Committee members heard a multi-part package (House Bills 5104, 5106, 5105 and 5107) the Cannabis Regulatory Agency and prosecutors described as a response to large illicit grow operations, trafficking indicators and enforcement gaps.

Derek Sova of the CRA testified that the bills would do two primary things: add specific, egregious offenses that allow the agency to summarily suspend a license during an investigation (examples he cited included untagged product, illicit marijuana and obstruction or refusal to provide records or surveillance video) and give the agency authority to continue disciplinary action against persons who close or abandon a license to evade discipline. Sova said the changes aim to target willful, intentional, egregious violations and "are not looking to use this new authority to go after lower-level offenses."

Prosecutors told the committee they face practical hurdles under current law. Prosecuting attorneys James Bacarella (Iosco County) and Zachary Sampson (Branch County) described large indoor grows and hazardous butane extraction labs that they said posed public-safety and trafficking concerns and were difficult to prosecute under a statutory framework that, following court decisions, often left misdemeanor penalties as the primary option for large-scale possession or cultivation.

Bacarella described a raid that uncovered 5,057 plants, large-scale processing, strong electrical usage and indicators of organized criminal activity; he said the current penalties invite organized crime because they can be misdemeanors regardless of scale. Sampson reviewed case law (Kedgby/So to referenced in testimony) that he said left statutory conflicts about whether large manufacturing is charged under the public-health code (felony) or under the marijuana regulatory act (often misdemeanor), creating prosecutorial uncertainty.

Industry representatives including Robin Schneider, executive director of the Michigan Cannabis Industry Association, told the committee the regulated industry is harmed by bad actors who import illicit product into the legal supply chain, compress prices and undermine licensed businesses’ investments. Schneider urged a reference lab to identify synthetic imported products and said summarily suspending licenses would stop bad actors from operating while they await due process.

Committee members asked about market impacts and timing; one member raised concerns that raising penalties while also increasing taxes on the legal market could push licensed operators toward illegality. CRA and prosecutors said the goal is to protect compliant licensees and public safety by targeting large, organized illicit operators. The transcript records no committee vote on these bills in the excerpt.