"Gifting" Marijuana for Profit - Is it legal? What are the potential penalties

The Michigan Regulation and Taxation of Marijuana Act was effective on December 15, 2019. It specifically permits a person to “give away or otherwise transferring without remuneration up to 2.5 ounces of marijuana”, or 15 grams of marijuana concentrate, to an adult over the age of 21 years. Until commercial retail marijuana dispensaries are licensed and in business sometime in 2020, gifting is potentially the only legal manner of obtaining adult use marijuana in Michigan. That is a year away so, quite naturally, “entrepreneurs ” are trying different ways to make money with marijuana distribution.

What is remuneration?

Remuneration is defined as money or compensation paid for a product or service.

Selling a T-Shirt for $100

The classic example is selling a t-shirt (or any other low value product or service) for $100 and during that same transaction giving the same person an amount of marijuana valued at $100. This is not a sale of a T-shirt, its a sale of marijuana. Just because the seller labels the transaction in one way does not make it so. In this example, there is no marijuana gift without the purchase of the t-shirt. Therefore, this transaction is really a sale of marijuana and its illegal.

Exchange For Something of Value - Consider the Transaction as a Whole

There are other exchanges involving the gifting of marijuana that are legitimate and lawful. The key consideration is if the remuneration is in exchange for something of value other than the marijuana. Plus the gift should be a separate transaction. Consider the scenario where a person pays money to enter an event. There could be unique benefits of the event to which value may be attributed. Perhaps there is a unique guest list, entertainment, or educational value. Gifting cannabis at that type of event is permissible as the remuneration was something distinct, separate and for something of value besides the marijuana.

Habitual, Willful and For a Commercial Purpose - Penalties

There is only one situation where MRTMA identifies a criminal penalty punishable by jail. That is when there is a habitual, willful and commercial sale of marijuana. That is what many of these “gifting “operations are engaged in. Courts have not yet interpreted how much potential jail time is intended.

Likelihood of Law Enforcement and Charges

Due to the recent legalization of marijuana, law enforcement is not making marijuana offenses a high priority. They will when one of two things happen: enough people, like licensed marijuana businesses and/or consumers complain, or when there is a demonstrated public health or safety issue. Eventually, businesses that have paid hundreds of thousands of dollars for their marijuana licenses will not be happy with “gifting” operations who have not. Illegitimate ones will not last long.

Intent for Commercial Purpose Intent of the MRTMA

Section 2 of the act specifically states that one of the purposes of the act is to control the commercial production and distribution of marijuana under a system that licenses, regulates, and taxes the businesses involved. Section 17 states that the Act shall be broadly constructed to effectuate its stated purposes in Section 2. Even with a broad interpretation, exchanges of products of minimal value for money while at the same time “gifting” an amount of marijuana does not satisfy the Act’s intent.

Best Practice Advice

These exchanges are subject to interpretation and are fact specific. The totality of circumstances will be reviewed. Eventually law enforcement and prosecutors will be charging people with commercially selling marijuana when the accused purports it was a gift. Courts are used to reviewing all of the circumstances to determine whether an action is a crime. The best advice is to effectuate the intent of the act and not try to make a quick buck before adult use dispensaries get here. A conviction may keep a person out of the commercial market for a long time.

Categories: