House Bill 6299, introduced by Michigan House Representative Marty Knollenberg (R - Troy), would amend the Michigan Medical Marihuana Act to prohibit any convicted felon from becoming a Primary Caregiver.  Currently, the Act prohibits only those individuals with felony drug convictions from legally growing and distributing marihuana to Qualifying Patients.

Because this Bill would amend a citizen initiated law, the Michigan Constitution requires approval by 3/4 of the Michigan House and Senate.  To track House Bill 6299, please visit the Michigan Legislature.

The Hubbard Law Firm has been credited with providing valuable information and guidance to municipalities on how best to address the Michigan Medical Marihuana Act.  Most recently, The Hubbard Law Firm, recommended by the Michigan Municipal League to the Mayor of the City of Williamston, provided training for the Williamston City Council.  The Lansing State Journal interviewed City Manager Tim Allard and specifically mentioned the training provided by The Hubbard Law Firm.

Clarifying Michigan's Medical Marihuana Act will not be easy.  The MMMA is an initiated law and not easily modified, amended or repealed.  The right of citizens to enact laws through initiative is a constitutional right.  Once enacted, an initiated law may be "amended or repealed" either by "a vote of the electors . . . or by three-fourths of the members elected to and serving in each house of the legislature."   Nonetheless, pending legislation pledges to "amend the Michigan Medical Marihuana Act."

Senate Bill 616 proposes to classify marihuana as a schedule 2 controlled substance, thereby allowing physicians to prescribe marihuana. Currently, marihuana is a scheduled 1 controlled substance, and due to such classification, prohibited from being prescribed.  Instead, under the Michigan Medical Marihuana Act, doctors provide "recommendations" for medical marihuana.  Whether marihuana remains a schedule 1 controlled substance is not the main concern of municipalities; rather, it's the commercial establishments popping up in virtually every community in the state.  Senate Bill 618 attempts to provide some reprieve for municipalities.

Senate Bill 618 proposes to amend the Public Health Code, not the Michigan Medical Marihuana Act, to prohibit "medical marihuana from being grown, sold, distributed, possessed, used, transported, or delivered unless it were grown and sold through a licensed medical marihuana growing facility."  The Bill also allows the State, through the Department of Community Health to "license up to ten (10) medical marihuana growing facilities in any one-year period...."   The sponsors of these bills may have good intentions; however, these bills are largely seen as political maneuvers and have little hope of becoming law.

Moreover, requiring the Department of Community Health to license and/or inspect facilities to cultivate or otherwise manufacture marihuana will further burden an already over-worked and under-staffed Department.  After the Michigan Medical Marihuana Act was passed, the Department anticipated they would receive approximately 7,000 applications the first year.  As of April 30, 2010, the Department received 27,883 original and renewal applications, issued 14,398 patient registrations and 6,274 caregiver registrations. As such, instead of processing applications and issuing cards within 20 days from the date the Department receives the application--as required under the Michigan Medical Marihuana Act--the Department is taking four months to process applications.

Addressing the issues presented by the Michigan Medical Marihuana Act in a timely manner requires municipalities and the elected officials running local governments to take action. Some municipalities have chosen to do nothing, others have outright banned the uses, while others are regulating Medical Marihuana businesses in commercial districts.  What will your municipality do?

ESTATE TAX REPEAL

In 2001 changes to the federal estate tax, generation skipping transfer tax, and gift tax were passed by Congress.  These changes were scheduled to take effect, and did take effect, in 2010.  So what are the changes and how might they affect you? 

In 2009 an estate valued up to $3.5 million was exempt from federal estate and generation skipping transfer taxes upon a person’s death.  In other words, a person who passed away in 2009 could transfer assets up to $3.5 million without having to pay federal estate taxes or generation skipping transfer taxes.  For an estate greater than $3.5 million the tax rate was 45%.  There is also a gift tax exemption of $1 million.  If a person used the $1 million gift tax exemption during his or her life then the $3.5 million exemption for estate and generation skipping transfer taxes was reduced to an exemption of $2.5 million.  The Estate Tax is currently repealed (if Congress does not act retroactively), meaning that for the year 2010 no estate is subject to estate or generation skipping transfer taxes.  There is still the $1 million gift tax exemption. 

Another major change, that will probably affect many more people, is the change to the rules regarding a step up in basis.   In 2010, instead of a beneficiary receiving an estate asset with a basis equal to the estate tax value, the beneficiary takes the asset with a carry-over basis, i.e. the same basis the decedent had in the asset.  Thus, a sale of the asset may result in capital gains tax on the amount in excess of the carry-over basis.  However, the personal representative of the estate can allocate up to $1.3 million to the beneficiaries to step up the basis for assets passing to the beneficiaries.  In addition, up to a $3 million adjustment can be allocated to property that is Qualified Spousal Property.

If Congress does nothing, in 2011 the federal estate tax and generation skipping transfer tax are scheduled to return at $1 million with a 55% tax rate.  This means that for individuals with an estate valued at over $1 million their estate would owe federal estate tax at a rate of 55%.  It is surprising how easy it is for an estate to reach, and perhaps surpass, $1 million.  Should the exemption be limited to $1 million, many people will need to review, and likely update, their estate planning strategy to attempt to reduce or even avoid estate taxes.  As we do not know what Congress will do at this point, all we can do is wait for Congress to take action.  Additionally, in 2011 the carry-over basis is scheduled to be repealed and the step up in basis to return. 

So what can you do now?  It is very important to review the distribution sections of all wills and/or trusts to be sure that they continue to reflect the Testator’s (or Settlor’s in the event of a trust) intent.  Be particularly cautious if the estate plan depends upon a formula (as opposed to a specified dollar amount) to determine a beneficiary’s share.  If you have any concerns it is wise to speak to an attorney.  However, with the future being so uncertain, even changes made to an estate plan now, may need to be reviewed again after Congress has taken action, if it decides to take action at all, regarding the estate and generation skipping transfer taxes. 

We understand that this is confusing and may be frustrating.  If you have any questions regarding the above information or if you need assistance with your own estate plan, please feel free to contact our law firm at 517/886-7176.

Kristin D. Arnett, Attorney

THE HUBBARD LAW FIRM, P.C.