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Josh_Colton

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About Josh_Colton

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  1. The BMMR has provided a list of 3rd party software providers that integrate with the METRC https://www.michigan.gov/documents/lara/_MI_TPV_Authorized_Functionality_FINAL_APPROVED_621220_7.pdf
  2. Fascinating how no matter how much rush there has been to be the first person in the door, none of that matters when the state provides a bunch of last minute rules in the application instructions, emergency rules, and the application itself. Patience has become a must have virtue. https://www.freep.com/story/news/2017/12/15/medical-marijuana-michigan/953853001/
  3. This is the instruction given in the application. E. Technology Plan Provide an explanation in the space provided AND supplemental documentation demonstrating the applicant’s technology plan including (1) any third-party systems being used to interface with METRC; and (2) systems and procedures for internal loss/theft/destruction reporting. I would recommend filling this out by providing some of the background documentation that you can obtain from METRC. I would also add additional information about the physical equipment you will use and any additional safety that you will employ. I think with all the medical information being stored on the retail side HIPPA becomes extremely important, but in any type of license I would highly recommend looking into the area of information security. Both in how you can prevent the physical storage device from being stolen or broken, but also how to prevent someone from hacking in. Be descriptive. (ex. We will maintain all technology used to store data in a locked file cabinet, that only the onsite supervisor will have access to.)
  4. I would definitely be of the opinion that any individual who applies for a license should avoid listing any caregiver plants, usable marihuana or any other marihuana infused products as part of their capitalization. Nothing good can come from the scenario described above.
  5. Below I have attached a link to all of the administrative rules that were released by LARA in relation to the MMFLA. This definitely provides some clarity and insight into what potential license applicants can expect through the process, while operating their facilities, and in their interactions with the state. http://www.michigan.gov/documents/opt/Emergency_Rules_Medical_Marihuana_Facilities_Licensing_Act_607643_7.pdf
  6. The purpose of this bulletin is to advise municipalities (cities, townships, and villages) of the Bureau of Medical Marihuana Regulation’s (BMMR) intentions regarding municipality authorization of medical marihuana facilities. This bulletin is only for advisory purposes and is subject to change. Under the Medical Marihuana Facility Licensing Act (MMFLA), MCL 333.27101 et seq., a municipality has the discretion to adopt an ordinance authorizing one or more types of marihuana facilities to operate within its boundaries. An applicant that is located in a municipality without an authorizing ordinance is ineligible for state marihuana facility licensure. The Bureau intends to rely on the local municipality’s authorizing ordinance to determine whether an applicant is in compliance with relevant provisions of the MMFLA. Information that will be considered includes the following: The types of marihuana facilities (growers, processors, provisioning centers, safety compliance facilities, and/or secure transporters) allowed to operate in the municipality. If applicable, the maximum number of each type of marihuana facility allowed to operate in the municipality. Any zoning regulations that apply to marihuana facilities within the municipality, including whether licensees may apply for special use permits. More information regarding municipalities and the MMFLA: Municipalities shall not impose regulations regarding the purity or pricing of marihuana. Municipalities shall not impose regulations that conflict with statutory regulations for licensing marihuana facilities. There is no deadline for municipalities to adopt authorizing ordinances. Municipalities are not required to “opt out” or prohibit marihuana facilities within their boundaries. This bulletin does not constitute legal advice and is subject to change. It is intended to be advisory only, in anticipation of the Department of Licensing and Regulatory Affairs’ promulgation of emergency rules consistent with statutory requirements. Potential licensees are encouraged to seek legal counsel to ensure their licensure applications and operations comply with the Medical Marihuana Facilities Licensing Act and associated administrative rules. http://www.michigan.gov/documents/lara/ADVISORY_BULLETIN_-_Municipal_Authorization_FINAL_604557_7.pdf
  7. LARA Announces Medical Marihuana Educational Sessions; BMMR to show potential licensees the application process, monitoring system Media Contact: LARA Communications 517-373-9280 Email: mediainfo@michigan.gov October 9, 2017 – The Dept. of Licensing and Regulatory Affairs (LARA) and the Bureau of Medical Marihuana Regulation (BMMR) announced today the dates, times and locations of a series of educational sessions designed to familiarize potential licensees with the application process and the statewide monitoring system. Employees of LARA and BMMR will be on hand during the in-person sessions to show attendees the license application process for each of the five license categories: Grower Processor Secure Transporter Provisioning Center Safety Compliance Facility While applications will not be completed during these events, attendees will be able to familiarize themselves with the process – and what will be required – when the applications become available on Dec. 15, 2017. Representatives from Franwell – the company chosen to implement Michigan’s statewide monitoring system for integrated marihuana tracking, inventory, and verification under the Marihuana Tracking Act – will be present at each of the five medical marihuana educational sessions to demonstrate Franwell’s Metrc, the seed-to-sale tracking system, to potential licensees. Metrc is a cloud-hosted, real-time, online software reporting system that will be used by licensed Michigan medical marihuana businesses to manage and report supply chain activities as required by state rules. Metrc uses serialized tags attached to every plant – and labels attached to wholesale packages – to track medical marijuana inventory through different stages of growth, as well the drying and curing processes. The educational sessions will take place in five locations throughout the state: Wednesday, Nov. 8, 2017 Oakland Community College, 27055 Orchard Lake Road, Farmington Hills, MI Thursday, Nov. 9, 2017 Saginaw Valley State University, 7400 Bay Road, University Center, MI Monday, Nov. 13, 2017 Great Wolf Lodge, 3575 North US Highway 31 South, Traverse City, MI Tuesday, Nov. 14, 2017 Wing’s Conference Center, 3600 Vanrick Drive, Kalamazoo, MI Wednesday, Nov. 15, 2017 Kellogg Conference Center, 219 South Harrison Road, East Lansing, MI The Nov. 9 and Nov. 15 events will also be live-streamed on the BMMR website at www.michigan.gov/medicalmarihuana All events begin at 9:00 AM and end at 12:00 PM. There is no cost to attend the medical marihuana educational sessions but – due to space constraints – potential licensees and their representatives must all register at https://www.metrc.com/michigan by 5:00 PM on Nov. 1, 2017 to guarantee themselves entrance to the event. Click “Sign up for Educational Sessions” and then choose the appropriate date. The LARA educational sessions are not board meetings and there will not be time set aside for public comment. The educational sessions will be informative presentations of processes for Metrc (the statewide monitoring system) and Accela (the application process) that will be utilized by future licensees and/or potential applicants and will not interfere with the authority of the Medical Marihuana Licensing Board or the Advisory Panel as provided under the Medical Marihuana Facilities Licensing Act. Attendance at the educational sessions will not affect a potential licensee’s application. All interested members of the public will be able to participate in future training opportunities whether they attend the educational sessions or not. Any information or feedback provided at the educational sessions is merely advisory. Members of the media are asked to RSVP to David Harns by calling 517-373-6963 or emailing HarnsD1@michigan.gov.
  8. The purpose of this bulletin is to inform the public and potential medical marihuana licensees of the Bureau of Medical Marihuana Regulation’s intentions regarding testing of marihuana and marihuana-infused products. This bulletin is only for advisory purposes and is subject to change. The Bureau intends to require testing of marihuana and marihuana-infused products at the following two points in the supply chain: After harvest: Harvested marihuana must pass required tests before it is transferred from a grower to a processor or a provisioning center. After processing: Marihuana and marihuana-infused products in their final state must pass required tests before they are transferred from a processor to a provisioning center. Facilities may choose to test their products at additional points in the supply chain. More information regarding marihuana testing: The test results will be recorded in the statewide monitoring system by the licensed safety compliance facility The grower or processor that provided the test sample will be able to view the testing results in the statewide monitoring system once they have been recorded A caregiver may choose to have his or her product tested by a licensed safety compliance facility, but those tests will not be recorded or tracked in the statewide monitoring system. Licensed provisioning centers can sell or transfer marihuana to a registered qualifying patient or registered primary caregiver only after it has been tested and bears the label required for retail sale. http://www.michigan.gov/documents/lara/BMMR_Advisory_Bulletin_Testing_602773_7.pdf
  9. When forming a corporate structure for any business a company is generally weighing two factors: 1) What are my tax liabilities? and 2) What are my civil liabilities? General practice in Michigan for most business owners is to set something up called an LLC (limited liability company). This business has the benefit of being both taxed friendly, as you are only taxed on an individual level, and not as a company, along with the benefit of providing a solid amount of liability protection from being held personally responsible if your company is being sued. This is generally results in a win-win situation for business owners, and as a result is the ideal set-up. However, there are certain disadvantages to this set-up, which make it particularly dangerous for those setting of a cannabis business. 280E to be exact... If anyone is unfamiliar with this law please feel free to review the last blog post. This heightened tax liability, that is confusing, constantly changing, and often overlooked so as to avoid massive taxation, has frequently led to audits where cannabis businesses are facing massive audits sometimes as much as hundreds of thousands of dollars. So in an L.L.C when your company is determined to owe the IRS $500,000 the IRS will first determine whether the business can cover the debt, but also the Internal Revenue Service will be able to go after the business owner personally for the remainder of the owed taxes. That includes anyone with any portion of ownership in the company. So not only does your company stand to be dealt a death blow by a sever tax audit, but your personal finances could ultimately become crushed. Now these tax liabilities are most frequently owed by the provisioning side of the licensing and not by the grower, but based on the tax court trending towards more and more taxation it is safe to say that no company is truly safe from the potential wrath of the IRS and therefore it highly recommended when setting up your corporation to avoid taking excessive risk and therefore to avoid setting up as an L.L.C. -Josh Colton
  10. Yes, I 100% agree with your comment concerning the lack of awareness of potential start up costs and also how strict the government and IRS compliance standards will be. To say the least there is going to be a much much smaller profit margin than people anticipate. Based on many conversations I have had with individuals operating in commercial systems across the country, there is a lot of misconception about how profitable these businesses really are, as many of them are still spending more than they are making. I apologize for not providing a more thorough answer in regards to the 280e implications, as you have found in the article you read the basic idea is that costs associated with the growing side of marijuana deductible, where as the retail side is generally 280E liable. However, I was not confident enough to comment on how that would play out when you are dealing with a caregiver, who acts in both the role as manufacturer and "trafficker", versus on the commercial side where there is more division between the two. I would proceed with extreme caution when it comes to labeling which of the actions should be and shouldn't be 280E exempt. Thank you for sharing that article. It is very informative.
  11. Semicaregiver, thank you for reaching out. It is important to remember that from a legal perspective all involvement in medical marijuana activity is federally illegal, and therefore declaring taxes to your caregiver business would be highly incriminating if an investigation were ever being formed against you. This information could also be manipulated in any potential state criminal investigation against you as well. On the other hand not paying taxes on income is illegal in its own right. This has resulted in many individuals such as yourself being stuck between a rock and a hard place. The best way to handle this is to consult with both a legal expert and a tax expert before making any rush decisions. Understand though that a legal expert is going to have an obligation to inform you of serious criminal liability attached to this, while a CPA is going to tell you that nothing is more important than paying taxes. I know i've gone on a bit of a tangent from your initial question, but I thought it was important to fully answer your question. In regards to which of these items specifically is deductible, each item should be reviewed by an accountant who is familiar with 280e law. License holders under the MMFLA will be open and obvious as to their actions through the Seed to Sale tracking, so they will be much more strictly tied to IRS 280e. If you have any further questions or need further clarification please feel free to reach out Josh_Colton
  12. The creation of the MMFLA is anything but a simple application process like we see with the MMMA. The requirements include, but are not limited to, Background investigation, municipal property approval, and application preparation. If this sounds easy I apologize for being misleading but the reality is that this will be anything but that. This is heavy government regulation and heavy compliance and maybe even above and beyond that this will be HEAVILY TAXED by the state and also the IRS. Today I would like to focus in a bit on the IRS side of things and specifically 280E. IRS Taxcode 280E states that: Section 280E of the Internal Revenue Code forbids businesses from deducting otherwise ordinary business expenses from gross income associated with the “trafficking” of Schedule I or II substances, as defined by the Controlled Substances Act. This code has led to marijuana businesses being hit with significant IRS audits that have resulted in heavy fines being levied against these businesses, some so severe that they have actually not only been shut down but the individuals who own these businesses are actually personally harmed by the IRS. Let me back up and explain this a little bit though... Cannabis producers, retailers, and processors are not allowed to take deductions for many of their expenses from their taxable income, as a result they are taxed at a much higher effective rate than other similar business types. The only deductions marijuana businesses can claim are costs of coods sold, such as labor costs for things like seeding, planting, and cultivating. They can’t make any deductions attributable to general business activities or marketing activities because of 280E. There have been some additional cases allowing for limited deductions if a corporation is set up appropriately. I plan on going into more depth on these issues going forward, but I wanted to start bringing up this largely alarming issue to both the caregiver and MMFLA Licensee communities. If your CPA or Attorney who advises you in these matters is not heavily versed and focused in on this issue, then you are entering a very dangerous area. The only way to avoid the IRS penalties that destroy businesses and lives is to put in the necessary structuring, preparation, and procedures. The best advice that can possibly be given is SPEAK TO AN EXPERT!! -Josh Colton
  13. Some clarity provided on fee structure for the licensing process, but nothing finite as they have only provided a range of potential fees. September 12, 2017 - At a meeting of the Medical Marihuana Licensing Board later today, the Department of Licensing and Regulatory Affairs (LARA) will inform the board members regarding several oversight issues and the implementation of the regulatory framework for the new Medical Marihuana Facility Licensing Act (MMFLA). LARA, in consultation with the board, has sole authority to promulgate rules and emergency rules as necessary to implement, administer, and enforce the MMFLA. LARA will notify the board of its intent to submit emergency rules necessary for the initial implementation of the MMFLA. The emergency rules – expected to be submitted in November – will further establish regulatory policies, including the application and licensing process and the fee structure. LARA is currently working with the board to develop permanent rules. Existing Facilities LARA consulted with the Michigan Attorney General’s office regarding facilities and dispensaries currently in operation and determined that any regulatory action will require an administrative rule. The department’s intent for the emergency rules is to consider any operation of a facility – that would otherwise need to be licensed under the MMFLA – as a potential impediment to licensure if continued after December 15, 2017. LARA will begin accepting license applications for all facilities on that date. This applies to all facilities defined under MMFLA. This approach will allow existing operations to wind down while also giving adequate time for patients to establish connections to caregivers to help ensure continuity of access. Fee Structure MMFLA requires LARA, in consultation with the board, to set the application fee and the annual regulatory assessment for each license. LARA will notify the board of its intent to submit emergency rules related to the following fee structure: The Application Fee is non-refundable and offsets the cost for LARA, the Michigan State Police (MSP), and/or contract costs for investigative services in order to conduct the background investigation of those applying for licenses. The nonrefundable application fee – which must be submitted with the application – will likely be in the $4,000 to $8,000 range, depending on the number of applications received. The annual Regulatory Assessment offsets operational costs and other statutory mandates including LARA’s costs to implement the act. It also offsets the cost of medical-marihuana-related services provided to LARA by the Michigan Attorney General’s office, MSP, and the Dept. of Treasury. By statute, the assessment must also provide $500,000 annually to LARA for licensing substance abuse disorder programs in addition to five percent of other state departments’ costs to the Michigan Department of Health and Human Services for substance abuse-related expenses. LARA is currently determining the annual regulatory assessment for fiscal year 2018 for each of the five license categories authorized by MMFLA. Grower A licenses are capped, by statute, at $10,000. Grower B-C, Processor, Transporter, and Provisioning Center licenses will be dependent on the number of total licenses subject to assessment and could be as low as $10,000 or as high as $57,000. The regulatory assessment does not apply to safety compliance facilities.
  14. Well this is interesting. So imagine where this is headed, politics aside. This is going to make this a more efficient and streamlined process. Less transport company involvement. Co-Location of Medical Marihuana Facilities Operation of grower, processor, and/or provisioning center facilities at the same location The purpose of this bulletin is to advise the public and potential medical marihuana licensees of the Bureau of Medical Marihuana Regulation’s intention to allow for the operation of licensed grower, processor, and/or provisioning center facilities at the same location. This bulletin is only for advisory purposes and is subject to change. A potential licensee may apply for and be granted a license to operate as a grower, processor, and/or provisioning center. It is the Bureau’s intention that growers, processors, and provisioning centers may operate at the same location under the following conditions:  Each licensed entity remains distinct and separate within different working areas.  Each licensed entity has separate entrances and exits, point of sale operations (if applicable), and record keeping systems.  The municipality in which the facility is located does not prohibit co-location of facilities through its local ordinance or zoning regulations.  Each licensed entity is compliant with local and state public health standards and building inspection and fire safety regulations.  Each entity’s license is posted on the wall in its distinct working area.  The Department has authorized the licensees to operate at the same location. Other considerations regarding co-location of facilities:  Additional inspections and/or permits may be required for licensed entities operating at the same location.  Each grower, processor, and provisioning center requires its own separate application, regulatory assessment, and license.
  15. This really sets the stage for super grows... The State of Michigan’s Department of Licensing and Regulatory Affairs (LARA) released an advisory bulletin today to inform and advise prospective medical marihuana licensees regarding stacking of medical marihuana class C grower licenses. The bulletin is for advisory purposes only and is subject to change. It is the intent of the Bureau of Medical Marihuana Regulation to allow a potential licensee to apply for – and be granted – multiple (“stacked”) class C grow licenses in a single location. Each class C license authorizes the grower to grow up to 1,500 marihuana plants. Stacked licenses must be issued to the same applicant/licensee and each license will be subject to an additional application and regulatory assessment. While a stacked licensee will need to identify and track all information in the statewide monitoring system under the appropriate license, the licensee will not be required to operate each license in a separate, distinct working area. A licensee with stacked licenses must be in compliance with all applicable local ordinances and zoning regulations. This bulletin does not constitute legal advice and is subject to change. It is intended to be advisory only, in anticipation of the Department of Licensing and Regulatory Affairs’ promulgation of emergency rules consistent with statutory requirements. Potential licensees are encouraged to seek legal counsel to ensure their licensure applications and operations comply with the Medical Marihuana Facilities Licensing Act and associated administrative rules.
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