The state will stick with high capitalization requirements for people getting into the medical marijuana industry, but is expanding what qualifies as an asset.
The capitalization requirements will stay at the proposed rates of $150,000 for the class A growing license for people who want to grow up to 500 plants and up to $500,000 for a Class C growing license, which allows for between 1,001 and 1,500 plants.
The requirements don’t mean that a potential medical marijuana business person has to have that much cash. They just have to show that they have enough assets to support the business.
And in an effort to make it easier for businesses to qualify for a license, only 25% of those assets will have to be liquid — something easily converted into cash, such as retirement accounts, stocks and bonds, bank accounts or marijuana inventory. The rest can be real estate, equipment or supplies for the business.
The ruling from the state Department of Licensing and Regulatory Affairs this week comes despite a public hearing last month where dozens of people argued that the high asset requirements will put the medical marijuana business out of reach for small operators.
“We’ve looked at some of the numbers that go into the regulatory costs and that this is a program that was supposed to be self-supporting,” said Andrew Brisbo, director of the state’s Bureau of Medical Marijuana Regulation. “We want to make sure the applicants have the financial capability to pay those costs to get in to the industry and to be financially viable in the long run.”
Jerry Millen, who hopes to get a state license to open the Green Way medical marijuana dispensary in Walled Lake, said the capitalization requirements won’t be a problem for him. He’s already purchased and outfitted a building and coming up with 25% of liquid assets is doable.
“I think there are good people and bad people in the industry,” he said. “And I think the state just wants to weed out some of the bad people.”
But Christina Montague, an Ann Arbor resident who is hoping to open a dispensary in Washtenaw County, said the capitalization requirements could keep small business owners like her out of the market.
“I don’t know if I’ll be able to raise $300,000,” she said during a recent meeting of the Michigan Medical Marijuana Licensing Board. “It’s not too much if you’re a millionaire or a big corporation, but if you’re just an everyday person and you want to be a part of this movement because you believe in it, they’ve got to give the middle-class guys a break.”
Under the rules imposed by LARA, applicants would have to show the following proof of assets when they apply for a license:
In addition to the capitalization requirements, a municipality can charge up to $5,000 to get approval to operate in the city. The application fee for the state is going to run between $4,000 and $8,000 depending on the license, and the state regulatory assessment will cost between $10,000 and $57,000. License applicants would also have to prove that they were are able to get insurance policies that provide at least $100,000 of coverage.
Brisbo said the department came up with the figures when looking at the asset requirements in other states, including Arizona, which requires $150,000 in assets for a dispensary; Connecticut, which requires $2 million each in assets for a growing or processing operation, and Nevada, which requires $250,000 in liquid assets for growers, processors, testers and dispensaries.
Applications for medical marijuana licenses will be available from the state on Dec. 15 and the licensing board is expected to begin awarding licenses in the first quarter of 2018.
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Contact Kathleen Gray: 313-223-4430, firstname.lastname@example.org or on Twitter @michpoligal