Michigan poised to ramp up efforts against black-market marijuana

Police and marijuana weren’t always friends, so it’s somewhat unexpected that a former lawyer would be heading Michigan’s commercial marijuana industry.

But that’s exactly what happened.

Brian Hanna, appointed acting director of the Cannabis Regulatory Agency (CRA) by Gov. Gretchen Whitmer on September 15, is doing the rounds and meeting with stakeholders.

Using technology and intelligence to fight crime has been an integral part of Hanna’s career. Most recently, he worked as a computer crime analyst for the Michigan State Police and previously as a criminal intelligence analyst for the agency. This isn’t his first foray into marijuana regulation. Hanna worked for the CRA from 2017 to March 2022 as the Investigations and Inspections Manager.

Marijuana trade groups and industry insiders don’t believe it’s coincidence. They expect more control – increased inspections, targeted data analysis and increased inventory checks.

Michigan’s marijuana industry is largely regulated by information reviewed by METRC, the state’s comprehensive cannabis database software used by licensors and corporations, which theoretically tracks marijuana from seed to sale.

Many marijuana executives say they’re ready for the CRA to step up enforcement of illegal marijuana creeping into an already saturated market. Black market marijuana potentially harms the integrity and security of the market, leading to falling marijuana prices and stiff competition, they argue.

Several stakeholders raised the issue at the CRA’s quarterly public meeting in September.

“One of the things we’ve heard from the company recently, if you look at the amount of (THC) distillate in the legal market, is that there isn’t enough flower from producers that come from licensed breeders,” said Allison Arnold of Cannabis Attorneys of Michigan. “So there must be marijuana from the illegal market making its way into the legal market.”

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There have been no public cases illustrating black market marijuana infiltration, but most believe it is happening to some extent. They speculate that unscrupulous companies are accepting unlicensed marijuana and combining it with legitimate products that make their way onto store shelves.

“There are a lot of people in the industry who hear anecdotally that … even licensees are doing this,” said Shelly Edgerton, executive chair of the Michigan Cannabis Manufacturer’s Association, “and that’s really important to us.”

Edgerton is a former director of the Department of Licensing and Regulatory Affairs appointed by Governor Rick Snyder. She was replaced when Whitmer’s administration took office in 2019, but not before hiring former CRA director Andrew Brisbo and Hanna, who began the now-defunct Bureau of Marijuana Regulation.

“I think Brian (Hanna) is open to even starting these anonymous conversations to get information or direction or people’s comments on what might be happening and how they can better track this through enforcement,” Edgerton said.

She said it’s a tough problem because nobody in the industry wants to “be the snitch.”

Edgerton supports more opportunities for anonymous reporting by those who might otherwise face consequences for blowing the whistle.

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MLive has reviewed complaints filed by the CRA over the past few months. None specifically reference suspected black market marijuana.

There was one case of plants discovered by an inspector not having the correct tracking tags attached, raising questions about provenance. As a general rule, METRC tags should be attached to plants until they are harvested.

Another complaint involved a retailer selling marijuana without providing proper tracking information, again making it impossible to verify that the product was legally licensed.

Robin Schneider, director of another marijuana business trade group, the Michigan Cannabis Industry Association, said CRA enforcement was already on the rise as the former director prepared to leave. She expects Hanna to continue this trend.

“By enforcement I mean random inspection, checking METRC tags to make sure all crops are tagged, checking camera footage to make sure all cameras are working, checking inventory to make sure all inventory is on site should be present. ‘ said Schneider. “I’m talking about numerous calls from licensees that the CRA is there and doing inspections, long inspections, surprise visits and things like that.”

Schneider said such actions are part of any regulated and licensed industry. “I think our members expect good enforcement to make sure everyone is following the rules.”

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Anton Harb Jr. is a marijuana advocate and military veteran who is not in the industry but part of a consumer group that meets regularly with the CRA. He was among the first to meet Hanna after taking on the role of director.

“People weren’t happy about law enforcement being appointed to this position,” Harb said.

“He was a bureaucrat, of course … but he seemed to listen openly.”

Harb agrees that the general industry consensus is that more enforcement is needed.

“I just think as the market matures, the natural evolution is that people will skirt the rules and do things under the radar,” he said. “I don’t think that’s necessarily a small thing to the CRA or the industry, it just is.”

Hanna’s role as head of the CRA is expected to be temporary. Whitmer’s office announced plans to conduct a nationwide search for a permanent director at a later date.

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