The issue of allowing a Michigan-licensed marijuana facility to offer trade samples to other licensed entities and internal product samples to employees is addressed in the Administrative Rules promulgated by the Michigan Marijuana Regulatory Agency (MRA). Specifically, Administrative Rule 420.508 provides that certain types of licensees can, in fact, provide trade samples to other license-types, but trade samples can never be provided to patients or customers. Similarly, Administrative Rule 420.509 provides that certain types of licensees can provide internal product samples directly to its employees for purposes of ensuring product quality and to assess whether the products should be sold to patients and consumer.

The MRA’s Administrative Rules obligate cannabis licensees to strictly adhere to these rules regarding external trade samples and internal product samples. Penalties for non-compliance of the trade samples rules can lead to some potentially heavy-handed punishment and sanctions, such as possible revocation or loss of licensure. As such, it is critically important for all licensees, especially those new players just entering the market without previously operating a medical cannabis establishment, to understand and abide by the conditions set for in the rules and regulations which govern the conditions under which trade samples to other licensed entities and internal product samples to employees can be compliantly achieved.

External Cannabis Trade Samples to Other Licensed Facilities

As an initial matter, the MRA regulations allow only two (2) license types (grower and processor) to transfer trade sample products.A licensed grower (cultivator) may provide trade samples of cannabis products, but only to to a licensed processor or a licensed provisioning center.All three (3) classes of the grower license (Class A, B, and C) are allowed to transfer sample products, in accordance with the MRA’s regulations.

A licensed processor may provide trade samples of marijuana products to either another processor or to a provisioning center.Based on the regulations governing permissible trade samples, only growers or processors may provide trade samples. Further, the MRA regulations make it clear that trade samples must not be provided or sold to any other licensee aside from processors or provisioning centers.Further, no trade samples can be sold to consumers. 

The MRA’s Administrative Rules regarding trade samples require that any trade sample provided to another licensee (or received by a licensee) must be recorded in METRC, the statewide monitoring and tracking system, and that any and all product(s) involved in any trade sample must be adequately tested, in accordance with standard MRA-required product-testing rules, before such product(s) can be transferred under the trade sample allowance.

Additionally, the MRA regulations state that the transfer of trade samples does not require the use of a secure transporter as long as the trade sample amounts do NOT exceed:

1. fifteen (15) ounces of marijuana, or
2. sixty (60) grams of marijuana concentrate.

Quantity Limitations and Labeling Requirements

So long as an approved license type is allowed to provide trade samples to the other approved license types, the entity providing such samples must also be mindful of the quantity limitations to such trade samples. Pursuant to Administrative Rule 420.508(6), an approved licensee is limited to providing an aggregate amount of no more than 2.5 ounces of marijuana (or 15 grams of marijuana concentrate) for trade samples in a 30-day period to another licensee (the transferee facility). 

This quantity limitation for trade sample transferors covers 30-day periods and applies per transferee, meaning that an approved licensee can offer trade samples to an unlimited number of approved transferees so long at the quantity limitations per transferee are not exceeded in a 30-day period.

In addition to the quantity limitations, the Administrative Rules also require adequate labeling of trade samples before they are provided to transferees. Specifically, any trade sample must have a label containing the following message: “TRADE SAMPLE NOT FOR RESALE” in bold, capital letters. The MRA rules allow for the transferee facility to distribute the trade sample to its employees in order to determine whether to purchase the product.

Internal Product Samples to Employees

Similar to external trade samples to other licensed facilities, the Administrative Rules also allow for the transfer of internal product samples to employees in order to ensure product quality and to assist in making determinations as to whether product should ultimately be sold.

In contrast to external trade samples, however, the MRA allows more than just growers and processors to provide internal product samples to employees. Specifically, growers, processors, provisioning centers, and microbusinesses may provide internal product samples directly to its employees. Internal product samples may not be transferred or sold to another license-type, and can never be transferred or sold to customers or patients.As is the case with external trade samples, any and all internal product samples must be recorded in METRC.

Of the license types approved for internal product samples, quantity limitations apply only for growers and processors.Specifically, a grower is limited to providing a total of one (1) ounce of internal product samples to each of their employees in a 30-day period.A processor is limited to providing a total of two (2) grams of marijuana concentrate and marijuana-infused products with a total THC content of 2000mg of internal product sample to each of their employees in a 30-day period.

No quantity limitations exist for internal product samples offered by provisioning centers or microbusinesses to their employees.

The Takeaway

Overall, the MRA rules and regulations do allow certain type of licensed entities to provide trade samples to other licensees, as well as to provide internal product samples to employees for quality assessment and sampling purposes. However, as explained above, each licensee must be keenly aware of the various conditions the MRA places on licensees whenever it desires to offer cannabis trade samples to other licensees or internal products samples to their employees.The strict controls, including the time and quantity limit amounts, are designed to ensure that no products are illegally diverted or to otherwise ensure that no products fall into the possession of unauthorized entities or individuals.

Failure to strictly adhere to the compliance requirements regarding the provision of trade samples to other licensees or the provision of internal product samples to employees could result in the imposition of fines and other penalties, as well as potentially jeopardize your license to operate as a licensed marijuana facility. As such, strict adherence to the regulatory compliance requirements regarding appropriate trade and internal product sampling practices, among other requirements, is of paramount importance when it comes to ensuring that the overall business operations of your newly licensed marijuana facility are running efficiently and in full compliance with all applicable regulations.