Analysis of the Business Implications of State Cannabis Law

Background

On Nov. 6, 2018, Michigan voters approved a ballot proposal to decriminalize recreational marijuana. The Michigan Regulation and Taxation of Marihuana Act (MRTMA) took effect Dec. 6, 2018, and permits adults over 21 to possess and consume legally acquired cannabis. It also allows licensed entities to cultivate, process and sell cannabis commercially.

Marijuana remains illegal under federal law. The U.S. Drug Enforcement Administration (DEA) classifies cannabis as a Schedule I drug, which means that it has no accepted medical use and a high potential for abuse. Certain derivative products are classified as Schedule V, which means they have the lowest potential for abuse.

The A2Y Regional Chamber takes no position on state and federal cannabis law, but it recognizes the business community’s exposure to legal changes and seeks to inform members on the issue.

Implications of the Law

The conflicting federal standards, coupled with the vague language of the MRTMA, have produced legal ambiguities for consumers, cannabis industry members and businesses that engage with them. Here are some answers and questions about how the A2Y business community is affected by cannabis law:

Human Resource Policy

According to the MRTMA, employers are not required to tolerate employee consumption perceived to affect work performance. Businesses can:

  • Institute and enforce workplace drug policies that prohibit employees from working under the influence or using marijuana on company property;
  • Conduct pre-employment drug tests, random employee drug tests, or reasonable suspicion drug tests according to company policies; and
  • Discipline, terminate or refuse to hire employees for testing positive in violation of workplace drug policies.

The Michigan Court of Appeals ruled that employers cannot withhold unemployment benefits from employees who hold medical marijuana cards and test positive. Non-medical consumers may be disqualified from benefit reception, though.

Neither the MRTMA nor legal precedent clarifies whether non-at-will employees, such as union workers, deserve special consideration. The terms of the employment contract may require distinct procedures or permit employees to claim disability protection under the Americans With Disabilities Act.

While the State empowers companies to set internal drug policies, federal contractors and grant recipients remain bound to stricter standards. The Drug-Free Workplace Act (DFWA) requires some contractors and all grantees of federal agencies to operate drug-free work facilities or risk indefinite termination of funds and contracts.

Public Education Operations

The MRTMA prohibits marijuana consumption on the grounds of primary and secondary schools, but it does not rule on institutions of higher education. Federal law is more definitive. As a DEA Schedule I drug, cannabis falls under the purview of the Drug-Free Schools and Communities Act (DFSCA). The DFSCA obligates federally-funded institutions of higher education to develop programs preventing possession, use or distribution of marijuana on school grounds. Violations jeopardize financial aid.

Lending and Investment

The federal government has not explicitly prohibited marijuana-related banking activity. However, according to the American Bankers Association, financial institutions that lend to, bank the money of, or process transactions for cannabis-related operations could risk charges of money laundering. Servicing non-cannabis clients in the supply chain — including utilities companies — could create similar risk. State Attorneys General have requested legal clarity on the issue.

Michigan legislators passed a resolution urging Congress to approve the Secure and Fair Enforcement Banking Act (H.R. 1595) to protect banks from sanctions. The bill remains in the U.S. House Subcommittee on Crime, Terrorism and Homeland Security but is expected to be taken to a chamber vote in the coming weeks. A Senate bill (S. 1120) that seeks protections for both banks and insurance companies remains in the Senate Committee on Banking, Housing and Urban Affairs. The Congressional efforts have the support of U.S. Treasury Secretary Steven Mnuchin.

Real Estate Management

Landlords can restrict or ban tenants from smoking, growing, processing, distributing or displaying cannabis on their property. However, they cannot prevent tenants from possessing cannabis or consuming it through smoke-free methods, such as through edibles or topical applications. Whether landlords can prohibit vaping is unclear. The right will depend on whether the State defines vaping as “smoking” or a distinct form of consumption.

Operations of Public Places

The MRTMA prohibits consumption in public places but permits use in areas that are inaccessible to people under 21 and that municipalities formally designate as consumption areas. Marijuana use is not restricted by Michigan’s Smoke-Free Air Law, which prohibits tobacco smoking in businesses and licensed food establishments. It is similarly unaddressed by the Washtenaw County Clean Indoor Air Regulation, which bans nicotine vaping in public spaces or places of employment. Municipalities will determine whether social establishments can allow consumption.

Policy Analysis

Industry Impacts  —  The Michigan Petroleum Association and Michigan Association of Convenience Stores say the average gas station will pay an extra $1,125 per day in taxes. This figure represents the statutory tax incidence, not the economic incidence. Gas is a relatively inelastic good, which means consumers would bear more of the tax burden than gas stations would. The associations also expect consumers to offset higher gas expenses by cutting spending in station convenience stores. Station owners record higher margins from commodities than fuel, so lost store sales could hurt operations. Consumers near state borders are predicted to escape the tax altogether by buying gas in Ohio and Indiana. Washtenaw County commuters may similarly pursue substitutes; they can avoid the fuel tax by biking or electric scootering. These changes in consumer behavior would hurt local gas stations.

Economic Impacts  —  Road improvements are expected to increase travel efficiency and reduce vehicle-repair expenditures across Michigan. These factors free up consumer time and resources for discretionary spending. The economic benefits could be offset by the fuel tax increasing business transportation and distribution costs. Rising input costs would yield higher prices for consumer goods and services, which could hamper the broader consumer spending and decrease Michigan’s national price competitiveness.

Environmental Impacts  —  The tax could help reduce Michigan’s carbon emissions by inspiring drivers to cut consumption or purchase more fuel-efficient vehicles. However, the University of Michigan Energy Institute expects rising registration fees to disincentivize purchases of cleaner vehicles. This would undermine carbon-reduction efforts. Policy proponents argue the $225 fee increase is minimal.

Equity Impacts  —  The policy mitigates negative effects on low-income motorists by doubling the Earned Income Tax Credit from 6% to 12%. In the near term, though, high-income earners may escape fair contributions to the road-repair fund and shift the cost burden onto low-income earners. As EV prices remain prohibitively high, EV ownership may be the exclusive privilege of high-income drivers. After about 13,500 miles, ICE drivers would pay higher annual taxes per mile than their EV counterparts would. Low-income motorists would effectively subsidize the road use of high-income drivers. Some experts propose an electricity use tax as an equitable alternative to charging static EV registration fees.

Industry Development Timeline

Legal experts await clarity on insurance and banking obligations; vaping restrictions; and consumption in age-restricted social establishments. They expect some answers as soon as June, when the Michigan Department of Licensing and Regulatory Affairs (LARA) plans to issue draft regulations. Formal state regulation will appear no later than Dec. 6, 2019. Conflicts between state and federal law may clear with the passage of the bipartisan Strengthening the Tenth Amendment Through Entrusting States (STATES) Act. The federal law would exempt state-authorized activity from the Controlled Substances Act. It has been endorsed by U.S. Attorney General William Barr and remains in the Senate Judiciary Committee and the House Subcommittee on Crime, Terrorism and Homeland Security.

The A2Y Regional Chamber, with business networks across the state, is closely watching cannabis policy developments and will provide updates as information becomes available.

Analysis of Gov. Whitmer’s Gas Tax Proposal

Executive Summary

Gov. Gretchen Whitmer proposed a fuel tax to raise funds for statewide road repair. The tax exclusively targets vehicles with internal combustion engines (ICE) but also effectively raises the ownership fees for electric vehicles (EVs). Experts debate the policy’s effect on taxpayer equity, environmental sustainability, and economic growth. The State Legislature appears unlikely to pass the current draft.

Background

Poor road conditions cost Michigan motorists an average of $686 per year in vehicle repairs. Insurance fees, lost productivity, and other factors raise the cost to $1,980. Studies point to underinvestment in infrastructure. The State ranks No. 42 in road expenditures per vehicle miles traveled. It funds road maintenance through the Michigan Transportation Fund (MTF), which is financed by fuel taxes and vehicle registration fees. The revenue source has seen little growth over the years. Registration fees have risen proportionately with vehicle values, but until 2015, fuel taxes had never been adjusted for inflation and had not increased since 1997. The State had issued bonds to offset funding deficiencies; the Michigan Department of Transportation (MDOT) is now paying down $1.2 billion in outstanding debt.

In 2015, Michigan approved a $1.2 billion-per-year funding package for road and bridge repair. A five-year phase-in began in 2017. The plan included a 7.3-cent increase in gas taxes to 26.3 cents, an 11.3-cent increase in diesel fuel taxes to 26.3 cents, a $20 hike in registration fees, and a $600 million allocation from the general fund. It also indexed the fuel tax for inflation; effective in 2022, the tax will rise annually by either 5% or the inflation rate, whichever is lower. MDOT said the 2015 plan has slowed road deterioration but cannot solve the state’s infrastructure problems. Studies suggest the roads need another $2 billion to $2.6 billion annually.

Fuel Tax Proposal

To fill the funding gap, Gov. Whitmer proposed raising fuel taxes from 26.3 cents to 71.3 cents. The increase would be phased in with 15-cent hikes in October 2019, April 2020, and October 2020. Inflationary indexing would begin as planned in 2022. Whitmer expects $2.5 billion in gross annual revenue from the new tax beginning in 2021. The sum would be apportioned to a new Fixing Michigan Roads Fund ($1.9 billion) and restoration of the general fund ($600 million). The proposal eliminates the general-fund earmark for roads and restores $500 million siphoned from the School Aid Fund.

Those who oppose the plan point to its impact on Michigan’s at-pump taxes, which would become the highest in the nation, according to the Tax Foundation. Michigan fuel taxes are compounded by a 6% sales tax. The additional 45-cent-per-gallon excise tax would raise the average at-pump tax from 44.13 to 89.13 cents per gallon. For a 15-gallon tank, the total tax increase would cost an extra $7.16 per fill-up.

Whitmer’s plan would also indirectly raise registration fees for battery electric vehicles (BEVs) and hybrid electric vehicles (HEVs) to the highest rates in the country. The Michigan Vehicle Code ties each one-cent increase in fuel taxes to a $5 increase in BEV fees and $2.50 increase in HEV fees. For a 45-cent fuel raise, EV owners would pay an extra $102.50 to $225. The average ICE vehicle that gets 27 miles to the gallon could travel 13,500 miles before breaking the BEV rate. Since the average U.S. driver travels 13,476 miles annually, the proposed tax appears to draw comparable contributions from the average BEV and ICE owners. Altogether, EV fee increases are expected to generate $3 million in new revenue.

Five years into Whitmer’s 10-year road plan, a commission would be appointed to examine the market share of fuel-efficient and electric vehicles. The commission would explore fuel-tax alternatives to capture an evolving tax base.

Policy Analysis

Industry Impacts  —  The Michigan Petroleum Association and Michigan Association of Convenience Stores say the average gas station will pay an extra $1,125 per day in taxes. This figure represents the statutory tax incidence, not the economic incidence. Gas is a relatively inelastic good, which means consumers would bear more of the tax burden than gas stations would. The associations also expect consumers to offset higher gas expenses by cutting spending in station convenience stores. Station owners record higher margins from commodities than fuel, so lost store sales could hurt operations. Consumers near state borders are predicted to escape the tax altogether by buying gas in Ohio and Indiana. Washtenaw County commuters may similarly pursue substitutes; they can avoid the fuel tax by biking or electric scootering. These changes in consumer behavior would hurt local gas stations.

Economic Impacts  —  Road improvements are expected to increase travel efficiency and reduce vehicle-repair expenditures across Michigan. These factors free up consumer time and resources for discretionary spending. The economic benefits could be offset by the fuel tax increasing business transportation and distribution costs. Rising input costs would yield higher prices for consumer goods and services, which could hamper the broader consumer spending and decrease Michigan’s national price competitiveness.

Environmental Impacts  —  The tax could help reduce Michigan’s carbon emissions by inspiring drivers to cut consumption or purchase more fuel-efficient vehicles. However, the University of Michigan Energy Institute expects rising registration fees to disincentivize purchases of cleaner vehicles. This would undermine carbon-reduction efforts. Policy proponents argue the $225 fee increase is minimal.

Equity Impacts  —  The policy mitigates negative effects on low-income motorists by doubling the Earned Income Tax Credit from 6% to 12%. In the near term, though, high-income earners may escape fair contributions to the road-repair fund and shift the cost burden onto low-income earners. As EV prices remain prohibitively high, EV ownership may be the exclusive privilege of high-income drivers. After about 13,500 miles, ICE drivers would pay higher annual taxes per mile than their EV counterparts would. Low-income motorists would effectively subsidize the road use of high-income drivers. Some experts propose an electricity use tax as an equitable alternative to charging static EV registration fees.

Political Analysis

The Michigan House Speaker and Senate Majority Leader (both Republicans) acknowledge the need for road repair but oppose the fuel tax. They propose to fund roads with revenue from the existing sales tax on fuel. That revenue currently supports schools and local governments. Whitmer is willing to negotiate on other budget points, including a GOP-opposed business tax, to advance her fuel tax proposal as is.

A2Y Chamber Welcomes Lizzy Balboa, Public Policy Intern

The A2Y Chamber is always looking for better ways to serve our members. One area of great importance to our community is public policy. This includes a better understanding of the participants and processes involved, along with an objective assessment of the political dynamics at work.

To keep our members updated on legal and regulatory changes, the A2Y Chamber has partnered with the University of Michigan’s Ford School of Public Policy to host a policy research intern. Lizzy Balboa will join us through July and will be available to help answer your policy questions regarding process, participants, and assessment of the practical outcomes. She will provide details on proposed or approved policies, explain their implications, and offer analyses on the political likelihood of implementation. In addition to answering your questions, Lizzy will also help us deliver updates on local, state and federal policy developments. These updates will be designed to serve as informative and objective summaries.

We are excited to have Lizzy on board and we know you will find great value in her work. A Michigan native, and graduate of Grand Valley State University, Lizzy is pursuing a Master of Public Policy degree at the Ford School of Public Policy. Along with her educational background, Lizzy brings experience as a financial and business journalist. She is pleased to field your policy inquiries at lizzy@a2ychamber.org.

A2Y Regional Chamber Partners on New Ypsilanti Wayfinding Signage

From the City of Ypsilanti:

Ypsilanti, MI, February 28, 2017: The City of Ypsilanti and the Ypsilanti Downtown Development Authority, in partnership with the Charter Township of Ypsilanti, are pleased to announce the installation of new wayfinding and parking signage throughout the Ypsilanti area. This project is the result of many partners’ contributions, including those of the former Ypsilanti Area Convention & Visitors Bureau, the Washtenaw County Convention & Visitors Bureau, Eastern Michigan University, the A2Y Regional Chamber, Washtenaw County Parks & Recreation, Washtenaw County, Eastern Leaders Group, St. Joseph Mercy Ann Arbor Hospital, Washtenaw Community College, the Charter Township of Ypsilanti, the Ypsilanti Downtown Development Authority, and the City of Ypsilanti.

“We are pleased to be one of the many stakeholders in the Ypsilanti area in support of this project. Wayfinding helps connect visitors to our attractions, events and other locations of interest,” said Mary Kerr, President & CEO of the Washtenaw County Convention & Visitors Bureau. “This wayfinding program is intended to guide visitors and residents to our various destinations, provide an identity to the area which creates a sense of place, and assist people with locating additional points of interest, encouraging them to spend additional time and dollars in our area,” said Beth Ernat, Director of Economic Development for the City of Ypsilanti. “Signage is important to help people navigate the Ypsilanti area. Adding local artistic designs to the signs celebrates our local community’s creativity and talent,” said Mayor Amanda Edmonds. To that end, the steering committee held an open header design contest in 2015.

Local artist William Burgard’s designs were selected, and they will feature local icons Rosie the Riveter, the Tridge, a Hudson Commodore, and the Great Blue Heron. The project is the result of cooperative efforts and open community involvement, from the development of the signage master plan in 2015 to the final approval for sign design and locations from both the City of Ypsilanti’s City Council and the Charter Township of Ypsilanti’s Board of Trustees in late 2016. A total of eighteen wayfinding signs and nineteen parking signs will have been installed upon the project’s completion. A ribbon cutting will be held on Friday, March 10, 2pm at Ypsilanti City Hall in the upper level parking lot off of South Huron Street. Additional information, including the sign map, may be found at http://cityofypsilanti.com/644/Ypsilanti-Wayfinding-and-Signage-Project.

Photos from the Ribbon Cutting held March 3, 2017 are below:

A Gathering of Stakeholders

March 10, 2017

On Thursday, February 9, 2017, the Ann Arbor Ypsilanti Regional Chamber celebrated their move to the Atria Park Business Center at 2010 Hogback Road, Suite 4, Ann Arbor. In many ways, the move from downtown Ann Arbor to the more central location on Hogback Road finalizes the merger between the Ann Arbor and Ypsilanti Chambers that occurred in 2010. The Chamber is now easily accessible to businesses in both communities. The Open House celebration on February 9 provided a long overdue recognition of the close relationship between these two vibrant communities.

Katie Jones, Director of Marketing and Events at the Chamber, summed it up like this, “The cultural split between Ann Arbor and Ypsilanti is so well established in our collective imaginations, and it’s easy to forget just how much overlap there really is between the two cities. I have no doubt this new location will go a long way in bringing our ‘sister cities’ together even more than ever before.”

Strengthening community was at the top of the menu for this exciting evening. In fact, the Chamber’s commitment to Conscious Capitalism, a business approach predicated on mindful, human-centered practices, was the primary purpose of the event. Bringing the community together to celebrate a more accessible location for the Chamber was a way to target the second tenet of conscious capitalism—stakeholder orientation.

“The stakeholders for our Chamber aren’t just members and business owners,” Rosalind Vaughn, Director of Business Development & Membership explained. “We’re all connected in the end. So a healthy business is more than the bottom line. It’s about the people in our community. Our businesses impact our neighbors, co-workers, associates, and our families. Those are the people that determine whether or not our members thrive or fail. Conscious Capitalism is about integration.”

It was the community stakeholders who made the Open House, such a success. From the shuttles provided by the Hampton Inn and Suites, to the stellar catering from Forte Belanger, many hands came together to work toward the common goal of supporting our communities through business engagement. Of the more than two hundred guests, representatives from Congresswoman Dingell’s office, County Commissioner Jason Morgan, Ypsilanti Township Supervisor Brenda Stumbo, Ypsilanti Township Clerk Karen LoveJoy Roe, and Pittsfield Township Supervisor Mandy Grewal all attended. Of course, this event couldn’t have happened without the generous support of Blue Cross/Blue Shield of Michigan, as well as many other organizations. The offices were especially inviting that evening and featured the additions of beautiful plants from English Gardens and aerial photos by Dale Fisher will remain as a reminder of our great cities for future visitors to enjoy.

Conscious Capitalism includes four principles that guide healthy, profitable businesses: maintaining a purpose or mission higher than monetary gain, staying focused on stakeholders of the business, providing leadership based on service, and fostering a company-wide conscious culture that embodies the higher principals of the company. The Chamber’s embrace of Conscious Capitalism is communicated clearly through this more inclusive new location on Hogback Road.

“We’re eager and excited to see how this location opens up new opportunities for us to connect with more businesses in the Ann Arbor-Ypsilanti region,” said Diane Keller at the Open House early in the evening. “We’re convinced this move is a win-win.”

About The Chamber

The Ann Arbor / Ypsilanti Regional Chamber is a 1,200-member community organization that actively facilitates, educates and advocates on behalf of its business members through their services and programs.  The chamber offers numerous networking opportunities and events, educational seminars, leadership development.  Additionally, they work closely with other organizations in the Washtenaw County area to assist in the promotion and growth of the area.

For more information about the relocation or the Chamber, please contact Katie Jones, at 734-214-0105 or email her at Katie@a2ychamber.org.

Contact:
Katie Jones
Katie@a2ychamber.org

A2Y Chamber New Location Open House

 

Sometimes our environments change us—our thinking, mood, and temperament. The A2Y Chamber team was ready for a move, both physically and mentally, and our new offices at the Atria Business Center at 2010 Hogback Road in Ann Arbor, are worth celebrating. That’s exactly what we did at our Open House on February 9. It wasn’t just an excuse for a party, it was a way for us to practice Conscious Capitalism, an approach to business that inspires as effectively as it profits. By bringing our community together, we applied the second tenet of Conscious Capitalism—stakeholder orientation.

We know our community of stakeholders isn’t just made up of our membership! Local and chamber businesses impact our neighbors, co-workers, associates, and families. With six degrees of separation, business impacts the world.

Our community stakeholder made the evening such a success. From the shuttles provided by the Hampton Inn and Suites, to Forte Belanger who provided the stellar catering, many hands came together to work toward a common goal–supporting our communities through business engagement. Of the 200+ guests, we were especially honored to have representatives from Congresswoman Dingell’s office, County Commissioner Jason Morgan, Ypsilanti Township Supervisor Brenda Stumbo, Ypsilanti Township Clerk Karen Love Joy Roe, and Pittsfield Township Supervisor Mandy Grewal. Of course, this event couldn’t have happened without the generous support of Blue Cross / Blue Shield of Michigan, as well as the help of many other organizations.

The building and offices are warm, open, and inviting especially with special touches by the incredible aerial photographer Dale Fisher and beautiful floral arrangements from English Gardens. With members of the business community mingling and networking, we all felt tremendous pride in the place we now call our A2Y Chamber home.

Come and Discover Our New Beginnings

It’s a new year and we are thrilled to start it off  in our new offices!  A new year brings hopes and promises of change for the better, while cherishing and utilizing our memories to create even more success in the future.  Our new offices are filled with as much anticipation for future growth as the sunshine that now flows through our offices.(them?  the windows? Into our space?)  The new offices, located in the Atria Park Business Center, is the perfect location for our members, staff and the community to easily connect and create even more business opportunities to our region.

 

We hope you will join us at our upcoming Open House, on February 9th, to tour our new offices and experience the joy and excitement that is inspiring our staff to make 2017 the year of new growth and positive change for all of the residents of Washtenaw county.

 

Please RSVP at  www.A2YChamber.org.

Ringing in the New at the Year Ender Gala!

Celebrating change was on the menu at this year’s newly combined (Year Ender & Gala) event and excitement filled the rooms at the Morris Lawrence Building at Washtenaw Community College on December 1st, 2016.

Many members joined in the celebration of our new look, the new event and learned about our new offices located in the center of Washtenaw County at 2010 Hogback Road, Suite 4, Ann Arbor.  The night was filled with a live band, delicious tastings from many of our local restaurants, and a silent auction that created anticipation in the effort to win the bid.  Of course everyone’s plate was filled with meeting new members, reflecting with old friends, and learning about new business opportunities – a perfect evening filled with fun and promise.

The event was a perfect prelude to the upcoming year, which will be filled with our goals to incorporate the four pillars of conscious capitalism into our daily efforts to help prosper and support our business members and the community.

View photos from the Year Ender Gala.

Here’s to welcoming the “new“of 2017!

 

Nick Hutchinson, City of Ann Arbor- Leadership 2.0 Testimonial

“Over the course of the last few months, I have found the Leadership 2.0 program to be very enlightening and helpful in my job. As the manager of a department of approximately 35 City employees, it was valuable to hear from people who are proven business and community leaders. Even more valuable was the opportunity to dialogue with my peers in similar positions.”

-Nick Hutchinson, City Engineer, City of Ann Arbor

Click here for more information on Leadership A2Y.

Genius Phone Repair

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Genius Phone Repair offers professional iPhone, iPad, Smartphone, and Computer repair services at our retail locations throughout Michigan and Indiana. Their high level of customer service has allowed Genius Phone Repair to open seventeen full-service repair centers throughout Michigan and Indiana! The experienced technicians at Genius are dedicated to getting you back on with your life! They carefully repair your broken iPhone, iPad, and Android devices while ensuring you the highest level of customer service. They are so confident in their quality parts and service that every repair comes with a Lifetime Warranty on both parts and labor! Most repairs can be done same day, in as little as a few hours.

 

Genius Phone Repair also offers a free diagnosis on any device, certified pre-owned devices for sale, top of the line cell phone and tablet accessories, and they also pay cash for old devices that you may be looking to sell!

 

Locally, Genius Phone Repair has two locations. Their Eisenhower Pkwy location is located in the colonnade near the intersection of Ann-Arbor-Saline Rd. next door to Panera Bread. Their Carpenter Road location can be found kiddie corner to Target and next door to Starbucks.”

 

genius phone repair