Michigan doesn’t get as much “pot press” as Cali or Colorado, but it’s undeniably one of America’s most MJ-friendly states. Now that recreational weed is legal in Michigan, many ambitious “cannapreneurs” smell a “green” opportunity.
While opening a dispensary in Michigan is challenging, it could also be a lucrative opportunity for Midwesterners. Please keep reading to find out how to open a legal dispensary in the Great Lakes State.
FYI: For some weird reason, Michigan refers to “dispensaries” as “provisioning centers.” Also, the state spells “marijuana” as “marihuana” in all of its legal documents. We will use these terms interchangeably below.
Dispensary Laws In Michigan
A Brief History Of Michigan’s Cannabis Laws
Michigan first opened the door to marijuana legalization in 2008 when voters passed the Compassionate Care Initiative (aka the Michigan Medical Marihuana Act). This early law allowed patients or caregivers on the state’s medical marijuana program to grow 12 cannabis plants on their property.
Eight years after the state passed the Compassionate Care Initiative, Michigan expanded its medical marijuana program with the Medical Marihuana Facilities Licensing Act. Under this new law, residents could apply to set up state-approved medical dispensaries and sell cannabis to MMJ patients.
However, the biggest news for cannabis fans in Michigan occurred in November of 2018. During this election cycle, voters approved the Regulation and Taxation of Marihuana Act, which legalized adult-use recreational marijuana. This law made Michigan the 10th state in the nation (and the first in the Midwest) to legalize recreational cannabis.
What Are Michigan’s Cannabis Limits?
While we’re on the subject of cannabis legality, dispensary owners must know Michigan’s cannabis purchase limits. First and foremost, dispensaries can only sell recreational marijuana to customers over the age of 21. Medical marijuana patients must be at least 18-years-old and have a valid MMJ license.
Adult users of cannabis in Michigan are not subject to a daily purchase cap; instead, the daily maximum is 2.5 ounces per transaction. The daily limit for medical patients (or their carers) is 2.5 ounces. In total, recreational users could have 10 oz of cannabis flower in their home at any given time. Residents could also cultivate up to 12 cannabis plants indoors.
These limits are the same for qualifying MMJ patients and caregivers. However, there may be case-by-case differences depending on each patient’s prescription.
Licensing Requirements in Michigan
Anyone interested in applying for a dispensary license in Michigan will have to work through the Michigan Department of Licensing and Regulatory Affairs (aka LARA). Specifically, applicants need to access LARA’s Marijuana Regulatory Agency (MRA). You can find the MRA’s homepage on www.michigan.gov/mra/.
Understandably, a top concern people have before applying for a dispensary license is how much it will cost them. Currently, the MRA charges a non-refundable $6,000 application fee for recreational and medical dispensary applicants. If a dispensary owner passes the MRA’s application process, they also have to pay an annual regulatory assessment fee before getting their license.
The prices of this annual regulatory assessment depend on what license you’re applying for and your revenue stream. The MRA also revises these costs each year.
According to the MRA’s website, adult-use marijuana facilities should expect to pay $25,000 for their first annual regulatory assessment fee. Afterward, the MRA will charge the following renewal fees for different income brackets:
- Bottom 33%: $20,000
- Middle 33%: $25,000
- Top 33%: $30,000
On average, medical marijuana dispensaries don’t have to pay as much as adult-use facilities. According to a new report, the MRA will charge medical marijuana facilities $13,125 for their new license fee. Afterward, renewal fees are as follows:
- Bottom 33%: $8,750
- Middle 33%: $13,125
- Top 33%: $17,500
Beyond application and renewal fees, prospective dispensary owners have to account for taxes. According to Michigan’s current laws, recreational and medical dispensaries have to pay the state’s 6 percent sales tax plus an excise tax. For medical marijuana facilities, the excise tax is set at 3 percent. Recreational dispensaries currently have to pay a 10 percent excise tax.
Michigan Microbusiness License
The Michigan microbusiness license permits marijuana microbusinesses to cultivate up to 150 marijuana plants. It also allows them to process, package, and sell that cannabis directly to consumers. The license does, however, restrict the businesses’ ability to sell marijuana or marijuana-infused products to other marijuana establishments as well as limit their capacity to market marijuana products made by other establishments. Microbusinesses selling marijuana in Michigan can only do so directly to customers.
Small business owners would be able to consolidate their operations under one roof if they had a marijuana microbusiness license. One important aspect of the microbusiness license is that once you have one, you cannot obtain any other recreational marijuana license. This prevents huge business interests from acquiring Michigan’s small business owners. Yet, there are certain challenges with the micro-business model, particularly regarding zoning and municipal approval.
How Is The Cannabis Market In Michigan?
Although the Michigan marijuana market is relatively young, economists have “high” hopes for the future. Indeed, recent estimates show that both medical and recreational marijuana sales have been climbing during the COVID-19 pandemic.
For instance, the revenue from medical and recreational cannabis went from $52 million in March to $109 million in July of 2020. Researchers at the MRA and Michigan State University recently estimated that total marijuana sales could reach $3 billion in a matter of years.
Another report out of Marijuana Business Daily suggested Michigan’s recreational marijuana program is off to a strong start. Within three months, the state raked in over $30 million in recreational cannabis sales. At least half of these sales went to cannabis flower, while one-quarter went to vape-related products.
The marijuana market in Michigan is growing, and by 2024, total revenues are anticipated to exceed $3 billion.
Understandably, the majority of Michigan’s dispensaries are clustered around the densely-populated Detroit area. Here are just a few of the leading names in Michigan’s budding dispensary market:
How To Set Up A Cannabis Dispensary In Michigan
In this final section, we’ll briefly review how to set up a cannabis dispensary in Michigan. Hopefully, this overview will help you transform your dispensary dreams into a reality.
If the info below doesn’t address your “canna-queries,” please visit the MRA’s official FAQ page or send them an email. You could also get in touch with a local cannabis law expert for personalized guidance.
Has Your Zone “Opted Out” Of The Marijuana Program?
Before you sign your name on prequalification papers, please double-check your town accepts marijuana dispensaries. This may sound elementary, but many new applicants forget that Michigan is an “opt out” state. Even though Michigan legalized the sale of adult-use cannabis, every district has the right to ban provisioning centers.
You can find a full list of municipalities that do not allow marijuana businesses on this official link. You should also reach out to your town’s legislature to verify its stance on marijuana businesses.
Even if you’re in a marijuana-friendly district, please remember that provisioning centers must be 1,000-feet away from other dispensaries and K-12 schools. You cannot establish a marijuana dispensary in a residential area unless you have express permission from your municipality.
Do You Qualify For The Social Equity Program?
To help Michigan’s underserved communities, the state recently created a unique Social Equity Program. This branch of the MRA helps educate and empower economically-disadvantaged residents interested in entering the marijuana industry.
Anyone who believes they might qualify for the Social Equity Program should review this group’s portal on the MRA’s website. For more info, you could also research the Social Equity Program’s upcoming live events.
Note: you must apply to the Social Equity Program before submitting your prequalification application.
Ensure You Have The Right Seed-To-Sale Technology
Like other states where marijuana is legal, Michigan requires vendors to implement robust seed-to-sale software. Specifically, dispensary owners must integrate their preferred software to the Metrc tracking system. The state also requires dispensaries to have a reliable method for verifying inventory, transactions, and every customer’s age.
Please take your time researching POS software solutions and see whether they work with Michigan’s laws.
Application Step One: Prequalification Stage
With all of that prep work out of the way, it’s time to begin your provisioning center application. Whether you’re applying for a medical or recreational dispensary, each MRA application has two stages: prequalification and establishment licensing.
The prequalification stage is essentially a lengthy background check. The MRA is most interested in previous felonies, local ordinance violations, and misdemeanors involving controlled substances. Successful applicants should have no felonies within the past ten years and no misdemeanors in the past five years.
It’s important to note that anyone involved with a dispensary’s operation (e.g., LLCs, individual partners, and corporations) must submit a supplemental application. It’s strongly advised the primary applicant doesn’t send the required $6,000 until all of the supplementary info is ready for the application. After paying the non-refundable application fee, the primary applicant has only five days to send the necessary supplemental material.
To see a complete copy of the MRA’s prequalification paperwork, be sure to click on this PDF.
Application Step Two: Establishment Licensing Instructions
If applicants pass the prequalification stage, it’s time to move on to the second phase of the MRA’s license application: establishment licensing.
In this stage, you will have to provide the MRA with detailed info on your provisioning center’s physical layout and address. The MRA will verify your insurance, security system, employee data, and tax info. Applicants must also obtain written consent from their municipal clerk to set up a dispensary.
Note: the MRA will inspect your proposed dispensary at least 60 days after sending your establishment licensing paperwork. Please be prepared to meet with an inspector shortly after submitting your application.
FYI, Michigan currently offers optional features such as cannabis delivery services and in-store consumption areas. Both of these features require additional paperwork that you could send through the establishment licensing program.
For more detailed info on the establishment license application, be sure to read through this PDF.
Choose The Right Cannabis Technology Partner
In Michigan, opening a dispensary can be a great way to join the growing cannabis industry. There is a good chance for success, but first, you must equip your dispensary with the essentials. For Michigan dispensary operators, our state-of-the-art cannabis POS and inventory management software is a good investment because it streamlines operations and makes compliance as simple as possible.
Need Help With Your Michigan Dispensary? Give Cure8 a Call!
As the first MJ-legal state in the Midwest, Michigan has a huge first-mover advantage. While this presents a massive opportunity for entrepreneurs, opening a dispensary is still a costly and complicated endeavor.
To help new dispensary owners thrive, Cure8 now offers tech support services in the cannabis sector. Whether you need help with security systems or installing POS systems, our team could keep your business compliant and profitable.
Please find out more about Cure8’s offerings by emailing our friendly team at [email protected].
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