The Michigan Licensing and Regulatory Authority issued a statement informing medical marijuana facilities they may enter into licensing agreements for another company’s intellectual property including brands or recipes. The license agreement may include a royalty fee for each unit sold. Michigan’s approach is a bit hands-off compared to other states that view license agreements as a side door approach to avoiding licensing requirements. Washington State currently has a bill that would place a 10% cap on licensing fees to prevent this risk. Parties entering into the licensing agreement should consider the impact of a a subsequent change in Michigan law. As Michigan’s regulatory framework matures, it too could decide to cap royalty fees in order to retain tighter control over licensees.
Michigan Allows Uncapped Royalty Fees for Cannabis IP
