HOUSE BILL NO. 5706

A bill to amend 2018 IL 1, entitled

"Michigan Regulation and Taxation of Marihuana Act,"

by amending sections 3, 7, 13, and 14 (MCL 333.27953, 333.27957, 333.27963, and 333.27964), section 3 as amended by 2021 PA 56.

the people of the state of michigan enact:

Sec. 3. As used in this act:

(a) "Cultivate" means to propagate, breed, grow, harvest, dry, cure, or separate parts of a marihuana plant by manual or mechanical means.

(b) "Department" means the department of licensing and regulatory affairs.marijuana regulatory agency.

(c) "Indian lands" means that term as defined in 25 USC 2703.

(d) "Indian tribe" means that term as defined in 25 USC 2703.

(e) (c) "Industrial hemp" means any of the following:

(i) A plant of the genus Cannabis, whether growing or not, with a THC concentration of 0.3% or less on a dry-weight basis.

(ii) A part of a plant of the genus Cannabis, whether growing or not, with a THC concentration of 0.3% or less on a dry-weight basis.

(iii) The seeds of a plant of the genus Cannabis with a THC concentration of 0.3% or less on a dry-weight basis.

(iv) If it has a THC concentration of 0.3% or less on a dry-weight basis, a compound, manufacture, derivative, mixture, preparation, extract, cannabinoid, acid, salt, isomer, or salt of an isomer of any of the following:

(A) A plant of the genus Cannabis.

(B) A part of a plant of the genus Cannabis.

(v) A product to which 1 of the following applies:

(A) If the product is intended for human or animal consumption, the product, in the form in which it is intended for sale to a consumer, meets both of the following requirements:

(I) Has a THC concentration of 0.3% or less on a dry-weight or per volume basis.

(II) Contains a total amount of THC that is less than or equal to the limit established by the marijuana regulatory agency under section 8(1)(n).

(B) If the product is not intended for human or animal consumption, the product meets both of the following requirements:

(I) Contains a substance listed in subparagraph (i), (ii), (iii), or (iv).

(II) Has a THC concentration of 0.3% or less on a dry-weight basis.

(f) (d) "Licensee" means a person holding a state license.

(g) (e) "Marihuana" means any of the following:

(i) A plant of the genus Cannabis, whether growing or not.

(ii) A part of a plant of the genus Cannabis, whether growing or not.

(iii) The seeds of a plant of the genus Cannabis.

(iv) Marihuana concentrate.

(v) A compound, manufacture, salt, derivative, mixture, extract, acid, isomer, salt of an isomer, or preparation of any of the following:

(A) A plant of the genus Cannabis.

(B) A part of a plant of the genus Cannabis.

(C) The seeds of a plant of the genus Cannabis.

(D) Marihuana concentrate.

(vi) A marihuana-infused product.

(vii) A product with a THC concentration of more than 0.3% on a dry-weight or per volume basis in the form in which it is intended for sale to a consumer.

(viii) A product that is intended for human or animal consumption and that contains, in the form in which it is intended for sale to a consumer, a total amount of THC that is greater than the limit established by the marijuana regulatory agency under section 8(1)(n).

(h) (f) Except for marihuana concentrate extracted from any of the following, "marihuana" does not include any of the following:

(i) The mature stalks of a plant of the genus Cannabis.

(ii) Fiber produced from the mature stalks of a plant of the genus Cannabis.

(iii) Oil or cake made from the seeds of a plant of the genus Cannabis.

(iv) A compound, manufacture, salt, derivative, mixture, or preparation of the mature stalks of a plant of the genus Cannabis.

(v) Industrial hemp.

(vi) An ingredient combined with marihuana to prepare topical or oral administrations, food, drink, or other products.

(vii) A drug for which an application filed in accordance with 21 USC 355 is approved by the Food and Drug Administration.

(i) (g) "Marihuana accessories" means any equipment, product, material, or combination of equipment, products, or materials, that is specifically designed for use in planting, propagating, cultivating, growing, harvesting, manufacturing, compounding, converting, producing, processing, preparing, testing, analyzing, packaging, repackaging, storing, containing, ingesting, inhaling, or otherwise introducing marihuana into the human body.

(j) (h) "Marihuana concentrate" means the resin extracted from any part of a plant of the genus Cannabis.

(k) (i) "Marihuana establishment" means a marihuana grower, marihuana safety compliance facility, marihuana processor, marihuana microbusiness, marihuana retailer, marihuana secure transporter, or any other type of marihuana-related business licensed by the marijuana regulatory agency.

(l) (j) "Marihuana grower" means a person licensed to cultivate marihuana and sell or otherwise transfer marihuana to marihuana establishments.

(m) (k) "Marihuana-infused product" means a topical formulation, tincture, beverage, edible substance, or similar product containing marihuana and other ingredients and that is intended for human consumption.

(n) (l) "Marihuana microbusiness" means a person licensed to cultivate not more than 150 marihuana plants; process and package marihuana; and sell or otherwise transfer marihuana to individuals who are 21 years of age or older or to a marihuana safety compliance facility, but not to other marihuana establishments.

(o) (m) "Marihuana processor" means a person licensed to obtain marihuana from marihuana establishments; process and package marihuana; and sell or otherwise transfer marihuana to marihuana establishments.

(p) (n) "Marihuana retailer" means a person licensed to obtain marihuana from marihuana establishments and to sell or otherwise transfer marihuana to marihuana establishments and to individuals who are 21 years of age or older.

(q) "Marihuana safety compliance facility" means a person licensed to test marihuana, including certification for potency and the presence of contaminants.

(r) (o) "Marihuana secure transporter" means a person licensed to obtain marihuana from marihuana establishments in order to transport marihuana to marihuana establishments.

(p) "Marihuana safety compliance facility" means a person licensed to test marihuana, including certification for potency and the presence of contaminants.

(s) (q) "Marijuana regulatory agency" means the marijuana regulatory agency created under Executive Reorganization Order No. 2019-2, MCL 333.27001.

(t) (r) "Municipal license" means a license issued by a municipality pursuant to section 16 that allows a person to operate a marihuana establishment in that municipality.

(u) (s) "Municipality" means a city, village, or township.

(v) (t) "Person" means an individual, corporation, limited liability company, partnership of any type, trust, or other legal entity.

(w) (u) "Process" or "processing" means to separate or otherwise prepare parts of a marihuana plant and to compound, blend, extract, infuse, or otherwise make or prepare marihuana concentrate or marihuana-infused products.

(x) "Qualifying Indian tribe" means an Indian tribe that has entered into an agreement with the marijuana regulatory agency under section 7(2)(b).

(y) (v) "State license" means a license issued by the marijuana regulatory agency that allows a person to operate a marihuana establishment.

(z) (w) "THC" means any of the following:

(i) Tetrahydrocannabinolic acid.

(ii) Unless excluded by the marijuana regulatory agency under section 8(2)(c), a tetrahydrocannabinol, regardless of whether it is artificially or naturally derived.

(iii) A tetrahydrocannabinol that is a structural, optical, or geometric isomer of a tetrahydrocannabinol described in subparagraph (ii).

(aa) "Tribal marihuana business" means a business that meets all of the following conditions:

(i) Engages in the type of activities licensed under this act.

(ii) Is wholly owned by a qualifying Indian tribe, the enrolled members of a qualifying Indian tribe, or a combination of a qualifying Indian tribe and the members of that qualifying Indian tribe.

(iii) Is located in this state and in the qualifying Indian tribe's Indian lands.

(bb) (x) "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.

Sec. 7. (1) 1. The department marijuana regulatory agency is responsible for implementing this act and has the powers and duties necessary to control the commercial production and distribution of marihuana. The department marijuana regulatory agency shall employ personnel and may contract with advisors and consultants as necessary to adequately perform its duties. No person who is pecuniarily interested, directly or indirectly, in any marihuana establishment may be an employee, advisor, or consultant involved in the implementation, administration, or enforcement of this act. An employee, advisor, or consultant of the department may not be personally liable for any action at law for damages sustained by a person because of an action performed or done in the performance of their duties in the implementation, administration, or enforcement of this act. The department of state police shall cooperate and assist the department in conducting background investigations of applicants. Responsibilities of the department include:do all of the following:

(a) promulgating Promulgate rules pursuant to section 8 of this act that are necessary to implement, administer, and enforce this act. ;

(b) granting Grant or denying deny each application for licensure and investigating investigate each applicant to determine eligibility for licensure, including conducting a background investigation on each person holding an ownership interest in the applicant. ;

(c) ensuring compliance Ensure that marihuana establishments comply with this act and the rules promulgated thereunder by marihuana establishments under this act by performing doing all of the following:

(i) Performing investigations of compliance and regular inspections of marihuana establishments. and by taking

(ii) Taking appropriate disciplinary action against a licensee, including prescribing civil fines for violations of this act or the rules promulgated under this act and suspending, restricting, or revoking a state license. ;

(d) holding Hold at least 4 public meetings each calendar year for the purpose of hearing complaints and receiving the views of the public with respect to administration of this act. ;

(e) collecting Collect fees for licensure and fines for violations of this act or the rules promulgated thereunder, depositing under this act.

(f) Deposit all fees collected in for licensure into the marihuana regulation fund established by under section 14 of this act, and remitting remit all fines collected to be deposited in for deposit into the general fund. ; and

(g) (f) submitting Submit an annual report to the governor covering the previous immediately preceding year , which report shall include that includes all of the following:

(i) The number of state licenses of each class issued. , demographic

(ii) Demographic information on of licensees. , a

(iii) A description of enforcement and disciplinary actions taken against licensees. , and a

(iv) A statement of revenues and expenses of the department marijuana regulatory agency related to the implementation, administration, and enforcement of this act.

(h) Employ personnel as necessary to adequately perform its duties.

(2) The marijuana regulatory agency may do either of the following:

(a) Enter into an agreement with an advisor or consultant as necessary to adequately perform its duties under this act.

(b) Enter into an agreement with an Indian tribe regarding marihuana-related regulatory issues that involve the interests of this state and the Indian tribe, including, but not limited to, issues related to the commercial growing, processing, sale, testing, transportation, and possession of marihuana.

(3) A person who has a pecuniary interest, directly or indirectly, in a marihuana establishment or tribal marihuana business may not be an employee, advisor, or consultant involved in the implementation, administration, or enforcement of this act. An employee, advisor, or consultant of the marijuana regulatory agency is not personally liable for any action at law for damages sustained by a person because of an action performed or done in the performance of employee's, advisor's, or consultant's duties in the implementation, administration, or enforcement of this act.

(4) The department of state police shall cooperate and assist the marijuana regulatory agency in performing the marijuana regulatory agency's duties under this act, including, but not limited to, conducting background investigations of applicants. The department of state police may recover its costs of cooperation and assistance under this subsection from the marijuana regulatory agency.

Sec. 13. (1) 1. In Except as otherwise provided in subsection (4), in addition to all other taxes, an excise tax is imposed on each marihuana retailer and on each marihuana microbusiness at the rate of 10% of the sales price for marihuana sold or otherwise transferred to anyone other than a marihuana establishment or tribal marihuana business.

(2) 2. Except as otherwise provided by a rule promulgated by the department of treasury, a product subject to the tax imposed by under this section may not be bundled in a single transaction with a product or service that is not subject to the tax imposed by this section.

(3) 3. The department of treasury shall administer the taxes imposed under this act and pursuant to 1941 PA 122, MCL 205.1 to 205.31. The department of treasury may promulgate rules pursuant to the administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to MCL 24.328, that prescribe a method and manner for payment and collection of the tax to ensure proper tax collection taxes imposed under this act.

(4) The tax imposed under subsection (1) does not apply to marihuana sold or otherwise transferred from a tribal marihuana business to another tribal marihuana business or a person other than a marihuana establishment if all of the following conditions are met:

(a) The qualifying Indian tribe on whose Indian lands the tribal marihuana business is located imposes its own tax on the sale or transfer of marihuana.

(b) The tax described in subdivision (a) is based on the sales price of the marihuana.

(c) The rate of the tax described in subdivision (a) is equal to or greater than the rate of the tax imposed under subsection (1).

Sec. 14. (1) 1. The marihuana regulation fund is created in the state treasury. The department of treasury shall deposit into the fund all money collected under section 13 of this act and the department marijuana regulatory agency shall deposit into the fund all fees collected in the fund. under this act. The state treasurer shall direct the investment of the fund and shall credit to the fund interest and earnings from fund investments. The department marijuana regulatory agency shall administer the fund for auditing purposes. Money in the fund shall at the close of the fiscal year must remain in the fund and must not lapse to the general fund.

(2) 2. Funds for the initial activities of the department marijuana regulatory agency to implement this act shall be appropriated from the general fund. The department marijuana regulatory agency shall repay any amount appropriated under this subsection from proceeds in the fund.

(3) 3. The department marijuana regulatory agency shall expend money in the fund first for as follows:

(a) For the implementation, administration, and enforcement of this act. , and second, until

(b) Until 2022 or for at least two 2 years, to provide $20 million annually to one whichever is later, for 1 or more development and research projects, including clinical trials, that are approved by the United States food Food and drug administration Drug Administration and sponsored by a non-profit nonprofit organization or researcher within an academic institution researching the efficacy of marihuana in treating the medical conditions and preventing the suicide of United States armed services Armed Services veterans. and preventing veteran suicide. The marijuana regulatory agency shall expend $20,000,000.00 per year under this subdivision.

(4) Upon appropriation, the unexpended balances in the fund must be allocated as follows:

(a) Subject to subsection (5), 15% to municipalities in which a marihuana retail store retailer or a marihuana microbusiness is located, allocated in proportion to the number of marihuana retail stores and marihuana microbusinesses within the each municipality. ;

(b) Subject to subsection (5), 15% to counties in which a marihuana retail store retailer or a marihuana microbusiness is located, allocated in proportion to the number of marihuana retail stores and marihuana microbusinesses within the each county. ;

(c) 35% to the school aid fund to be used for K-12 education. ; and

(d) 35% to the Michigan transportation fund to be used for the repair and maintenance of roads and bridges.

(5) If a marihuana retailer or marihuana microbusiness is located in Indian lands, the portions of the unexpended balances attributable to the marihuana retailer or marihuana microbusiness that would have otherwise been allocated to a municipality under subsection (4)(a) and a county under subsection (4)(b) must instead be allocated to the Indian tribe in whose Indian lands the marihuana retailer or marihuana microbusiness is located.