Michigan court deals blow to new medical marijuana law

DETROIT (Reuters) - A Michigan court on Wednesday dealt a blow to a nascent industry developing around the state's new medical marijuana law, ruling that sales are not permitted between registered patients.

An appeals court ordered a central Michigan medical marijuana dispensary closed as a public nuisance. It had facilitated the sale of about 19 pounds of marijuana between its members in the first 2-1/2 months after it opened in May 2010.

The dispensary in Mount Pleasant, Michigan, which generated about $21,000 before expenses in that opening period, violated state public health laws, the court found.

Michigan, whose voters approved the medical marijuana act in November 2008, is one of 17 states plus the District of Columbia which have active programs allowing possession and cultivation of marijuana for certain ailments.

Brandon McQueen and Matthew Taylor opened the dispensary called Compassionate Apothecary, or CA. McQueen is registered as a patient and as a primary caregiver for three other patients, while Taylor is a caregiver for two patients.

The Michigan law allows registered patients to possess up to 2.5 ounces of marijuana at any one time and caregivers to possess up to 2.5 ounces per patient. Patients and caregivers also can possess up to an additional 12 marijuana plants.

The state has approved more than 96,000 patient registrations since rules were put in place in April 2009.

Under the dispensary's rules, members paid $5 per month and it rented 27 storage lockers for $50 a month where excess marijuana was made available for sale to member patients.

Patients who sought to buy the marijuana inspected samples under the supervision of dispensary workers who retrieved the drugs from the storage lockers, weighed and packaged them and then took the payments, the appeals court noted.

The dispensary took 20 percent of the sale price of the marijuana as a fee, but said they did not own the drugs.

The court disagreed, saying the dispensary possessed the marijuana stored in the lockers and controlled the drugs.

(Writing by David Bailey; Editing by Greg McCune)