Michigan Office of Administrative Hearings and Rules  
Administrative Rules Division (ARD)  
611 W. Ottawa Street  
Lansing, MI 48909  
Phone: 517-335-8658 Fax: 517-335-9512  
REGULATORY IMPACT STATEMENT  
and COST-BENEFT ANALYSIS (RIS)  
Agency Information:  
Department name:  
Licensing and Regulatory Affairs  
Bureau name:  
Marihuana Regulatory Agency  
Name of person filling out RIS:  
JESSICA FOX  
Phone number of person filling out RIS:  
517-284-9294  
E-mail of person filling out RIS:  
Rule Set Information:  
ARD assigned rule set number:  
2020-120 LR  
Title of proposed rule set:  
Marihuana Licensees  
Comparison of Rule(s) to Federal/State/Association Standard  
1. Compare the proposed rules to parallel federal rules or standards set by a state or national licensing agency or  
accreditation association, if any exist.  
There are no federal rules or standards for the regulation of marihuana. There are no other state or national licensing  
agency standards or accreditation standards for marihuana.  
A. Are these rules required by state law or federal mandate?  
These rules are required by the Medical Marihuana Facilities Licensing Act and the Michigan Regulation and  
Taxation of Marihuana Act. There is no federal mandate for these rules.  
B. If these rules exceed a federal standard, please identify the federal standard or citation, describe why it is  
necessary that the proposed rules exceed the federal standard or law, and specify the costs and benefits arising out  
of the deviation.  
These rules do not exceed any federal standards or laws. There are no federal standards or laws in place.  
2. Compare the proposed rules to standards in similarly situated states, based on geographic location, topography,  
natural resources, commonalities, or economic similarities.  
MCL 24.245(3)  
RIS-Page 2  
Michigan’s licensing and regulatory framework is similar to programs in other Great Lakes and surrounding states.  
Michigan has one of the country’s largest patient populations registered with its medical marihuana program, which  
will presumptively create the consumer base for marihuana businesses. The other states have a tenth of the patient  
population that Michigan has. On March 6, 2019, the taxation of medical marihuana ceased per Sec. 601 of the  
Medical Marihuana Facilities Licensing Act which nullifies the tax with the enactment of a law authorizing the  
recreational or nonmedical use of marihuana in this state. With the enactment of the Michigan Regulation and  
Taxation of Marihuana Act (MRTMA), there is an excise tax on marihuana retailers and marihuana microbusinesses at  
the rate of 10% of the sales price of the marihuana sold. The tax in Illinois is 7% at cultivators/dispensaries.  
Pennsylvania has a 5% excise tax on gross receipts of dispensaries. Minnesota has a $3.50 tax on each gram. Ohio  
does not have an excise tax on medical marihuana. The other programs also have similar licensing categories;  
however, Michigan is unique with a transporter license available. The only other Great Lakes state that allows  
recreational/adult-use marijuana is Illinois. Illinois’ Cannabis Regulation and Tax Act (ICRTA) took effect January 1,  
2020. The Illinois Cannabis Regulation and Tax Act is comparable to the MRTMA in that it creates personal  
possession limits and allows for individuals to cultivate a specific number of plants for themselves. The ICRTA also  
creates comparable license types to MRTMA.  
A. If the rules exceed standards in those states, please explain why and specify the costs and benefits arising out of  
the deviation.  
The rules do not exceed the scope of licensing requirements of other states where licensure is required.  
3. Identify any laws, rules, and other legal requirements that may duplicate, overlap, or conflict with the proposed  
rules.  
The proposed rule changes do not duplicate, overlap, or conflict with any laws, rules, or other legal requirements.  
A. Explain how the rules have been coordinated, to the extent practicable, with other federal, state, and local laws  
applicable to the same activity or subject matter. This section should include a discussion of the efforts undertaken  
by the agency to avoid or minimize duplication.  
The rules continue to work in conjunction with the Medical Marijuana Program rules. The rules have been  
streamlined to avoid duplication.  
4. If MCL 24.232(8) applies and the proposed rules are more stringent than the applicable federally mandated  
standard, provide a statement of specific facts that establish the clear and convincing need to adopt the more  
stringent rules.  
MCL 24.232(8) does not apply; there is no applicable federally mandated standard.  
5. If MCL 24.232(9) applies and the proposed rules are more stringent than the applicable federal standard,  
provide either the Michigan statute that specifically authorizes the more stringent rules OR a statement of the  
specific facts that establish the clear and convincing need to adopt the more stringent rules.  
MCL 24.232(9) does not apply; there is no applicable federal standard.  
Purpose and Objectives of the Rule(s)  
6. Identify the behavior and frequency of behavior that the proposed rules are designed to alter.  
The rule changes are designed to create greater consistency in the licenses available to marihuana businesses and to  
create cohesion between license issuance for medical and adult-use marihuana businesses. These decisions are made  
daily by agency licensing staff. The rule changes are also intended to create clear and consistent operational standards  
for marihuana businesses. These rule changes are also intended to create new license types under MRTMA to assist  
the industry in growing, provide greater opportunity for small businesses, and provide greater opportunity for  
education and research at academic institutions.  
A. Estimate the change in the frequency of the targeted behavior expected from the proposed rules.  
The rule changes should change or create more consistency in licenses available to marihuana businesses and continue  
to help the industry grow by allowing more individuals to enter into the market.  
B. Describe the difference between current behavior/practice and desired behavior/practice.  
These rule changes continue to create and refine the more consistent process for licensees that began with the rules  
that were promulgated in 2020. As the industry grows it became more apparent that as the rules were written  
businesses holding both medical marihuana licenses and adult-use marihuana licenses were being treated very  
differently.  
MCL 24.245(3)  
RIS-Page 3  
C. What is the desired outcome?  
The desired outcome is to achieve greater consistency in the authorized licenses’ operational areas for marihuana  
related business for medical marihuana facilities and adult-use establishments and create new licenses to assist the  
industry in continuing to grow.  
7. Identify the harm resulting from the behavior that the proposed rules are designed to alter and the likelihood  
that the harm will occur in the absence of the rule.  
The harm that will result is that businesses are not operated consistently across licenses and across the MMFLA and  
MRTMA. Businesses will not be able to continue to operate or begin operating compliantly. Businesses may fail.  
There is also a risk that licensees will not be subject to the same criteria. This will affect consumer safety, if all  
businesses are not held to the same standards. In the absence of these rule changes this harm is likely to occur on a  
regular basis.  
A. What is the rationale for changing the rules instead of leaving them as currently written?  
The rationale for changing these rules is to create greater consistency in licensing practices and authority for all  
marihuana businesses to operate. This cannot be done with the rules as currently written.  
8. Describe how the proposed rules protect the health, safety, and welfare of Michigan citizens while promoting a  
regulatory environment in Michigan that is the least burdensome alternative for those required to comply.  
The proposed rule changes help ensure that eligible individuals who obtain licenses to grow, process, test, transport,  
and sell marihuana products to residents of the state of Michigan will be treated consistently across the medical and  
adult-use licenses. The proposed rule changes contain specific criteria to ensure that individuals who are issued  
licenses are treated equally and that it is easier for them to be compliant with all of the administrative rules regulating  
marihuana businesses, including safety testing standards that protect the public health, safety, and welfare.  
9. Describe any rules in the affected rule set that are obsolete or unnecessary and can be rescinded.  
These rules are updating the Marihuana Licensees Rule Set (R 420.101 to R 420.113). The proposed rule changes do  
not make any other rules obsolete, unnecessary, or proper for rescission.  
Fiscal Impact on the Agency  
Fiscal impact is an increase or decrease in expenditures from the current level of expenditures, i.e. hiring additional staff,  
higher contract costs, programming costs, changes in reimbursements rates, etc. over and above what is currently  
expended for that function. It does not include more intangible costs for benefits, such as opportunity costs, the value of  
time saved or lost, etc., unless those issues result in a measurable impact on expenditures.  
10. Please provide the fiscal impact on the agency (an estimate of the cost of rule imposition or potential savings  
for the agency promulgating the rule).  
There will be no fiscal impact on the agency. The agency already manages both medical marihuana facilities  
licensing and adult-use marihuana licensing.  
11. Describe whether or not an agency appropriation has been made or a funding source provided for any  
expenditures associated with the proposed rules.  
No appropriations have been made to any governmental units because of these rule changes. No additional  
expenditures are anticipated or intended with the proposed rule changes.  
12. Describe how the proposed rules are necessary and suitable to accomplish their purpose, in relationship to the  
burden(s) the rules place on individuals. Burdens may include fiscal or administrative burdens, or duplicative  
acts.  
The rules must ensure the safety, security, and integrity of the operation of marihuana businesses. Any burdens would  
be in place as required by the MMFLA, MTA, and MRTMA. The application/licensing process requires  
documentation, fingerprinting, etc. that will be at a financial and administrative cost. There are rules required for the  
use of a statewide monitoring system which will place a burden on the individual but is statutorily required. These  
items are already in place so there will be no increased burden.  
A. Despite the identified burden(s), identify how the requirements in the rules are still needed and reasonable  
compared to the burdens.  
The rules must ensure the safety, security, and integrity of the operation of marihuana businesses. Any burden is  
reasonable in the proposed rule changes as it complies with the statutory requirement for its consideration.  
MCL 24.245(3)  
RIS-Page 4  
Impact on Other State or Local Governmental Units  
13. Estimate any increase or decrease in revenues to other state or local governmental units (i.e. cities, counties,  
school districts) as a result of the rule. Estimate the cost increases or reductions for other state or local  
governmental units (i.e. cities, counties, school districts) as a result of the rule. Include the cost of equipment,  
supplies, labor, and increased administrative costs in both the initial imposition of the rule and any ongoing  
monitoring.  
There are no anticipated increases or decreases in revenues or costs to other state or local government units because  
of the proposed rule changes. Any local or state change to revenue may occur via the statutory provisions as it  
concerns how the funds, fees, or taxes are allocated or expended. The agency is required to set an application fee  
pursuant to the MMFLA and MRTMA and has set the fee at $3,000 to offset the background investigations,  
administration of the licensing application, etc. The other statutory imposed fee is the annual regulatory  
assessment/renewal fee set forth in the MMFLA and MRTMA which will be deposited in the marihuana regulatory  
fund.  
14. Discuss any program, service, duty, or responsibility imposed upon any city, county, town, village, or school  
district by the rules.  
There is no additional responsibility imposed upon any city, county, town, village, or school district by the proposed  
rule changes.  
A. Describe any actions that governmental units must take to be in compliance with the rules. This section should  
include items such as record keeping and reporting requirements or changing operational practices.  
There are no anticipated actions that a governmental unit must take to comply with these proposed rule changes.  
15. Describe whether or not an appropriation to state or local governmental units has been made or a funding  
source provided for any additional expenditures associated with the proposed rules.  
No appropriations have been made to any governmental units because of these rule changes. No additional  
expenditures are anticipated or intended with the proposed rule changes.  
Rural Impact  
16. In general, what impact will the rules have on rural areas?  
The proposed rule changes are not expected to impact rural areas in as much as the rule changes apply to all  
marihuana businesses regardless of location.  
A. Describe the types of public or private interests in rural areas that will be affected by the rules.  
The proposed rule changes are not expected to affect public or private interests in rural areas.  
Environmental Impact  
17. Do the proposed rules have any impact on the environment? If yes, please explain.  
These proposed rule changes do not have any impact on the environment.  
Small Business Impact Statement  
18. Describe whether and how the agency considered exempting small businesses from the proposed rules.  
The proposed rule changes are designed to regulate all commercial marihuana businesses, regardless of their size.  
They are intended to allow any business, including a small business, to obtain a license in the industry.  
19. If small businesses are not exempt, describe (a) the manner in which the agency reduced the economic impact  
of the proposed rules on small businesses, including a detailed recitation of the efforts of the agency to comply  
with the mandate to reduce the disproportionate impact of the rules upon small businesses as described below (in  
accordance with MCL 24.240(1)(a-d)), or (b) the reasons such a reduction was not lawful or feasible.  
MCL 24.245(3)  
RIS-Page 5  
The license types available are available to small businesses. These rule changes, however, are intended to broadly  
lay out the criteria for a marihuana business to obtain a license. They do not target small businesses, nor do they  
negatively impact them exclusively. The annual regulatory assessments are reduced for those license types that are  
more likely to be held by small businesses.  
A. Identify and estimate the number of small businesses affected by the proposed rules and the probable effect on  
small businesses.  
It is uncertain how many small businesses may be affected by the proposed rule changes. However, the belief is that  
these proposed rule changes will make it easier for small businesses to enter into the regulated marihuana market.  
B. Describe how the agency established differing compliance or reporting requirements or timetables for small  
businesses under the rules after projecting the required reporting, record-keeping, and other administrative costs.  
The agency did not establish separate compliance or reporting requirements for small businesses. The proposed rule  
changes will apply to all applicants and licensees across the license categories, as applicable. The rule changes were  
drafted to be the least burdensome on all applicants and licensees.  
C. Describe how the agency consolidated or simplified the compliance and reporting requirements for small  
businesses and identify the skills necessary to comply with the reporting requirements.  
The agency did not consolidate or simplify compliance and reporting requirements for small businesses with the  
proposed rule changes.  
D. Describe how the agency established performance standards to replace design or operation standards required  
by the proposed rules.  
The agency did not establish performance standards to replace design or operation standards required by these rule  
changes.  
20. Identify any disproportionate impact the proposed rules may have on small businesses because of their size or  
geographic location.  
The proposed rule changes affect applicants and/or licensees rather than specifically small businesses. Therefore,  
there is no disproportionate effect on a small business because of its size or geographic location.  
21. Identify the nature of any report and the estimated cost of its preparation by small businesses required to  
comply with the proposed rules.  
The requirements of the proposed rule changes apply to all applicants and licensees based on license type. The only  
report required of a small business is the Annual Financial Statement, which is required to be filed by all licensees.  
The cost of the report is set by the accounting business that is engaged to prepare it for the licensee.  
22. Analyze the costs of compliance for all small businesses affected by the proposed rules, including costs of  
equipment, supplies, labor, and increased administrative costs.  
There will be no increased costs of compliance for a small business related to the costs of equipment, supplies, or  
administrative costs.  
23. Identify the nature and estimated cost of any legal, consulting, or accounting services that small businesses  
would incur in complying with the proposed rules.  
Small businesses will not incur any costs of legal, consulting, or accounting services to comply with the rule changes  
other than what any marihuana business would incur.  
24. Estimate the ability of small businesses to absorb the costs without suffering economic harm and without  
adversely affecting competition in the marketplace.  
There are no expected costs to a small business that will cause economic harm to a small business or the marketplace  
because of the proposed rule changes.  
25. Estimate the cost, if any, to the agency of administering or enforcing a rule that exempts or sets lesser  
standards for compliance by small businesses.  
The proposed rule changes apply to all applicants and licensees, regardless of size or geographic location. Therefore,  
exempting or setting lesser compliance standards for small businesses could create a potential threat to health and  
safety of the state of Michigan.  
26. Identify the impact on the public interest of exempting or setting lesser standards of compliance for small  
businesses.  
The proposed rule changes apply to all applicants and licensees, regardless of size or geographic location. Therefore,  
exempting or setting lesser compliance standards for small businesses could create a potential threat to health and  
safety of the state of Michigan.  
MCL 24.245(3)  
RIS-Page 6  
27. Describe whether and how the agency has involved small businesses in the development of the proposed rules.  
Workgroups were conducted that were comprised with varying levels of business owners, from small or large  
businesses and members of the public and they made recommendations to the Agency. Small businesses were not  
exclusively included or excluded by the very nature of being a small business.  
A. If small businesses were involved in the development of the rules, please identify the business(es).  
Small business was involved in the development of rule changes only in as much as making recommendations during  
the workgroups to the Board and not specifically to the agency on specifics concerning the proposed rule changes.  
Cost-Benefit Analysis of Rules (independent of statutory impact)  
28. Estimate the actual statewide compliance costs of the rule amendments on businesses or groups.  
The MMFLA and MRTMA require the agency to promulgate rules that ensure the safety, security, and integrity of the  
operation of marihuana businesses. The statutes also require licensees to comply with standards and requirements for  
marihuana businesses. There are costs associated with the statutory requirements implemented through the proposed  
rule changes. This is an existing program, so the actual costs are already in place. These rule changes will not  
increase or decrease the compliance costs.  
A. Identify the businesses or groups who will be directly affected by, bear the cost of, or directly benefit from the  
proposed rules.  
The rule changes apply to applicants and licensees. There could be additional businesses or groups affected by, bear  
the cost of, or directly benefit from the proposed rule changes. Examples may be CPAs, lab equipment companies,  
surveillance equipment companies, third-party integrators, and point of sale companies.  
B. What additional costs will be imposed on businesses and other groups as a result of these proposed rules (i.e.  
new equipment, supplies, labor, accounting, or recordkeeping)? Please identify the types and number of businesses  
and groups. Be sure to quantify how each entity will be affected.  
No additional cost will be imposed on businesses or other groups. Only applicants and licensees are affected by the  
proposed rule changes.  
29. Estimate the actual statewide compliance costs of the proposed rules on individuals (regulated individuals or  
the public). Include the costs of education, training, application fees, examination fees, license fees, new  
equipment, supplies, labor, accounting, or recordkeeping.  
There are no compliance costs associated with these rule changes.  
A. How many and what category of individuals will be affected by the rules?  
All licensees are affected by these proposed rule changes. There are approximately 1,850 licenses currently.  
B. What qualitative and quantitative impact do the proposed changes in rules have on these individuals?  
This licensed and regulated industry could have an impact on the cost and sale of medical marihuana, and whether  
someone chooses to become a medical marihuana patient with adult-use marihuana available.  
30. Quantify any cost reductions to businesses, individuals, groups of individuals, or governmental units as a result  
of the proposed rules.  
The proposed rule changes do not provide any cost reductions to business, individuals, or governmental units.  
31. Estimate the primary and direct benefits and any secondary or indirect benefits of the proposed rules. Please  
provide both quantitative and qualitative information, as well as your assumptions.  
a) Establish consistent authorizations for individuals who obtain licenses to operate marihuana businesses across the  
adult-use and medical marihuana businesses. This is important in order to protect the integrity of the marihuana  
industry.  
b) Establish parity between the adult-use and medical marihuana business, especially so that those holding equivalent  
licenses are able to operate in a compliant fashion.  
32. Explain how the proposed rules will impact business growth and job creation (or elimination) in Michigan.  
The licensing and regulatory framework that is created will establish a commercial supply and distribution  
mechanism for marihuana. The license categories create new businesses in the industry that otherwise were not  
licensed or regulated – and will impact business growth and job creation specifically for those interacting with the  
licensed marihuana business.  
MCL 24.245(3)  
RIS-Page 7  
33. Identify any individuals or businesses who will be disproportionately affected by the rules as a result of their  
industrial sector, segment of the public, business size, or geographic location.  
The proposed rule changes specifically focus on the marihuana industrial sector as they implement aspects of the  
regulatory framework as required by the MMFLA and MRTMA. The operation of these businesses impacts the  
marihuana customer segment of the public through increased access to marihuana that has been tracked, tested, and  
labeled to ensure safety for customers. There is no expected disproportionate effect due to business size or  
geographic location.  
34. Identify the sources the agency relied upon in compiling the regulatory impact statement, including the  
methodology utilized in determining the existence and extent of the impact of the proposed rules and a cost-  
benefit analysis of the proposed rules.  
Sources from other states are the following:  
Illinois:  
Minnesota:  
Ohio:  
(June)/MMAC%20Updates%20June%202021.pdf  
Pennsylvania:  
OTHER:  
A. How were estimates made, and what were your assumptions? Include internal and external sources, published  
reports, information provided by associations or organizations, etc., that demonstrate a need for the proposed  
rules.  
There were no estimates made because the rule changes impact an individual licensee or registrant as well as  
applicant for licensure or registration. No estimate could consider the setting where an individual may use his or her  
license or registration. Because the rule changes only impact an individual, and impact all in the same way, the  
assumptions made was that no additional cost or benefit would result from the proposed rule changes.  
Alternative to Regulation  
35. Identify any reasonable alternatives to the proposed rules that would achieve the same or similar goals.  
The rules are required by the MMFLA and MRTMA; there is no reasonable alternative to the proposed rule changes.  
A. Please include any statutory amendments that may be necessary to achieve such alternatives.  
The rulemaking provisions of the MMFLA and MRTMA would have to be removed for any such alternative to occur.  
36. Discuss the feasibility of establishing a regulatory program similar to that proposed in the rules that would  
operate through private market-based mechanisms. Please include a discussion of private market-based systems  
utilized by other states.  
The rules are required by the MMFLA and MRTMA; private market-based systems cannot serve as an alternative.  
37. Discuss all significant alternatives the agency considered during rule development and why they were not  
incorporated into the rules. This section should include ideas considered both during internal discussions and  
discussions with stakeholders, affected parties, or advisory groups.  
MCL 24.245(3)  
RIS-Page 8  
Since the rules are specifically required by the MMFLA and MRTMA, there are no alternatives to the proposed rule  
changes that the agency could consider. They are necessary to ensure the safety, security, and integrity of the  
operation of marihuana facilities.  
Additional Information  
38. As required by MCL 24.245b(1)(c), please describe any instructions regarding the method of complying with  
the rules, if applicable.  
There are no additional instructions for complying with the proposed rule changes.  
MCL 24.245(3)  
;