Michigan Statehouse

Zac Nielson

Michigan Bill Would Remove Background Checks for Some Cannabis Investors

The Michigan House of Representatives passed a bill on Tuesday that would remove some background check requirements for people who own 5 percent or less of a business seeking a cannabis license, according to the Detroit Free Press.

Michigan’s current regulations require persons owning any stake at all in a potential cannabis business to undergo a background and credit check. This created a high barrier to entry for anyone who has ever been convicted of cannabis possession, among other charges.

Under HB6500, those who own less than 5 percent no longer need to undergo the background check. This class of owner is looked at as an investor and the bill should encourage more investors into the fledgling cannabis economy. The bill also further limits the Medical Marijuana Licensing Board’s ability to consider arrests, charges without a conviction, and expunged records against applicants.

“If you own less than 5 percent, then you don’t have to go through all the financial disclosures. If they own less than 5 percent, they’re not really decision makers, they’re really just investors. And rather than clog the system and create lag in issuing licenses, this allows investment to come into state more easily.” — State Rep. Klint Kesto (R-Commerce Township), to the Detroit Free Press

Dissidents fear that removing the background check requirement will encourage those of questionable character — and their questionable money — to insert themselves into the legal cannabis economy. Advocates disagree and, like Rep. Kesto, argue that it will only encourage investment and not derail the entire market.

Many states with legalization prevent cannabis licenses from going to those with controlled substance convictions — including for simple cannabis possession. Advocates argue that this unfairly limits access to the new economy by minorities and other communities that were disproportionately targeted by the War on Drugs. For this reason, New York, Massachusetts, and other states with more recent cannabis reforms have started implementing social justice provisions in their laws.

While HB6500 is a small step, it’s a step in the right direction. The bill now must pass Michigan‘s Senate before going to the governor’s desk to be signed into law.

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