How Michigan Established a $10B Cannabis Industry
Brian Hanna, executive director of Michigan’s Cannabis Regulatory Agency, explores both the achievements and obstacles faced by the nation's most vibrant marijuana industry.
TroibNews 
Michigan is nearing $10 billion in cannabis sales just five years after legalizing recreational marijuana, with only California—home to nearly four times as many residents—boasting a larger market. Additionally, Alaska leads in per capita sales figures, likely influenced by its extreme climate.
“We're breaking sales records every quarter, but that's just a piece of the story,” stated Brian Hanna, the executive director of Michigan’s Cannabis Regulatory Agency. “We're trying to adapt with the industry, learn what should be regulated and what cuts we can make to save businesses money.”
The legalization of cannabis has been complicated across the nation, with illicit sales persisting in several states. Illegal operators in places like Oklahoma, Oregon, and Maine have leveraged legal markets to disguise wrongdoing. Moreover, the goal of providing consumers with safe, tested products has been hampered by lab shopping and fraud.
Michigan faces these challenges too but has made notable progress in tackling them, potentially offering a model for other states to follow.
Hanna, appointed by Democratic Governor Gretchen Whitmer a little over two years ago, has a background in law enforcement. He previously worked as a criminal intelligence analyst with the Michigan State Police and as a deputy sheriff in Kalamazoo County.
PMG interviewed Hanna on various issues affecting the vibrant cannabis market in Michigan.
This transcript has been edited for length and clarity.
You've been on the job for a little over two years. How would you characterize the state of Michigan's cannabis market at this point?
It’s continued progress. We continue to listen to stakeholders on what is important to them and how we can improve the regulatory landscape for the industry. We've been working on new rules since May of 2023. We received a lot of feedback, with hundreds of emails, phone calls, and live testimonies during public sessions.
As far as the sales go, we're breaking sales records every quarter, but that's just a piece of the story. At the end of the day, we're trying to adapt with the industry, learn what should be regulated and what cuts we can make to save businesses money.
Are there themes that emerged from all that feedback that you would highlight?
Enforcement challenges still remain. They continue to exist. We recently started issuing press releases on the most egregious behaviors, highlighting instances where licensees clearly have no intention of following the laws and rules.
Our new rules are designed to address some of the findings from our investigations, outlining necessary tools to prevent the inversion of marijuana from illegal sources and diverting marijuana to illicit markets. We want to keep untested, unsafe products out of the hands of consumers.
We also want to prevent individuals prohibited from owning or operating a marijuana business from entering the industry. We're making significant adjustments to our summary suspension language to better identify those engaging in the most egregious behaviors and remove them from the industry.
Another theme, though, is that we want to eliminate unnecessary regulations. I’ll give you an example. We heard feedback from the industry: “If we're a retailer, why do we have to have a lobby?” Currently, the rules require it. They have a point. If you want to have a lobby in the marijuana retail space, have at it. If you don’t want to have a lobby, you don’t have to have one. That, to us, makes sense.
You mentioned the illicit market and diversion. That's obviously been a massive challenge for states across the country. How would you characterize where Michigan is on that front?
It's hard to quantify or assign a percentage to our situation compared to other states. But we constantly learn from best practices in other areas.
We are very transparent. We publish all findings once investigations are complete. We tackle egregious behavior aggressively to show the public that we are actively pursuing these issues and warn potential violators that we are vigilant.
Due process takes time. People want to see strong and prompt enforcement, but we must ensure that due process is part of investigations. We want to do things right and ensure that anyone accused of regulatory violations is afforded their rights.
Testing has been another significant challenge for states, with issues such as lab shopping and fraud emerging. What challenges does Michigan face, and how are you addressing that?
Michigan is experiencing challenges similar to those faced by other regulatory bodies, including a lack of standardization in analytical methods and issues related to lab shopping and lab fraud. Our new rules overhaul testing protocols, with a focus on implementing safeguards and promoting consistency in testing methodologies.
Additionally, we’re in the early stages of constructing a new state reference laboratory. Creating a reference lab is vital in this space for several reasons. It will enhance investigative support, potentially reducing the current investigation time for illicit materials in the market. Furthermore, we aim to audit licensed labs and perform random audits to ensure compliance.
Michigan’s medical market has shrunk significantly, with sales falling to less than a million dollars last month. Is that a concern? Are there plans to address this?
We still have 84,000 registered patients in Michigan. The decline in medical sales is common in states that have legalized adult-use marijuana. I don’t believe the medical market will disappear entirely, even though we're losing roughly 3,000 registered patients each month. There remains a need for patients to have their cards, especially since they benefit from a lower sales tax rate.
There's also an opportunity for lawmakers to consider combining the medical and adult-use regulations in the future. A unified law would simplify regulation for our agency.
Michigan has become a consumer-friendly market, with average prices for an ounce of weed below $80. However, companies struggle financially. Besides easing regulatory burdens, what other steps can be taken to enhance the market's viability for businesses?
Our goal is for the CRA to position Michigan as a national model for a regulatory framework that fosters business growth while ensuring safe consumer access. Key to this is minimizing unreasonable burdens on licensees and eliminating unnecessary regulations.
For example, marijuana growers have expressed that the requirement to mix their waste with other materials is cost-prohibitive. After discussions with our environmental partners, we agree this requirement may no longer be necessary if waste disposal is properly secured by licensees.
Moreover, we have initiated a social equity grant program, allocating a million dollars to support small and socially equitable businesses last year, with another million available this year currently in the application phase.
You mentioned the potential for merging medical and adult-use regulations. Is there anything else you’ll be asking lawmakers to address?
Our Michigan hemp laws need updates, especially relating to intoxicating hemp products. We are aware that children have access to these products, and we need to collaborate with lawmakers on regulatory solutions to prevent this. Addressing these concerns is critical, and we recognize the existing loopholes in the 2018 farm bill that we need to overcome. We must ensure that we have regulations addressing these untested, unregulated products available to the public.
Anna Muller contributed to this report for TROIB News
“We're breaking sales records every quarter, but that's just a piece of the story,” stated Brian Hanna, the executive director of Michigan’s Cannabis Regulatory Agency. “We're trying to adapt with the industry, learn what should be regulated and what cuts we can make to save businesses money.”
The legalization of cannabis has been complicated across the nation, with illicit sales persisting in several states. Illegal operators in places like Oklahoma, Oregon, and Maine have leveraged legal markets to disguise wrongdoing. Moreover, the goal of providing consumers with safe, tested products has been hampered by lab shopping and fraud.
Michigan faces these challenges too but has made notable progress in tackling them, potentially offering a model for other states to follow.
Hanna, appointed by Democratic Governor Gretchen Whitmer a little over two years ago, has a background in law enforcement. He previously worked as a criminal intelligence analyst with the Michigan State Police and as a deputy sheriff in Kalamazoo County.
PMG interviewed Hanna on various issues affecting the vibrant cannabis market in Michigan.
This transcript has been edited for length and clarity.
You've been on the job for a little over two years. How would you characterize the state of Michigan's cannabis market at this point?
It’s continued progress. We continue to listen to stakeholders on what is important to them and how we can improve the regulatory landscape for the industry. We've been working on new rules since May of 2023. We received a lot of feedback, with hundreds of emails, phone calls, and live testimonies during public sessions.
As far as the sales go, we're breaking sales records every quarter, but that's just a piece of the story. At the end of the day, we're trying to adapt with the industry, learn what should be regulated and what cuts we can make to save businesses money.
Are there themes that emerged from all that feedback that you would highlight?
Enforcement challenges still remain. They continue to exist. We recently started issuing press releases on the most egregious behaviors, highlighting instances where licensees clearly have no intention of following the laws and rules.
Our new rules are designed to address some of the findings from our investigations, outlining necessary tools to prevent the inversion of marijuana from illegal sources and diverting marijuana to illicit markets. We want to keep untested, unsafe products out of the hands of consumers.
We also want to prevent individuals prohibited from owning or operating a marijuana business from entering the industry. We're making significant adjustments to our summary suspension language to better identify those engaging in the most egregious behaviors and remove them from the industry.
Another theme, though, is that we want to eliminate unnecessary regulations. I’ll give you an example. We heard feedback from the industry: “If we're a retailer, why do we have to have a lobby?” Currently, the rules require it. They have a point. If you want to have a lobby in the marijuana retail space, have at it. If you don’t want to have a lobby, you don’t have to have one. That, to us, makes sense.
You mentioned the illicit market and diversion. That's obviously been a massive challenge for states across the country. How would you characterize where Michigan is on that front?
It's hard to quantify or assign a percentage to our situation compared to other states. But we constantly learn from best practices in other areas.
We are very transparent. We publish all findings once investigations are complete. We tackle egregious behavior aggressively to show the public that we are actively pursuing these issues and warn potential violators that we are vigilant.
Due process takes time. People want to see strong and prompt enforcement, but we must ensure that due process is part of investigations. We want to do things right and ensure that anyone accused of regulatory violations is afforded their rights.
Testing has been another significant challenge for states, with issues such as lab shopping and fraud emerging. What challenges does Michigan face, and how are you addressing that?
Michigan is experiencing challenges similar to those faced by other regulatory bodies, including a lack of standardization in analytical methods and issues related to lab shopping and lab fraud. Our new rules overhaul testing protocols, with a focus on implementing safeguards and promoting consistency in testing methodologies.
Additionally, we’re in the early stages of constructing a new state reference laboratory. Creating a reference lab is vital in this space for several reasons. It will enhance investigative support, potentially reducing the current investigation time for illicit materials in the market. Furthermore, we aim to audit licensed labs and perform random audits to ensure compliance.
Michigan’s medical market has shrunk significantly, with sales falling to less than a million dollars last month. Is that a concern? Are there plans to address this?
We still have 84,000 registered patients in Michigan. The decline in medical sales is common in states that have legalized adult-use marijuana. I don’t believe the medical market will disappear entirely, even though we're losing roughly 3,000 registered patients each month. There remains a need for patients to have their cards, especially since they benefit from a lower sales tax rate.
There's also an opportunity for lawmakers to consider combining the medical and adult-use regulations in the future. A unified law would simplify regulation for our agency.
Michigan has become a consumer-friendly market, with average prices for an ounce of weed below $80. However, companies struggle financially. Besides easing regulatory burdens, what other steps can be taken to enhance the market's viability for businesses?
Our goal is for the CRA to position Michigan as a national model for a regulatory framework that fosters business growth while ensuring safe consumer access. Key to this is minimizing unreasonable burdens on licensees and eliminating unnecessary regulations.
For example, marijuana growers have expressed that the requirement to mix their waste with other materials is cost-prohibitive. After discussions with our environmental partners, we agree this requirement may no longer be necessary if waste disposal is properly secured by licensees.
Moreover, we have initiated a social equity grant program, allocating a million dollars to support small and socially equitable businesses last year, with another million available this year currently in the application phase.
You mentioned the potential for merging medical and adult-use regulations. Is there anything else you’ll be asking lawmakers to address?
Our Michigan hemp laws need updates, especially relating to intoxicating hemp products. We are aware that children have access to these products, and we need to collaborate with lawmakers on regulatory solutions to prevent this. Addressing these concerns is critical, and we recognize the existing loopholes in the 2018 farm bill that we need to overcome. We must ensure that we have regulations addressing these untested, unregulated products available to the public.
Anna Muller contributed to this report for TROIB News
