LANSING, MI — Medical marijuana sold through licensed dispensaries would be tracked from “seed to sale” under new legislation in the Michigan House.
House Bill 4827, sponsored by Judiciary Committee Chairman Klint Kesto, R-Commerce Township, would require the state to establish or contract for a marijuana tracking system.
The legislation would complement an ongoing push to formally allow and regulate medical marijuana dispensaries, some of which have continued to operate in a legal grey area since a 2013 Michigan Supreme Court ruling.
The dispensary bill would see the state license larger-scale marijuana growers, processors, transporters, “provisioning centers” and product safety testing facilities.
Marijuana transfers to dispensaries would be subject to an 8 percent tax under the proposed system, which would run parallel to the voter-approved caregiver home growing model.
The tracking bill is the latest wrinkle in the evolving medical marijuana dispensary plan, which may also provide a regulatory framework in the event that a recreational legalization proposal makes the ballot in 2016.
“We believe that regulation is the way forward,” said Jessica Billingsley, chief operating officer and co-founder of MJ Freeway Business Solutions, a tracking software company that could eventually bid for the state contract.
“Cannabis is unique in that it’s brought to market in a high-value dried flower form that loses value and weight as it evaporates, and it requires very unique inventory tracking in order to maintain a clear chain of custody and to prevent diversion.”
MJ Freeway, based in Colorado, is among a growing number of companies now offering marijuana inventory tracking software in states that have legalized marijuana for medical or recreational use.
Kesto invited MJ Freeway to testify before the committee on Tuesday but noted that his invitation did not reflect an endorsement of their particular suite of tracking and compliance software.
Tracking medical marijuana can improve patient and product safety, according to MJ Freeway program manager Tony Reese, ensuring that strains are properly identified, testing is completed and dosage is consistent.
Tracking can also benefit public safety and help states avoid interference by the federal government, which continues to consider marijuana an illegal controlled substance, according to Reese.
“It’s product going across state borders that draws federal interference,” he said, explaining that tracking systems can help match supply and demand.
“It’s when supply overreaches demand significantly that things like diversion — people taking product and trying to capitalize that product in other markets to recover the capital investment — occurs.”
State Rep. Jeff Irwin, D-Ann Arbor, questioned how much the software contract would cost the state and whether those costs would ultimately be passed onto consumers, thereby discouraging purchase through legal channels.
“My fear here is that in trying to grasp so tightly for control, everything will squeeze through our system, because of course there’s a very active black market for cannabis,” Irwin said.
Washington state, where voters chose to fully legalize the drug, contracted with Biotrack THC for tracking. The company reportedly submitted a bid of $782,000 for its software and $296,000 for annual maintenance and support.
Medical marijuana activists, who were not able to testify in committee on Tuesday due to time constraints, raised other concerns after the hearing.
“It seems excessive,” said Rick Thompson, former editor of the Michigan Medical Marijuana Magazine. “We don’t really need the state to know whether we’re producing sativa or indica, or exactly how many clones we’ve produced.”
Roger Milford, who runs the Jackson County Compassion Club, said he uses the MJ Freeway software but does not believe it should be mandated by the state.
“I use it because it’s good for business,” said Milford. “I can track my caregivers. I can track my business. I know my patients are in a HIPAA-compliant database so they’re information is protected. I enjoy the system. It works well. But I don’t need the state telling us to track every little minutia.”
The House Judiciary Committee did not vote on the medical marijuana dispensary or tracking bills. Discussion is expected to continue at a later date.
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