Added on February 11, 2019  Sara Swanson

Meet the ex-drug cop who now helps regulate Michigan marijuana

by Riley Beggin (Bridge)

In September 2017, a ballroom full of people at the Eagle Eye Golf Club north of East Lansing waited for the Michigan Medical Marihuana Licensing Board’s third-ever meeting to begin.

Many of them didn’t know what to expect from the five-person panel, gatekeeper to a medical cannabis industry that had operated in a legal gray area for years. But some knew one thing for sure: They did not want retired Michigan State Police Sergeant Donald Bailey on that board.

Bailey had kicked off the previous meeting by arguing for shutting down all Michigan dispensaries as a new licensing system was being implemented. The proposal, which was voted down, nonetheless angered patients and business owners.

“I have seen no compassion, I have seen no empathy out of you,” one man in running shorts and a backward baseball cap, who said he used marijuana to help treat a brain tumor, said at the September meeting. “You’re a coward, Mr. Bailey. You’re a coward.”

The room erupted in cheers.

In more than a year since, Bailey remains a lightning rod for those frustrated with the slow pace of licensure for the state’s commercial growers, processors and dispensaries.

Cannabis lawyers and industry advocates who spoke with Bridge say the board is unfairly stringent and inconsistent in which applicants it chooses to approve. Some say Bailey is the worst of them — a moralistic obstructionist who would prefer the industry he regulates didn’t exist.

They note that Bailey has repeatedly called for industry shutdowns as the state tries to balance licensing rules against the pleas of medical patients for greater supplies. He has supported LARA’s rule to require applicants to prove assets of up to $500,000, a threshold critics say would lock out small and minority businesses from gaining a foothold in the legal market and proponents say ensures businesses can survive without leaning on the black market.

Critics also cite, and Bailey does not necessarily deny, that he views licensing from a law-enforcement (versus a business) perspective. And there have been episodes when he has voted to deny licensing applications based on dubious factors such as age or unproven allegations of criminal activity.

Bailey counters that he believes “everyone should have the benefit of the doubt,” but that his stringency comes from a desire to see the regulated market succeed.

“Have I ever mentioned that this is about money?” he asked. “If you don’t have the integrity, if you don’t have the honesty, if you don’t have the personal and business probity to do the right thing because it’s the right thing,” you’re more likely to cut corners once licensed.

Bailey also noted that license denials can’t be put solely at his doorstep. “If somebody got denied, that means at least three of the board members voted to deny. It’s not just me; I only have one vote.”

Bailey and fellow board members say they are working as quickly as they can to meet patient needs while protecting public safety and ensuring those who receive licenses operate ethically. And they note that analysts at the state’s Department of Licensing and Regulatory Affairs (LARA) have boatloads of financial and other data to sift through for every applicant, slowing the process.

“I want to see this new industry be successful,” said Rick Johnson, the board chairman who frequently sides with Bailey. “And how do you do that? You put rules and laws in place to make it work that way.”

The simmering tension between the cannabis industry and Michigan regulators has become heightened in recent months, as the state repeatedly sets deadlines to shut down unlicensed facilities only to extend them when advocates for the state’s 300,000 patients roar about pot shortages and inaccessibility.

The hallmark growing pains — experienced in one way or another by most other states that have legalized medical or recreational marijuana — are felt even more acutely in Michigan now that the deadline to begin licensing recreational cannabis shops is less than a year away, nipping at the state’s heels.

Busting drugs before licensing them

Bailey, age 59, has ruddy cheeks and the close-cropped haircut of a former police officer. The former sergeant retired from the Michigan State Police in Gaylord two years ago after spending nearly four decades in law enforcement posts around the state. In that time, he also trained at the Drug Enforcement Agency’s Drug Unit Commanders Academy.

Bailey spent much of his career putting people behind bars for drug crimes. Mostly for heroin and cocaine, but once in a while for marijuana, too; the drug was illegal for any purpose in Michigan until 2008 and illegal for non-medical card holders until December.

Given his background and approach to licensing, allegations that he’s regulating a product he despises abound.

“What do you think motivates someone like Bailey, who so obviously hates cannabis, to become a licensing board member for the very product they loathe?” one commentator wrote in an online forum of the Michigan Medical Marijuana Association.

“I believe he’s way biased, he’s admitted he’s biased” against marijuana, dispensary owner Don Koshmider said during public comment at a board gathering in June 2017.

More than 1,500 people have signed an online petition urging Democratic Attorney General Dana Nessel to remove Bailey from the board, an unlikely proposition since Bailey was appointed to a term that runs through 2020.

While his shutdown proposals drew widespread fury from the medical marijuana community, Bailey says the rumors he hates marijuana began years ago after a handful of Northern Michigan marijuana dealers spread rumors he engineered raids on their businesses. He accompanied raids but didn’t engineer them, he said. Since then, Bailey says he has received death threats from those dealers and their friends, which is one reason he told Bridge in an interview that he’d prefer not to be photographed out of uniform.

“Now it’s polluted every marijuana activist across the entire state who knows nothing about me,” he said.

Bailey said his views toward weed veer more toward skepticism.

He grew up on a dairy farm in a small town sandwiched between Kalamazoo and Battle Creek. His high school graduating class in 1978 had 54 people, which he said he could separate into three groups: jocks, brainiacs and burnouts.

“You could belong to one or two but you couldn’t belong to all three,” Bailey said. He was a jock. Burnouts smoked weed, and he never felt the need to try. “It was around, but I just didn’t have any interest.”

In two wide-ranging interviews with Bridge, Bailey said he doesn’t believe pot is inherently dangerous — “there is some therapeutic benefit to some of the things in the marijuana plant” — but he believes new products like concentrates need more research, that weed can cause problems when it’s not used in moderation, and that it can be a “gateway” to other substances.

“I’ve never met a crackhead who didn’t start with marijuana. Zero. Every single one of them did,” Bailey said. “Now is alcohol in there too? Yes, of course. Are cigarettes in there? Yes, of course. But there’s a natural progression, and that’s what I know.”

He wants to curb the black market for marijuana in Michigan, he said, and that’s why it’s crucial that licensed facilities meet high standards for licensing. As for his personal views on pot:

“It doesn’t matter, it really doesn’t. We’ve got a law that says it’s medicine. So let’s get this up and running. Let’s do it correctly, let’s do it safely, let’s do it legally.”

Determining moral character

When Gov. Rick Snyder tapped Bailey to join the licensing board, he accepted. Not because he’s a former cop — though “that would be ignorant to say that had nothing to do with my thoughts on it,” he said — but because he wanted to help protect youth and vulnerable people from a drug that is increasingly popular among adults. Scientists agree there’s enough evidence from early studies that marijuana hurts adolescent brains to try to keep it out of their hands.

“The best that we can hope for as a state to protect the public, to protect the kids, is that we do all we can to make sure that those people that we give licenses to are going to do the right thing because it’s the right thing to do,” Bailey said.

“Because we know there’s an awful lot of money in this. And it’s going to be very easy to step out of line and do the wrong thing for the wrong reason.”

That’s why it matters whether medical cannabis business owners have sound ethics, Bailey said. And it’s more than a Sunday school philosophy — in Michigan, applicants can be denied licenses for lack of moral character, which most often happens for failing to disclose information to the board.

Bailey and Johnson, the chair, say they apply the criteria fairly: If you forget a speeding ticket, it’s no big deal. Forgetting the time you went to jail is another story.

Cannabis advocates disagree, complaining that application denials are “wildly inconsistent,” according to a lawyer representing marijuana businesses who asked not to be named for fear the board might retaliate against the lawyer’s clients. Others say Bailey in particular has made accusations against applicants that either weren’t supported by evidence or were demonstrably false.

At one board meeting, Bailey voted to deny an applicant because he suspected a relative would run the business instead, a charge fellow board members said was not supported by the record, according to a Detroit Free Press account.

“What we have to guard against is the ability for someone to put up a straw man as an applicant when the actual person running the business is someone who wouldn’t qualify for application,” Bailey said.

In the most high profile of moral character rulings, former Detroit Lions player Calvin Johnson was denied a license in December because he hadn’t disclosed yet-unpaid traffic tickets from years ago. John Truscott, a prominent Republican consultant hired by Johnson, told the Detroit News the board had been provided proof the tickets had been paid months earlier, adding that Bailey’s allegation “appears to be fabricated.”

Bailey declined to comment on Johnson’s case in particular, but said he looks for instances in which applicants illustrate they’re willing to flout rules. And any time he votes no, he said, it’s based solely on the information in the application.

“There are many rules that we have involved in the marijuana facilities,” Bailey said. “So how are you going to treat our laws? How are you going to treat our rules? You’ve already shown us what you’re going to do.”

Does he think any of his votes were unfair in retrospect? “I don’t think so,” he said.

Bailey’s critics say his law enforcement slant does a disservice to medical marijuana patients. At the first board meeting in 2017, other board members stressed the need for fairness to those seeking licenses, with one saying, “we’re all in this together.” When it was Bailey’s turn, he spoke instead of drug deals gone bad, shootings, and a hash oil lab explosion.

More than a year and a half later, law enforcement is still top of mind. And the love is mutual, he notes: While marijuana advocates revile him, police officers tell him all the time he’s doing the right thing.

The legalization of adult use marijuana late last year will lead to explosive growth in the black market, Bailey predicted, and there won’t be enough resources to enforce the laws.

It’s what keeps him up at night. “Nobody,” he said, “is prepared for what’s coming.”

Michigan’s meticulous system

The medical marijuana board was created through a 2016 law that ushered in a new era of legalized pot in Michigan. Introduced by House Republicans but supported by both parties, the law created a system for licensing medical marijuana facilities and testing product on a commercial scale. Medical marijuana has been legal in Michigan since 2008.

LARA reviews applications and hands them off to the board for a final decision with a recommendation on whether they meet requirements. The law requires no more than three board members be from the same party. Gov. Rick Snyder appointed three Republicans and two independents.

In addition to Bailey and Rick Johnson, the board is staffed by another former police officer, David LaMontaine, a pharmacist Nichole Cover, and Vivian Pickard, a consultant and former director of public policy for General Motors. Cover and Pickard are the board’s designated independents, while LaMontaine, Johnson and Bailey represent Republicans, though Bailey said he considers himself an independent.

Former Rep. Mike Callton, who sponsored the licensing legislation and now consults medical marijuana businesses, said lawmakers based the law on regulatory systems in other states, giving the appointed board final say in the hope it would be more accountable to changing political winds.

“You always hear the term ‘bureaucracy,’ which is negative,” Callton said. “People like it when there’s an elected official that can be the whipping boy. Or the designee of the elected official, because they’re a little more sensitive to the public.”

Applications are extensive and expensive: People who want to run a commercial facility pay a $6,000 non-refundable fee and undergo thorough background checks that include criminal background and financial history. After being approved and before receiving their license, applicants currently pay another non-refundable $66,000 regulatory assessment fee. They’re also required to prove they have up to $500,000 assets (depending on the license).

Capitalization requirements are “set because we need to make sure that the people who get into the industry are going to succeed and not have to turn to the black market to supplement their finances,” said LARA spokesman David Harns.

The road to licensure has been slow going. The board just approved the first commercial licenses last summer, a full year after the board’s first meeting.

To date, the state has received 532 license applications, said Harns. Of those, 104 have been approved, and 41 denied.

After applying, it typically takes months to get in front of the board. If denied, it can take months longer to appeal the decision, which eventually entails denied applicants making their case to the same board a second time.

“The licensing process, in my opinion, is taking far too long, to the point that it’s hurting patient access,” said Robin Schneider, executive director of the Michigan Cannabis Industry Association.

Bailey irked by gray-area businesses

Bailey quickly drew the wrath of industry advocates when he proposed at the board’s second meeting, in August 2017, that the state impose a deadline for the following month to shut downdispensaries in areas like Ann Arbor, Lansing and Detroit so state licensed facilities wouldn’t have to compete with unlicensed ones that operated in several cities.

Before the 2016 law that created the board, Michigan’s pot market operated in a legal gray zone enabled by the 2008 citizens initiative that legalized medical marijuana on a “caregiver” system. Patients could use marijuana, but they could only legally get it by growing their own or designating a caregiver to grow it for them — it didn’t allow for or expressly outlaw medical marijuana dispensaries.

Dispensaries quickly popped up and battled local ordinances until 2013, when the state Supreme Court ruled they didn’t have a legal right to exist. Since then, dispensaries have only operated in areas, most notably in Detroit, where local prosecutors have chosen not to enforce the decision.

This irks Bailey. He calls it a bright line: “You don’t get to pick and choose which laws we’re going to abide by and which ones we aren’t,” he said. People who flouted that ruling, regardless of where they live, are outside of the bounds of the law.

“I don’t really subscribe to a ‘gray’ market,” he said. “It’s legal or it’s illegal. It’s black and it’s white.”

Caregivers play a crucial role in sustaining the market right now: Too few commercial growers have been licensed to meet demand, so the board recently passed a resolution that allows caregivers to sell overages to shops so patients can access marijuana.

The resolution promises caregivers seeking licenses that selling to unlicensed dispensaries won’t be used against them when their applications come before the board, and that temporary dispensary owners can’t be punished for buying from them.

In the past, cannabis advocates say, caregivers were unfairly shut out of the system for similar activity. They should get the same flexible treatment as dispensaries they sold to since the Supreme Court ruling, said Matthew Abel, executive director of the Michigan chapter of the National Organization for the Reform of Marijuana Laws (NORML).

Instead, he said, the licensing board has been giving a leg up to business owners with no experience in the industry. He said he fears that will encourage the continuation of a black market, with caregivers continuing to sell their product for a profit.

“The process seems set to root out anybody that may have illegally profited from medical marijuana sales these past 10 years,” writes Metro Times columnist Larry Gabriel, a critic of the law. “In other words, they’re trying to eliminate the drug dealers from getting a license to be a drug dealer.”

Cannabis advocates say they dream of the legislature dissolving the board and re-assigning its duties to analysts in LARA, who they argue are already more familiar with each application and can more fairly analyze their merits. New Democratic Gov. Gretchen Whitmer could also choose to appoint new board members when Republicans Johnson and LaMontaine’s terms come to a close at the end of the year.

“I think that the department should be empowered to issue licenses themselves like we see routinely in other states,” said Schneider of the MCIA. “And I think that we need to take a look at individual board members and their patterns of behavior and ask if they are appropriate appointees for their position.”

Don Bailey said he will stick around until his term expires at the end of 2020. He says he doesn’t have thoughts to offer reformers on how to change the system. In the meantime, he’ll continue sticking to what he says is the rule of law.

“This is the framework we have to work within, so we have to make it work,” Bailey said. “I think it’s too important. It’s too important to public safety, it’s too important to our kids that we get this right.”