Pot growers, retailers clash as industry takes shape

River Rouge — Cannabis became Lisa Kirch's "savior" when she got her medical marijuana card in June after a decade of debilitating post-traumatic stress, bipolar disorders and anxiety.

But the 56-year-old Lincoln Park resident who's now on disability fears she won't be able to afford her medicine if a Michigan Court of Claims judge on Thursday decides to not extend a deadline allowing licensed provisioning centers to purchase untested marijuana from primary caregivers. Those are people registered with the state to grow plants for up to five patients and themselves but do not have grower licenses.

Licensed retailers are calling for the state to extend the deadline, fearing they will have to shut down because the 22 licensed growers cannot support the 72 licensed dispensaries and nearly 293,000 medical marijuana cardholders in the state.

Licensed growers and processors, meanwhile, say unregulated caregivers are undercutting their sales with cheaper prices with which they can't compete, leaving them with millions of dollars in inventory they cannot sell after investing tens of thousands into their operations.

Without the extension, licensed retailers only legally could purchase tested marijuana from licensed cultivators and processors. The Licensing and Regulatory Affairs Department has recommended caregivers bring their marijuana to licensed growers and processors for them to test and sell to retailers to maintain a steady supply for patients, a proposal that some licensed growers and processors said they support.

The licensing department declined to comment due to pending litigation.

Millions in inventory

The Curing Corner LLC, a licensed retailer in River Rouge, has sued the state to extend the deadline under which licensed dispensaries can buy from caregivers to Dec. 31 when more licensed cannabis should be available.

"Licensed growers and processors, they can't support the 300,000 medical marijuana patients right now," said Michelle Donovan, the Curing Corner's attorney. "We want to keep the supply chain operating," she said, adding that requiring caregiver product be tested at the four licensed testing facilities in Michigan would "bottleneck" them.

Some licensed growers in Michigan objected, saying they have millions of dollars in inventory available but no one willing to buy it. Their marijuana is double to triple the times more expensive than caregiver product and more limited in selection, according to several licensed retailers. Caregivers do not need state licenses, to get their product tested or to use a third-party secure transporter like licensed cultivators and processors must.

"If the deadline is extended to Dec. 31, it would put every single legal (grower) operator out of business," said Jason Pasko, chief operating officer of VB Chesaning LLC, a licensed cultivator and processor. It has seen sales drop 75 percent since licensed retailers could purchase from caregivers and laid off 17 of its 88 employees Friday.

"The whole purpose of putting this legalization law into place was to have safe, tested product available that's legal for people that need it in the state of Michigan," Pasko said. "What is happening now smacks directly in the face of what was supposed to happen."

Conversely, several provisioning centers, including the Curing Corner, said they would close their doors once they sell their stock if the court doesn’t extend the resolution.

"We'll have to close," said Amy McKinnon-Glun, team leader at the Curing Corner. "My customers are not going to be able to afford $400 ounces."

The Curing Corner's most popular offering costs $100 per ounce. Nearly all of its marijuana is from caregivers.

The Curing Corner sells a pound of marijuana for $3,200 compared to licensed grower wholesale prices of $3,000, McKinnon-Glun said. Prices start at $5 per gram.

Green Peak Industries LLC, a Windsor Township grower and processor with 13 licenses that countersued the Curing Corner, says it has about 1,500 pounds of tested flower and 15,000 grams of shelf concentrate in inventory. Since its first harvest went to market in January at a wholesale price of $3,500 per pound, it has not sold any product, said Joe Neller, executive vice president of government affairs and business development. He supports a firm deadline of June 1.

"People are trying to make this about profits and about the big guy versus the little guy," he said. "That can’t be further from the truth. We are trying to move people into the licensed, regulated market."

Recalled pot

Dozens of pounds of caregiver products were recalled after the state required them to be tested for a period of time January for registering above state limits for chemicals such as the mite-killing insecticide Spiromesifin, and salmonella and E. coli bacteria.

"A lot of people in the industry feel this is the Flint Water Crisis," said Maxwell Murphy, compliance officer for Jackson-based Choice Labs LLC, which submitted an amicus curiae brief and has millions of dollars of inventory available from its 1,500 plants, he said. "We don't know what the health implications are."

Patients have used untested marijuana from the caregiver network since medical marijuana was legalized in Michigan in 2008, some critics note. Provisioning centers must have patients sign a waiver that says the product is untested. Some dispensaries and caregivers also separately test their marijuana.

“I’m all for testing. We’d like to,” McKinnon-Glun said. When the Curing Corner opened without a license in May it did test its product for around $40 per batch at an unlicensed facility. Once the safety compliance facility got its license, the price increased to $400, she said.

The state also has let roughly 50 businesses operate temporarily while they go through the licensing process. These unlicensed dispensaries can purchase from the caregiver network.

In a separate case from Green Genie, a temporary operator in Detroit, a judge will decide Thursday if these unlicensed businesses can continue to operate. Green Genie declined to comment.

"Both sides of this issue are in a bind," said Josh Hovey, spokesman of the Michigan Cannabis Industry Association, which has not taken a side in the case. "Temporary operators through no fault of their own have not yet been granted a license because of delays at the state level or because they've been denied for unfair reasons. At the same, those who have gone through the process have to be treated fairly."

bnoble@detroitnews.com