The owners of so-called dispensaries "are not entitled to operate a business that facilitates patient-to-patient sales of marijuana," the court said in a 4-1 opinion.
The state's marijuana law makes no mention of pot shops. It says people can possess up to 2.5 ounces of "usable" marijuana and keep up to 12 plants in a locked place. A caregiver also can provide marijuana to as many as five people.
The Supreme Court ruled in the case of Compassionate Apothecary in Mount Pleasant. The shop allowed members to sell marijuana to each other and took as much as a 20 percent cut. The owners claimed they weren't doing anything illegal because the law allowed for the "delivery" and "transfer" of marijuana.
The state appeals court, however, said the shop was illegal and could be shut down as a public nuisance in 2011. Some dispensaries have remained in business while the case was pending. About 125,000 people in Michigan are registered to use medical marijuana.
Matthew Abel, a Detroit attorney who specializes in medical marijuana law, said it's time for the Legislature to step in and make dispensaries legal.
"This is the end of the road," said Abel, whose firm is known as Cannabis Counsel PLC. "It will be a mess until the Legislature clarifies what kinds of business entities are allowed to exist."
Michigan Attorney General Bill Schuette, no fan of medical marijuana, hailed the court's decision and said he would notify the 83 county prosecutors that they are empowered to shut down dispensaries.
"This law is narrowly focused to help the seriously ill, not an open door to unrestricted retail marijuana sales," Schuette said in a statement. "Dispensaries will have to close their doors."
The majority opinion was written by Chief Justice Robert Young Jr., who was joined by justices Stephen Markman, Mary Beth Kelly and Brian Zahra. Justice Bridget McCormack, who won election in November, did not take participate in the case.
The lone dissenter, Justice Michael Cavanagh, said the decision conflicts with the purpose of the voter-approved law — to promote "health and welfare" of citizens.
"Qualified patients who are in need of marijuana for medical use, yet do not have the ability to either cultivate marijuana or find a trustworthy caregiver, are ... deprived of an additional route," Cavanagh said.
Tim Beck of Detroit, who helped write the successful 2008 ballot proposal, told the Detroit Free Press that advocates purposely excluded any mention of dispensaries in the law.
"We thought the word — dispensary — was just too dangerous and would cause us to lose at the polls," he said.
State Rep. Mike Callton, R-Nashville, said he will introduce a bill to legalize dispensaries. His bill to regulate them never got a hearing in 2012.
"Not everyone can grow their own," Callton said. "It's really difficult to grow medical marijuana. You're going to have lots of people out there without access. It will essentially drive it underground, which is not where we want medical marijuana."
He noted that medical marijuana was approved by 63 percent of voters and making it available is a "political winner."
"I just have to convince other legislators of this and remind them of that," Callton said.