors

 

and their spouses, and all stockholders, not including those

 

holding a direct or indirect ownership interest of less than 10%,

 

and their spouses.

 

     (iv) For a publicly held corporation: all corporate officers

 

or persons with equivalent titles and their spouses, all directors

 

and their spouses, and all stockholders, not including those

 

holding a direct or indirect ownership interest of less than 10%,

 

and their spouses.

 

     (v) For a multilevel ownership enterprise: any entity or

 

person that receives or has the right to receive 10% or more of the

 

gross or net profit from the enterprise during any full or partial

 

calendar or fiscal year.

 

     (vi) For a nonprofit corporation: all individuals and entities

 

with membership or shareholder rights in accordance with the

 

articles of incorporation or the bylaws and their spouses.

 

     (d) "Board" means the medical marihuana licensing board

 

created in section 301.

 

     (e) "Cutting" means a section of a lead stem or root stock

 

that is used for vegetative asexual propagation.

 

     (f) "Department" means the department of licensing and

 

regulatory affairs.

 

     (g) "Grower" means a licensee that is a commercial entity

 

located in this state that cultivates, dries, trims, or cures and

 

packages marihuana for sale to a processor, provisioning center, or

 

another grower.


     (h) "Industrial hemp" means that term as defined in section

 

7106 of the public health code, 1978 PA 368, MCL 333.7106.

 

     (i) "Industrial hemp research and development act" means the

 

industrial hemp research and development act, 2014 PA 547.

 

     (j) (h) "Licensee" means a person holding a state operating

 

license.

 

     (k) (i) "Marihuana" means that term as defined in section 7106

 

of the public health code, 1978 PA 368, MCL 333.7106.

 

     (l) (j) "Marihuana facility" means a location at which a

 

licensee is licensed to operate under this act.

 

     (m) (k) "Marihuana plant" means any plant of the species

 

Cannabis sativa L. Marihuana plant does not include industrial

 

hemp.

 

     (n) (l) "Marihuana-infused product" means a topical

 

formulation, tincture, beverage, edible substance, or similar

 

product containing any usable marihuana that is intended for human

 

consumption in a manner other than smoke inhalation. Marihuana-

 

infused product is not considered a food for purposes of the food

 

law, 2000 PA 92, MCL 289.1101 to 289.8111.

 

     (o) (m) "Marihuana tracking act" means the marihuana tracking

 

act, 2016 PA 282, MCL 333.27901 to 333.27904.

 

     (p) (n) "Michigan medical marihuana act" means the Michigan

 

medical marihuana act, 2008 IL 1, MCL 333.26421 to 333.26430.

 

     (q) (o) "Municipality" means a city, township, or village.

 

     (r) (p) "Paraphernalia" means any equipment, product, or

 

material of any kind that is designed for or used in growing,

 

cultivating, producing, manufacturing, compounding, converting,


storing, processing, preparing, transporting, injecting, smoking,

 

ingesting, inhaling, or otherwise introducing into the human body,

 

marihuana.

 

     (s) (q) "Person" means an individual, corporation, limited

 

liability company, partnership, limited partnership, limited

 

liability partnership, limited liability limited partnership,

 

trust, or other legal entity.

 

     (t) (r) "Plant" means any living organism that produces its

 

own food through photosynthesis and has observable root formation

 

or is in growth material.

 

     (u) (s) "Processor" means a licensee that is a commercial

 

entity located in this state that purchases marihuana from a grower

 

and that extracts resin from the marihuana or creates a marihuana-

 

infused product for sale and transfer in packaged form to a

 

provisioning center or another processor.

 

     (v) (t) "Provisioning center" means a licensee that is a

 

commercial entity located in this state that purchases marihuana

 

from a grower or processor and sells, supplies, or provides

 

marihuana to registered qualifying patients, directly or through

 

the patients' registered primary caregivers. Provisioning center

 

includes any commercial property where marihuana is sold at retail

 

to registered qualifying patients or registered primary caregivers.

 

A noncommercial location used by a primary caregiver to assist a

 

qualifying patient connected to the caregiver through the

 

department's marihuana registration process in accordance with the

 

Michigan medical marihuana act is not a provisioning center for

 

purposes of this act.


     (w) (u) "Registered primary caregiver" means a primary

 

caregiver who has been issued a current registry identification

 

card under the Michigan medical marihuana act.

 

     (x) (v) "Registered qualifying patient" means a qualifying

 

patient who has been issued a current registry identification card

 

under the Michigan medical marihuana act or a visiting qualifying

 

patient as that term is defined in section 3 of the Michigan

 

medical marihuana act, MCL 333.26423.

 

     (y) (w) "Registry identification card" means that term as

 

defined in section 3 of the Michigan medical marihuana act, MCL

 

333.26423.

 

     (z) (x) "Rules" means rules promulgated under the

 

administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to

 

24.328, by the department in consultation with the board to

 

implement this act.

 

     (aa) (y) "Safety compliance facility" means a licensee that is

 

a commercial entity that takes marihuana from a marihuana facility

 

or receives marihuana from a registered primary caregiver, tests

 

the marihuana for contaminants and for tetrahydrocannabinol and

 

other cannabinoids, returns the test results, and may return the

 

marihuana to the marihuana facility.

 

     (bb) (z) "Secure transporter" means a licensee that is a

 

commercial entity located in this state that stores marihuana and

 

transports marihuana between marihuana facilities for a fee.

 

     (cc) (aa) "Seed" means the fertilized, ungerminated, matured

 

ovule, containing an embryo or rudimentary plant, of a marihuana

 

plant that is flowering.


     (dd) (bb) "Seedling" means a marihuana plant that has

 

germinated and has not flowered and is not harvestable.

 

     (ee) (cc) "State operating license" or, unless the context

 

requires a different meaning, "license" means a license that is

 

issued under this act that allows the licensee to operate as 1 of

 

the following, specified in the license:

 

     (i) A grower.

 

     (ii) A processor.

 

     (iii) A secure transporter.

 

     (iv) A provisioning center.

 

     (v) A safety compliance facility.

 

     (ff) (dd) "Statewide monitoring system" or, unless the context

 

requires a different meaning, "system" means an internet-based,

 

statewide database established, implemented, and maintained by the

 

department under the marihuana tracking act, that is available to

 

licensees, law enforcement agencies, and authorized state

 

departments and agencies on a 24-hour basis for all of the

 

following:

 

     (i) Verifying registry identification cards.

 

     (ii) Tracking marihuana transfer and transportation by

 

licensees, including transferee, date, quantity, and price.

 

     (iii) Verifying in commercially reasonable time that a

 

transfer will not exceed the limit that the patient or caregiver is

 

authorized to receive under section 4 of the Michigan medical

 

marihuana act, MCL 333.26424.

 

     (gg) (ee) "Tissue culture" means a marihuana plant cell,

 

cutting, tissue, or organ, that is kept under a sterile condition


on a nutrient culture medium of known composition and that does not

 

have visible root formation. A tissue culture is not a marihuana

 

plant for purposes of a grower.

 

     (hh) (ff) "Usable marihuana" means the dried leaves, flowers,

 

plant resin, or extract of the marihuana plant, but does not

 

include the seeds, stalks, and roots of the plant.

 

     Sec. 207. (1) A Except as otherwise provided in subsection

 

(2), a licensee shall adopt and use a third-party inventory control

 

and tracking system that is capable of interfacing with the

 

statewide monitoring system to allow the licensee to enter or

 

access information in the statewide monitoring system as required

 

under this act and rules. The third-party inventory control and

 

tracking system must have all of the following capabilities

 

necessary for the licensee to comply with the requirements

 

applicable to the licensee's license type:

 

     (a) Tracking all marihuana plants, products, packages, patient

 

and primary caregiver purchase totals, waste, transfers,

 

conversions, sales, and returns that are linked to unique

 

identification numbers.

 

     (b) Tracking lot and batch information throughout the entire

 

chain of custody.

 

     (c) Tracking all products, conversions, and derivatives

 

throughout the entire chain of custody.

 

     (d) Tracking marihuana plant, batch, and product destruction.

 

     (e) Tracking transportation of product.

 

     (f) Performing complete batch recall tracking that clearly

 

identifies all of the following details relating to the specific


batch subject to the recall:

 

     (i) Sold product.

 

     (ii) Product inventory that is finished and available for

 

sale.

 

     (iii) Product that is in the process of transfer.

 

     (iv) Product being processed into another form.

 

     (v) Postharvest raw product, such as product that is in the

 

drying, trimming, or curing process.

 

     (g) Reporting and tracking loss, theft, or diversion of

 

product containing marihuana.

 

     (h) Reporting and tracking all inventory discrepancies.

 

     (i) Reporting and tracking adverse patient responses or dose-

 

related efficacy issues.

 

     (j) Reporting and tracking all sales and refunds.

 

     (k) Electronically receiving and transmitting information as

 

required under this act, the Michigan medical marihuana act, 2008

 

IL 1, MCL 333.26421 to 333.26430, and the marihuana tracking act.

 

     (l) Receiving testing results electronically from a safety

 

compliance facility via a secured application program interface

 

into the system and directly linking the testing results to each

 

applicable source batch and sample.

 

     (m) Identifying test results that may have been altered.

 

     (n) Providing the licensee with access to information in the

 

tracking system that is necessary to verify that the licensee is

 

carrying out the marihuana transactions authorized under the

 

licensee's license in accordance with this act.

 

     (o) Providing information to cross-check that product sales


are made to a registered qualifying patient or a registered primary

 

caregiver on behalf of a registered qualifying patient and that the

 

product received the required testing.

 

     (p) Providing the department and state agencies with access to

 

information in the database that they are authorized to access.

 

     (q) Providing law enforcement agencies with access to only the

 

information in the database that is necessary to verify that an

 

individual possesses a valid and current registry identification

 

card.

 

     (r) Providing licensees with access only to the information in

 

the system that they are required to receive before a sale,

 

transfer, transport, or other activity authorized under a license

 

issued under this act.

 

     (s) Securing the confidentiality of information in the

 

database by preventing access by a person who is not authorized to

 

access the statewide monitoring system or is not authorized to

 

access the particular information.

 

     (t) Providing analytics to the department regarding key

 

performance indicators such as the following:

 

     (i) Total daily sales.

 

     (ii) Total marihuana plants in production.

 

     (iii) Total marihuana plants destroyed.

 

     (iv) Total inventory adjustments.

 

     (2) If the statewide monitoring system is capable of allowing

 

a licensee to access or enter information into the statewide

 

monitoring system without use of a third-party inventory control

 

and tracking system, a licensee may access or enter information


into the statewide monitoring system directly and the licensee is

 

not required to adopt and use a third-party inventory control and

 

tracking system.

 

     Sec. 301. (1) The medical marihuana licensing board is created

 

within the department of licensing and regulatory affairs.

 

     (2) The board consists of 5 members who are residents of this

 

state, not more than 3 of whom are members of the same political

 

party. The governor shall appoint the members. One of the members

 

shall be appointed from 3 nominees submitted by the senate majority

 

leader and 1 from 3 nominees submitted by the speaker of the house.

 

The governor shall designate 1 of the members as chairperson.

 

     (3) The members shall be appointed for terms of 4 years,

 

except, of those who are first appointed, 1 member shall be

 

appointed for a term of 2 years and 2 members shall be appointed

 

for a term of 3 years. A member's term expires on December 31 of

 

the last year of the member's term. If a vacancy occurs, the

 

governor shall appoint a successor to fill the unexpired term in

 

the manner of the original appointment.

 

     (4) Each member of the board shall be reimbursed for all

 

actual and necessary expenses and disbursements incurred in

 

carrying out official duties.

 

     (5) A board member shall not hold any other public office for

 

which he or she receives compensation other than necessary travel

 

or other incidental expenses.

 

     (6) A person who is not of good moral character or who has

 

been indicted for, charged with, or convicted of, pled guilty or

 

nolo contendere to, or forfeited bail concerning any felony or a


misdemeanor involving a controlled substance violation, theft,

 

dishonesty, or fraud under the laws of this state, any other state,

 

or the United States or a local ordinance in any state involving a

 

controlled substance violation, dishonesty, theft, or fraud that

 

substantially corresponds to a misdemeanor in that state is not

 

eligible to serve on the board.

 

     (7) The governor may remove any member of the board for

 

neglect of duty, misfeasance, malfeasance, nonfeasance, or any

 

other just cause.

 

     (8) The department in conjunction with the board shall employ

 

an executive director and other personnel as necessary to assist

 

the board in carrying out its duties. The executive director shall

 

devote his or her full time to the duties of the office and shall

 

not hold any other office or employment.

 

     (8) (9) The board shall not appoint or employ an individual if

 

any of the following circumstances exist:

 

     (a) During the 3 years immediately preceding appointment or

 

employment, the individual held any direct or indirect interest in,

 

or was employed by, a person who is licensed to operate under this

 

act or under a corresponding license in another jurisdiction or a

 

person with an application for an operating license pending before

 

the board or in any other jurisdiction. The board shall not employ

 

an individual who has a direct or indirect interest in a licensee

 

or a marihuana facility.

 

     (b) The individual or his or her spouse, parent, child,

 

child's spouse, sibling, or spouse of a sibling has an application

 

for a license pending before the board or is a member of the board


of directors of, or an individual financially interested in, any

 

licensee or marihuana facility.

 

     (9) (10) Each member of the board , the executive director,

 

and each key employee as determined by the department shall file

 

with the governor a financial disclosure statement listing all

 

assets and liabilities, property and business interests, and

 

sources of income of the member , executive director, and key

 

employee and his or her spouse, if any, affirming that the member ,

 

executive director, and key employee are in compliance with

 

subsection (9)(a) (8)(a) and (b). The financial disclosure

 

statement shall be made under oath and filed at the time of

 

employment and annually thereafter.

 

     (10) (11) Each employee of the board shall file with the board

 

a financial disclosure statement listing all assets and

 

liabilities, property and business interests, and sources of income

 

of the employee and his or her spouse. This subsection does not

 

apply to the executive director or a key employee.

 

     (11) (12) A member of the board , executive director, or key

 

employee shall not hold any direct or indirect interest in, be

 

employed by, or enter into a contract for services with an

 

applicant, a board licensee, or a marihuana facility for a period

 

of 4 years after the date his or her employment or membership on

 

the board terminates. The department in consultation with the board

 

shall define the term "direct or indirect interest" by rule.

 

     (12) (13) For 2 years after the date his or her employment

 

with the board is terminated, an employee of the board shall not

 

acquire any direct or indirect interest in, be employed by, or


enter into a contract for services with any applicant, licensee, or

 

marihuana facility.

 

     (13) (14) For 2 years after the termination of his or her

 

office or employment with the board, a board member or an

 

individual employed by the board shall not represent any person or

 

party other than this state before or against the board.

 

     (14) (15) A business entity in which a former board member or

 

employee or agent has an interest, or any partner, officer, or

 

employee of the business entity, shall not make any appearance or

 

represent a party that the former member, employee, or agent is

 

prohibited from appearing for or representing. As used in this

 

subsection, "business entity" means a corporation, limited

 

liability company, partnership, limited liability partnership,

 

association, trust, or other form of legal entity.

 

     Sec. 305. (1) By January 31 of each year, each member of the

 

board shall prepare and file with the governor's office and the

 

board a disclosure form in which the member does all of the

 

following:

 

     (a) Affirms that the member or the member's spouse, parent,

 

child, or child's spouse is not a member of the board of directors

 

of, financially interested in, or employed by a licensee or

 

applicant.

 

     (b) Affirms that the member continues to meet any other

 

criteria for board membership under this act or the rules

 

promulgated by the board.

 

     (c) Discloses any legal or beneficial interests in any real

 

property that is or that may be directly or indirectly involved


with operations authorized by this act.

 

     (d) Discloses any other information as may be required to

 

ensure that the integrity of the board and its work is maintained.

 

     (2) By January 31 of each year, each employee of the board

 

shall prepare and file with the board an employee disclosure form

 

in which the employee does all of the following:

 

     (a) Affirms the absence of financial interests prohibited by

 

this act.

 

     (b) Discloses any legal or beneficial interests in any real

 

property that is or that may be directly or indirectly involved

 

with operations authorized by this act.

 

     (c) Discloses whether the employee or the employee's spouse,

 

parent, child, or child's spouse is financially interested in or

 

employed by a licensee or an applicant for a license under this

 

act.

 

     (d) Discloses such other matters as may be required to ensure

 

that the integrity of the board and its work is maintained.

 

     (3) A member, employee, or agent of the board who becomes

 

aware that the member, employee, or agent of the board or his or

 

her spouse, parent, or child is a member of the board of directors

 

of, financially interested in, or employed by a licensee or an

 

applicant shall immediately provide detailed written notice thereof

 

to the chairperson.

 

     (4) A member, employee, or agent of the board who within the

 

previous 10 years has been indicted for, charged with, or convicted

 

of, pled guilty or nolo contendere to, or forfeited bail concerning

 

a misdemeanor involving controlled substances, dishonesty, theft,


or fraud or a local ordinance in any state involving controlled

 

substances, dishonesty, theft, or fraud that substantially

 

corresponds to a misdemeanor in that state, or a felony under

 

Michigan law, the laws of any other state, or the laws of the

 

United States or any other jurisdiction shall immediately provide

 

detailed written notice of the conviction or charge to the

 

chairperson.

 

     (5) Any member, employee, or agent of the board who is

 

negotiating for, or acquires by any means, any interest in any

 

person who is a licensee or an applicant, or any person affiliated

 

with such a person, shall immediately provide written notice of the

 

details of the interest to the chairperson. The member, employee,

 

or agent of the board shall not act on behalf of the board with

 

respect to that person.

 

     (6) A member, employee, or agent of the board shall not enter

 

into any negotiations for employment with any person or affiliate

 

of any person who is a licensee or an applicant and shall

 

immediately provide written notice of the details of any such

 

negotiations or discussions in progress to the chairperson. The

 

member, employee, or agent of the board shall not take action on

 

behalf of the board with respect to that person.

 

     (7) Any member, employee, or agent of the board who receives

 

an invitation, written or oral, to initiate a discussion concerning

 

employment or the possibility of employment with a person or

 

affiliate of a person who is a licensee or an applicant shall

 

immediately report that he or she received the invitation to the

 

chairperson. The member, employee, or agent of the board shall not


take action on behalf of the board with respect to the person.

 

     (8) A licensee or applicant shall not knowingly initiate a

 

negotiation for or discussion of employment with a member,

 

employee, or agent of the board. A licensee or applicant who

 

initiates a negotiation or discussion about employment shall

 

immediately provide written notice of the details of the

 

negotiation or discussion to the chairperson as soon as he or she

 

becomes aware that the negotiation or discussion has been initiated

 

with a member, employee, or agent of the board.

 

     (9) A member, employee, or agent of the board, or former

 

member, employee, or agent of the board, shall not disseminate or

 

otherwise disclose any material or information in the possession of

 

the board that the board considers confidential unless specifically

 

authorized to do so by the chairperson or the board.

 

     (10) A member, employee, or agent of the board or a parent,

 

spouse, sibling, spouse of a sibling, child, or spouse of a child

 

of a member, employee, or agent of the board shall not accept any

 

gift, gratuity, compensation, travel, lodging, or anything of

 

value, directly or indirectly, from any licensee or any applicant

 

or affiliate or representative of a licensee or applicant, unless

 

the acceptance conforms to a written policy or directive that is

 

issued by the chairperson or the board. Any member, employee, or

 

agent of the board who is offered or receives any gift, gratuity,

 

compensation, travel, lodging, or anything of value, directly or

 

indirectly, from any licensee or any applicant or affiliate or

 

representative of an applicant or licensee shall immediately

 

provide written notification of the details to the chairperson.


     (11) A licensee or applicant, or an affiliate or

 

representative of an applicant or licensee, shall not, directly or

 

indirectly, give or offer to give any gift, gratuity, compensation,

 

travel, lodging, or anything of value to any member, employee, or

 

agent of the board that the member, employee, or agent of the board

 

is prohibited from accepting under subsection (10).

 

     (12) A member, employee, or agent of the board shall not

 

engage in any conduct that constitutes a conflict of interest and

 

shall immediately advise the chairperson in writing of the details

 

of any incident or circumstances that would present the existence

 

of a conflict of interest with respect to performing board-related

 

work or duties.

 

     (13) A member, employee, or agent of the board who is

 

approached and offered a bribe as described in section 118 of the

 

Michigan penal code, 1931 PA 328, MCL 750.118, or this act shall

 

immediately provide written account of the details of the incident

 

to the chairperson and to a law enforcement officer of a law

 

enforcement agency having jurisdiction.

 

     (14) A member, employee, or agent of the board shall disclose

 

his or her past involvement with any marihuana enterprise in the

 

past 5 years and shall not engage in political activity or

 

politically related activity during the duration of his or her

 

appointment or employment.

 

     (15) A former member, employee, or agent of the board may

 

appear before the board as a fact witness about matters or actions

 

handled by the member, employee, or agent during his or her tenure

 

as a member, employee, or agent of the board. The member, employee,


or agent of the board shall not receive compensation for such an

 

appearance other than a standard witness fee and reimbursement for

 

travel expenses as established by statute or court rule.

 

     (16) A licensee or applicant or any affiliate or

 

representative of an applicant or licensee shall not engage in ex

 

parte communications with a member of the board. A member of the

 

board shall not engage in any ex parte communications with a

 

licensee or an applicant or with any affiliate or representative of

 

an applicant or licensee.

 

     (17) Any board member, licensee, or applicant or affiliate or

 

representative of a board member, licensee, or applicant who

 

receives any ex parte communication in violation of subsection

 

(16), or who is aware of an attempted communication in violation of

 

subsection (16), shall immediately report details of the

 

communication or attempted communication in writing to the

 

chairperson.

 

     (18) Any member of the board who receives an ex parte

 

communication in an attempt to influence that member's official

 

action shall disclose the source and content of the communication

 

to the chairperson. The chairperson may investigate or initiate an

 

investigation of the matter with the assistance of the attorney

 

general and state police to determine if the communication violates

 

subsection (16) or subsection (17) or other state law. The

 

disclosure under this section and the investigation are

 

confidential. Following an investigation, the chairperson shall

 

advise the governor or the board, or both, of the results of the

 

investigation and may recommend action as the chairperson considers


appropriate. If the chairperson receives such an ex parte

 

communication, he or she shall report the communication to the

 

governor's office for appropriate action.

 

     (19) A new or current employee or agent of the board shall

 

obtain written permission from the executive director of the

 

department or his or her designee before continuing outside

 

employment held at the time the employee begins to work for the

 

board. Permission shall be denied, or permission previously granted

 

shall be revoked, if the executive director of the department or

 

his or her designee considers the nature of the work to create a

 

possible conflict of interest or if it would otherwise interfere

 

with the duties of the employee or agent for the board.

 

     (20) An employee or agent of the board granted permission for

 

outside employment shall not conduct any business or perform any

 

activities, including solicitation, related to outside employment

 

on premises used by the board or during the employee's working

 

hours for the board.

 

     (21) The chairperson shall report any action he or she has

 

taken or proposes to take under this section with respect to an

 

employee or agent or former employee or former agent to the board

 

at the next meeting of the board. The board may direct the

 

executive director to take additional or different action.

 

     (22) Except as allowed under the Michigan medical marihuana

 

act, a member, employee, or agent of the board shall not enter into

 

any personal transaction involving marihuana with a licensee or

 

applicant.

 

     (23) If a licensee or applicant, or an affiliate or


representative of a licensee or applicant, violates this section,

 

the board may deny a license application, revoke or suspend a

 

license, or take other disciplinary action as provided in section

 

407.

 

     (24) Violation of this section by a member of the board may

 

result in disqualification or constitute cause for removal under

 

section 301(7) or other disciplinary action as recommended by the

 

board to the governor.

 

     (25) A violation of this section by an employee or agent of

 

the board need not result in termination of employment if the board

 

determines that the conduct involved does not violate the purpose

 

of this act. However, all of the following apply:

 

     (a) If, after being offered employment or beginning employment

 

with the board, the employee or agent intentionally acquires a

 

financial interest in a licensee or an applicant, or an affiliate

 

or representative of a licensee or applicant, the offer or

 

employment with the board shall be terminated.

 

     (b) If a financial interest in a licensee or an applicant, or

 

an affiliate or representative of a licensee or applicant, is

 

acquired by an employee or agent that has been offered employment

 

with the board, an employee of the board, or the employee's or

 

agent's spouse, parent, or child, through no intentional action of

 

the employee or agent, the individual shall have up to 30 days to

 

divest or terminate the financial interest. Employment may be

 

terminated if the interest has not been divested after 30 days.

 

     (c) Employment shall be terminated if the employee or agent is

 

a spouse, parent, child, or spouse of a child of a board member.


     (26) Violation of this section does not create a civil cause

 

of action.

 

     (27) As used in this section:

 

     (a) "Outside employment", in addition to employment by a third

 

party, includes, but is not limited to, the following:

 

     (i) Operation of a proprietorship.

 

     (ii) Participation in a partnership or group business

 

enterprise.

 

     (iii) Performance as a director or corporate officer of any

 

for-profit or nonprofit corporation or banking or credit

 

institution.

 

     (iv) Performance as a manager of a limited liability company.

 

     (b) "Political activity" or "politically related activity"

 

includes all of the following:

 

     (i) Using his or her official authority or influence for the

 

purpose of interfering with or affecting the result of an election.

 

     (ii) Knowingly soliciting, accepting, or receiving a political

 

contribution from any person.

 

     (iii) Running for the nomination or as a candidate for

 

election to a partisan political office.

 

     (iv) Knowingly soliciting or discouraging the participation in

 

any political activity of any person who is either of the

 

following:

 

     (A) Applying for any compensation, grant, contract, ruling,

 

license, permit, or certificate pending before the board.

 

     (B) The subject of or a participant in an ongoing audit,

 

investigation, or enforcement action being carried out by the


board.

 

     Sec. 401. (1) Beginning 360 days after the effective date of

 

this act, December 15, 2017, a person may apply to the board for

 

state operating licenses in the categories of class A, B, or C

 

grower; processor; provisioning center; secure transporter; and

 

safety compliance facility as provided in this act. The application

 

shall be made under oath on a form provided by the board and shall

 

contain information as prescribed by the board, including, but not

 

limited to, all of the following:

 

     (a) The name, business address, business telephone number,

 

social security Social Security number, and, if applicable, federal

 

tax identification number of the applicant.

 

     (b) The identity of every person having any ownership interest

 

in the applicant with respect to which the license is sought. If

 

the disclosed entity is a trust, the application shall disclose the

 

names and addresses of the beneficiaries; if a privately held

 

corporation, the names and addresses of all shareholders, officers,

 

and directors; if a publicly held corporation, the names and

 

addresses of all shareholders holding a direct or indirect interest

 

of greater than 5%, officers, and directors; if a partnership or

 

limited liability partnership, the names and addresses of all

 

partners; if a limited partnership or limited liability limited

 

partnership, the names of all partners, both general and limited;

 

or if a limited liability company, the names and addresses of all

 

members and managers.

 

     (c) An identification of any business that is directly or

 

indirectly involved in the growing, processing, testing,


transporting, or sale of marihuana, including, if applicable, the

 

state of incorporation or registration, in which an applicant or,

 

if the applicant is an individual, the applicant's spouse, parent,

 

or child has any equity interest. If an applicant is a corporation,

 

partnership, or other business entity, the applicant shall identify

 

any other corporation, partnership, or other business entity that

 

is directly or indirectly involved in the growing, processing,

 

testing, transporting, or sale of marihuana in which it has any

 

equity interest, including, if applicable, the state of

 

incorporation or registration. An applicant may comply with this

 

subdivision by filing a copy of the applicant's registration with

 

the Securities and Exchange Commission if the registration contains

 

the information required by this subdivision.

 

     (d) Whether an applicant has been indicted for, charged with,

 

arrested for, or convicted of, pled guilty or nolo contendere to,

 

forfeited bail concerning any criminal offense under the laws of

 

any jurisdiction, either felony or controlled-substance-related

 

misdemeanor, not including traffic violations, regardless of

 

whether the offense has been reversed on appeal or otherwise,

 

including the date, the name and location of the court, arresting

 

agency, and prosecuting agency, the case caption, the docket

 

number, the offense, the disposition, and the location and length

 

of incarceration.

 

     (e) Whether an applicant has ever applied for or has been

 

granted any commercial license or certificate issued by a licensing

 

authority in Michigan or any other jurisdiction that has been

 

denied, restricted, suspended, revoked, or not renewed and a


statement describing the facts and circumstances concerning the

 

application, denial, restriction, suspension, revocation, or

 

nonrenewal, including the licensing authority, the date each action

 

was taken, and the reason for each action.

 

     (f) Whether an applicant has filed, or been served with, a

 

complaint or other notice filed with any public body, regarding the

 

delinquency in the payment of, or a dispute over the filings

 

concerning the payment of, any tax required under federal, state,

 

or local law, including the amount, type of tax, taxing agency, and

 

time periods involved.

 

     (g) A statement listing the names and titles of all public

 

officials or officers of any unit of government, and the spouses,

 

parents, and children of those public officials or officers, who,

 

directly or indirectly, own any financial interest in, have any

 

beneficial interest in, are the creditors of or hold any debt

 

instrument issued by, or hold or have any interest in any

 

contractual or service relationship with an applicant. As used in

 

this subdivision, public official or officer does not include a

 

person who would have to be listed solely because of his or her

 

state or federal military service.

 

     (h) A description of the type of marihuana facility;

 

anticipated or actual number of employees; and projected or actual

 

gross receipts.

 

     (i) Financial information in the manner and form prescribed by

 

the board.

 

     (j) A paper copy or electronic posting website reference for

 

the ordinance or zoning restriction that the municipality adopted


to authorize or restrict operation of 1 or more marihuana

 

facilities in the municipality.

 

     (k) A copy of the notice informing the municipality by

 

registered mail that the applicant has applied for a license under

 

this act. The applicant shall also certify that it has delivered

 

the notice to the municipality or will do so by 10 days after the

 

date the applicant submits the application for a license to the

 

board.

 

     (l) Any other information the department requires by rule.

 

     (2) The board shall use information provided on the

 

application as a basis to conduct a thorough background

 

investigation on the applicant. A false application is cause for

 

the board to deny a license. The board shall not consider an

 

incomplete application but shall, within a reasonable time, return

 

the application to the applicant with notification of the

 

deficiency and instructions for submitting a corrected application.

 

Information the board obtains from the background investigation is

 

exempt from disclosure under the freedom of information act, 1976

 

PA 442, MCL 15.231 to 15.246.

 

     (3) An applicant must provide written consent to the

 

inspections, examinations, searches, and seizures provided for in

 

section 303(1)(c)(i) to (iv) and to disclosure to the board and its

 

agents of otherwise confidential records, including tax records

 

held by any federal, state, or local agency, or credit bureau or

 

financial institution, while applying for or holding a license.

 

Information the board receives under this subsection is exempt from

 

disclosure under the freedom of information act, 1976 PA 442, MCL


15.231 to 15.246.

 

     (4) An applicant must certify that the applicant does not have

 

an interest in any other state operating license that is prohibited

 

under this act.

 

     (5) A nonrefundable application fee must be paid at the time

 

of filing to defray the costs associated with the background

 

investigation conducted by the board. The department in

 

consultation with the board shall set the amount of the application

 

fee for each category and class of license by rule. If the costs of

 

the investigation and processing the application exceed the

 

application fee, the applicant shall pay the additional amount to

 

the board. All information, records, interviews, reports,

 

statements, memoranda, or other data supplied to or used by the

 

board in the course of its review or investigation of an

 

application for a license under this act shall be disclosed only in

 

accordance with this act. The information, records, interviews,

 

reports, statements, memoranda, or other data are not admissible as

 

evidence or discoverable in any action of any kind in any court or

 

before any tribunal, board, agency, or person, except for any

 

action considered necessary by the board.

 

     (6) By 10 days after the date the applicant submits an

 

application to the board, the applicant shall notify the

 

municipality by registered mail that it has applied for a license

 

under this act.

 

     Sec. 402. (1) The board shall issue a license to an applicant

 

who submits a complete application and pays both the nonrefundable

 

application fee required under section 401(5) and the regulatory


assessment established by the board for the first year of

 

operation, if the board determines that the applicant is qualified

 

to receive a license under this act.

 

     (2) An applicant is ineligible to receive a license if any of

 

the following circumstances exist:

 

     (a) The applicant has been convicted of or released from

 

incarceration for a felony under the laws of this state, any other

 

state, or the United States within the past 10 years or has been

 

convicted of a controlled substance-related felony within the past

 

10 years.

 

     (b) Within the past 5 years the applicant has been convicted

 

of a misdemeanor involving a controlled substance, theft,

 

dishonesty, or fraud in any state or been found responsible for

 

violating a local ordinance in any state involving a controlled

 

substance, dishonesty, theft, or fraud that substantially

 

corresponds to a misdemeanor in that state.

 

     (c) The applicant has knowingly submitted an application for a

 

license under this act that contains false information.

 

     (d) The applicant is a member of the board.

 

     (e) The applicant fails to demonstrate the applicant's ability

 

to maintain adequate premises liability and casualty insurance for

 

its proposed marihuana facility.

 

     (f) The applicant holds an elective office of a governmental

 

unit of this state, another state, or the federal government; is a

 

member of or employed by a regulatory body of a governmental unit

 

in this state, another state, or the federal government; or is

 

employed by a governmental unit of this state. This subdivision


does not apply to an elected officer of or employee of a federally

 

recognized Indian tribe or to an elected precinct delegate.

 

     (g) The applicant, if an individual, has been a resident of

 

this state for less than a continuous 2-year period immediately

 

preceding the date of filing the application. The requirements in

 

this subdivision do not apply after June 30, 2018.

 

     (g) (h) The board determines that the applicant is not in

 

compliance with section 205(1).

 

     (h) (i) The applicant fails to meet other criteria established

 

by rule.

 

     (3) In determining whether to grant a license to an applicant,

 

the board may also consider all of the following:

 

     (a) The integrity, moral character, and reputation; personal

 

and business probity; financial ability and experience; and

 

responsibility or means to operate or maintain a marihuana facility

 

of the applicant and of any other person that meets either of the

 

following:

 

     (i) Controls, directly or indirectly, the applicant.

 

     (ii) Is controlled, directly or indirectly, by the applicant

 

or by a person who controls, directly or indirectly, the applicant.

 

     (b) The financial ability of the applicant to purchase and

 

maintain adequate liability and casualty insurance.

 

     (c) The sources and total amount of the applicant's

 

capitalization to operate and maintain the proposed marihuana

 

facility.

 

     (d) Whether the applicant has been indicted for, charged with,

 

arrested for, or convicted of, pled guilty or nolo contendere to,


forfeited bail concerning, or had expunged any relevant criminal

 

offense under the laws of any jurisdiction, either felony or

 

misdemeanor, not including traffic violations, regardless of

 

whether the offense has been expunged, pardoned, or reversed on

 

appeal or otherwise.

 

     (e) Whether the applicant has filed, or had filed against it,

 

a proceeding for bankruptcy within the past 7 years.

 

     (f) Whether the applicant has been served with a complaint or

 

other notice filed with any public body regarding payment of any

 

tax required under federal, state, or local law that has been

 

delinquent for 1 or more years.

 

     (g) Whether the applicant has a history of noncompliance with

 

any regulatory requirements in this state or any other

 

jurisdiction.

 

     (h) Whether at the time of application the applicant is a

 

defendant in litigation involving its business practices.

 

     (i) Whether the applicant meets other standards in rules

 

applicable to the license category.

 

     (4) Each applicant shall submit with its application, on forms

 

provided by the board, a passport quality photograph and shall

 

ensure that 1 set of fingerprints is submitted to the department of

 

state police. for each person having any ownership interest in the

 

marihuana facility and each person who is an officer, director, or

 

managerial employee of the applicant, in order for the department

 

of state police to conduct a criminal history check on each person

 

and to forward each person's fingerprints to the Federal Bureau of

 

Investigation for a national criminal history check. The applicant


shall submit with its application each person's the applicant's

 

written consent to the criminal history check described in this

 

section and the submission of each person's the applicant's

 

fingerprints to, and the inclusion of each person's the applicant's

 

fingerprints in, the state and federal database systems described

 

in subsection (7).

 

     (5) The fingerprints required under subsection (4) may be

 

taken by a law enforcement agency or any other person determined by

 

the department of state police to be qualified to take

 

fingerprints. The applicant shall submit a fingerprint processing

 

fee to the department in an amount required under section 3 of 1935

 

PA 120, MCL 28.273, and any costs imposed by the Federal Bureau of

 

Investigation.

 

     (6) The department of state police shall conduct do all of the

 

following:

 

     (a) Conduct a criminal history check on each person described

 

in subsection (4) applicant and shall request the Federal Bureau of

 

Investigation to make a determination of the existence of any

 

national criminal history pertaining to each person. The department

 

of state police shall provide applicant.

 

     (b) Provide the board with a written report containing the

 

criminal history record information of each person who was the

 

subject of the criminal history check conducted under this

 

section.applicant.

 

     (7) All of the following apply concerning fingerprints

 

submitted to the department of state police under this section:

 

     (a) The department of state police shall store and retain all


fingerprints submitted under this section in an automated

 

fingerprint identification system database that searches against

 

latent fingerprints, and provides for an automatic notification if

 

and when a subsequent fingerprint is submitted into the system that

 

matches a set of fingerprints previously submitted under this

 

section or if and when the criminal history of an individual whose

 

fingerprints are retained in the system is updated. Upon receiving

 

a notification, the department of state police shall immediately

 

notify the board. Information in the database maintained under this

 

subsection is confidential, is not subject to disclosure under the

 

freedom of information act, 1976 PA 442, MCL 15.231 to 15.246, and

 

shall not be disclosed to any person except for purposes of this

 

act or for law enforcement purposes.

 

     (b) The department of state police shall forward all

 

fingerprints submitted to it under this section to the Federal

 

Bureau of Investigation for submission of those fingerprints into

 

the FBI automatic notification system. This subdivision does not

 

apply until the department of state police is a participant in the

 

FBI automatic notification system. As used in this subdivision:

 

     (i) "Automatic notification system" means a system that stores

 

and retains fingerprints, and that provides for an automatic

 

notification to a participant if and when a fingerprint is

 

submitted into the system that matches an individual whose

 

fingerprints are retained in the system or if and when the criminal

 

history of an individual whose fingerprints are retained in the

 

system is updated.

 

     (ii) "FBI automatic notification system" means the automatic


notification system that is maintained by the Federal Bureau of

 

Investigation.

 

     (8) The board shall review all applications for licenses and

 

shall inform each applicant of the board's decision.

 

     (9) A license shall be issued for a 1-year period and is

 

renewable annually. Except as otherwise provided in this act, the

 

board shall renew a license if all of the following requirements

 

are met:

 

     (a) The licensee applies to the board on a renewal form

 

provided by the board that requires information prescribed in

 

rules.

 

     (b) The application is received by the board on or before the

 

expiration date of the current license.

 

     (c) The licensee pays the regulatory assessment under section

 

603.

 

     (d) The licensee meets the requirements of this act and any

 

other renewal requirements set forth in rules.

 

     (10) The department shall notify the licensee by mail or

 

electronic mail at the last known address on file with the board

 

advising of the time, procedure, and regulatory assessment under

 

section 603. The failure of the licensee to receive notice under

 

this subsection does not relieve the licensee of the responsibility

 

for renewing the license.

 

     (11) If a license renewal application is not submitted by the

 

license expiration date, the license may be renewed within 60 days

 

after its expiration date upon application, payment of the

 

regulatory assessment under section 603, and satisfaction of any


renewal requirement and late fee set forth in rules. The licensee

 

may continue to operate during the 60 days after the license

 

expiration date if the license is renewed by the end of the 60-day

 

period.

 

     (12) License expiration does not terminate the board's

 

authority to impose sanctions on a licensee whose license has

 

expired.

 

     (13) In its decision on an application for renewal, the board

 

shall consider any specific written input it receives from an

 

individual or entity within the local unit of government in which

 

the applicant for renewal is located.

 

     (14) A licensee must consent in writing to inspections,

 

examinations, searches, and seizures that are permitted under this

 

act and must provide a handwriting exemplar, fingerprints,

 

photographs, and information as authorized in this act or by rules.

 

     (15) An applicant or licensee has a continuing duty to provide

 

information requested by the board and to cooperate in any

 

investigation, inquiry, or hearing conducted by the board.

 

     Sec. 406. Each license is exclusive to the licensee, and a

 

licensee or any other person must apply for and receive the board's

 

approval before a license is transferred, sold, or purchased. The

 

attempted transfer, sale, or other conveyance of an interest of

 

more than 1% in a license without prior board approval is grounds

 

for suspension or revocation of the license or for other sanction

 

considered appropriate by the board, but only if the transfer,

 

sale, or other conveyance would result in the transferee meeting

 

the definition of applicant.


     Sec. 407. (1) If an applicant or licensee fails to comply with

 

this act or rules, if a licensee fails to comply with the marihuana

 

tracking act, if a licensee no longer meets the eligibility

 

requirements for a license under this act, or if an applicant or

 

licensee fails to provide information the board requests to assist

 

in any investigation, inquiry, or board hearing, the board may

 

deny, suspend, revoke, or restrict a license. The board may

 

suspend, revoke, or restrict a license and require the removal of a

 

licensee or an employee of a licensee for a violation of this act,

 

rules, the marihuana tracking act, or any ordinance adopted under

 

section 205. The board may impose civil fines of up to $5,000.00

 

against an individual and up to $10,000.00 or an amount equal to

 

the daily gross receipts, whichever is greater, against a licensee

 

for each violation of this act, rules, or an order of the board.

 

Assessment of a civil fine under this subsection is not a bar to

 

the investigation, arrest, charging, or prosecution of an

 

individual for any other violation of this act and is not grounds

 

to suppress evidence in any criminal prosecution that arises under

 

this act or any other law of this state.

 

     (2) The board shall comply with the administrative procedures

 

act of 1969, 1969 PA 306, MCL 24.201 to 24.328, when denying,

 

revoking, suspending, or restricting a license or imposing a fine.

 

The board may suspend a license without notice or hearing upon a

 

determination that the safety or health of patrons or employees is

 

jeopardized by continuing a marihuana facility's operation. If the

 

board suspends a license under this subsection without notice or

 

hearing, a prompt postsuspension hearing must be held to determine


if the suspension should remain in effect. The suspension may

 

remain in effect until the board determines that the cause for

 

suspension has been abated. The board may revoke the license or

 

approve a transfer or sale of the license upon a determination that

 

the licensee has not made satisfactory progress toward abating the

 

hazard.

 

     (3) After denying an application for a license, the board

 

shall, upon request, provide a public investigative hearing at

 

which the applicant is given the opportunity to present testimony

 

and evidence to establish its suitability for a license. Other

 

testimony and evidence may be presented at the hearing, but the

 

board's decision must be based on the whole record before the board

 

and is not limited to testimony and evidence submitted at the

 

public investigative hearing.

 

     (4) Except for license applicants who may be granted a hearing

 

at the discretion of the board under subsection (3), any party

 

aggrieved by an action of the board suspending, revoking,

 

restricting, or refusing to renew a license, or imposing a fine,

 

shall be given a hearing before the board upon request. A request

 

for a hearing must be made to the board in writing within 21 days

 

after service of notice of the action of the board. Notice of the

 

action of the board must be served either by personal delivery or

 

by certified mail, postage prepaid, to the aggrieved party. Notice

 

served by certified mail is considered complete on the business day

 

following the date of the mailing.

 

     (5) The board may conduct investigative and contested case

 

hearings; issue subpoenas for the attendance of witnesses; issue


subpoenas duces tecum for the production of books, ledgers,

 

records, memoranda, electronically retrievable data, and other

 

pertinent documents; and administer oaths and affirmations to

 

witnesses as appropriate to exercise and discharge the powers and

 

duties of the board under this act. The executive director of the

 

department or his or her designee may issue subpoenas and

 

administer oaths and affirmations to witnesses.

 

     Sec. 407a. Beginning June 1, 2019, a person shall not hold

 

itself out as operating a marihuana facility if the person does not

 

hold a license to operate that marihuana facility or if the

 

person's license to operate that marihuana facility is suspended,

 

revoked, lapsed, or void, or was fraudulently obtained or

 

transferred to the person other than pursuant to section 406. A

 

person that violates this section is guilty as follows:

 

     (a) In the case of a first violation, a misdemeanor punishable

 

by a fine of not less than $10,000.00 or more than $25,000.00 or

 

imprisonment of not more than 93 days, or both.

 

     (b) In the case of a second or subsequent violation, a

 

misdemeanor punishable by a fine of not less than $10,000.00 or

 

more than $25,000.00 or imprisonment of not more than 1 year, or

 

both.

 

     (c) If the violation causes death or serious injury, a felony

 

punishable by a fine of not less than $10,000.00 or more than

 

$25,000.00 or imprisonment for not more than 4 years, or both.

 

     Sec. 409. A state operating license is a revocable privilege

 

granted by this state and is not a property right. Granting a

 

license does not create or vest any right, title, franchise, or


other property interest. Each license is exclusive to the licensee,

 

and a licensee or any other person must apply for and receive the

 

board's and municipality's approval before a license is

 

transferred, sold, or purchased. A licensee or any other person

 

shall not lease, pledge, or borrow or loan money against a license.

 

The attempted transfer, sale, or other conveyance of an interest in

 

a license without prior board approval is grounds for suspension or

 

revocation of the license or for other sanction considered

 

appropriate by the board.

 

     Sec. 702. The board shall submit with the annual report to the

 

governor under section 302(k) 302(l) and to the chairs of the

 

legislative committees that govern issues related to marihuana

 

facilities a report covering the previous year. The report shall

 

include an account of the board actions, its financial position,

 

results of operation under this act, and any recommendations for

 

legislation that the board considers advisable.

 

     Enacting section 1. Section 404 of the medical marihuana

 

facilities licensing act, 2016 PA 281, MCL 333.27404, is repealed.

 

     Enacting section 2. This amendatory act takes effect January

 

1, 2019.