THINGS TO KNOW IF YOU WANT TO START A MARIJUANA BUSINESS IN MICHIGAN

Jul 10, 2019 | Blog, Recreational Marijuana

Michigan is months away from licensing recreational marijuana businesses and opening a new chapter in the state’s cannabis industry. 

Originally Posted in MLive Here

Emergency rules were released this month by state officials to ensure that they meet a December deadline to launch the industry — or risk losing control. 

The 64-page document includes details for how the recreational marijuana industry will function, and gives a good indication of what interested entrepreneurs should expect in terms of state scrutiny. 

Here are 14 things to know if you’re interested in getting into the recreational marijuana market in Michigan: 

1. You need a state license to do business

A state license is necessary to operate any kind of marijuana business in Michigan. 

Licensing fees start at $4,000 and top out at $40,000, depending on the type of business.

The Marijuana Regulatory Agency controls the entire state licensing process, and oversees both the upcoming recreational and existing medical marijuana markets. It’s housed in the Department of Licensing and Regulatory Affairs. 

Depending on where your business is located, there may be a local license or permit from the municipality that is necessary as well. 

2. There are multiple license types — and they can be combined

Each function of the industry has a different state license type. They can be combined to make one large vertically integrated company.

Here are the license types and a short description of the function of each one: 

-Retailer: brick and mortar storefront sales 

-Class A Grower: up to 100 plants

-Class B Grower: up to 500 plants

-Class C Grower: up to 2,000 plants

-Excess Grower: for companies with at least two medical marijuana grow licenses and up to five Class C recreational licenses that want to operate on a large scale in the recreational market.

-Microbusiness: individuals can grow up to 150 plants, process the material and sell it all at the same location

-Processor: extracting and manufacturing products from marijuana flower like oils, edibles, vape cartridges and more

-Secure Transporter: transportation company that moves products from growers to the lab, to processors and then to retail stores

-Safety Compliance Facility: testing lab to make sure products meet state standards

-Designated Consumption Establishment: a social use lounge or club

There are also additional license types for people who want to host festivals. 

Marijuana flower at Yerba Buena farm, located about an outside of Portland, Oregon, Sept. 18, 2018. (Tanya Moutzalias | MLive.com)

3. License applications can be turned in starting Nov. 1

Officials with the Marijuana Regulatory Agency will begin accepting license applications Nov. 1. 

Once a business turns their license in, the agency has 90 days to turn it around. If applicants don’t respond to officials’ questions or requests for more documentation within five days, their application could be denied.

4. Retail stores will have to be owned by a medical marijuana company at first

Under state law, for the first two years of the recreational marijuana program, only business owners that hold a medical marijuana provisioning center license will be allowed to apply for a retailer license in the adult-use market. 

That requirement will stay in place until November 2021. 

However, officials have the option to remove that requirement in November 2020 if they deem it necessary.

5. Large-scale growers will have to be owned by a medical marijuana company at first

The same prerequisite licensing requirement is in place for large-scale growers who want a Class B, Class C or an Excess Grow license.

Under state law, for the first two years of the recreational marijuana program, only business owners that hold a medical marijuana grow license will be allowed to apply for a large-scale grow license in the adult-use market. 

That requirement will stay in place until November 2021. 

However, officials have the option to remove that requirement in November 2020 if they deem it necessary.

6. Processors will have to be owned by a medical marijuana company at first

The same prerequisite licensing requirement is in place for processors.

Under state law, for the first two years of the recreational marijuana program, only business owners that hold a medical marijuana processing license will be allowed to apply for a processing license in the adult-use market. 

That requirement will stay in place until November 2021. 

However, officials have the option to remove that requirement in November 2020 if they deem it necessary.

If you’re interested in starting a medical marijuana business you will need an attorney – click here to learn more about it regulations, licensing and legal issues. 

7. Transporters will have to be owned by a medical marijuana company at first

The same prerequisite licensing requirement is in place for secure transporting companies.

Under state law, for the first two years of the recreational marijuana program, only business owners that hold a medical marijuana secure transporter license will be allowed to apply for a secure transporter license in the adult-use market. 

That requirement will stay in place until November 2021. 

However, officials have the option to remove that requirement in November 2020 if they deem it necessary.

8. Only Michigan residents can start a small business at first

Prospective small business owners who want to grow on a small scale with a Class A grow license or start a microbusiness don’t have to hold any medical marijuana license. 

But they do have to be Michigan residents, for the first two years of the program. 

That requirement will stay in place until November 2021. 

However, officials have the option to remove that requirement in November 2020 if they deem it necessary.

9. Lab licenses have no residency requirements

There are no residency requirements or medical marijuana licensing requirements for individuals interested in obtaining a safety compliance facility license — unlike the other license types.

However, the owner of a safety compliance facility — more commonly known as a testing lab — cannot have an ownership interest in any other type of marijuana business.

10. This type of crime will disqualify you

If the business license applicant has previously been convicted for distributing a controlled substance to a minor, they are automatically not eligible for a recreational marijuana business license. 

Additionally, there are other specific situations that would prompt state officials to immediately reject a license application: 

-If the prospective business lies in their application

-If the applicant either works for or consults with the Marijuana Regulatory Agency or LARA 

-If the applicant is an elected government official in Michigan, in another state or in the federal government — or if the applicant is employed by any governmental unit — in Michigan or elsewhere

11. State officials have discretion to deny you a license

State regulators have broad discretion to deny a business license application based on their judgement of the applicant’s background, under the emergency rules. 

Per the rules, regulators are allowed to consider the following: 

-Whether anyone with an ownership stake in the company has “a pattern of convictions involving dishonesty, theft, or fraud that indicate the proposed marihuana establishment is unlikely to be operated with honesty and integrity”

-Whether the applicant has any delinquent taxes 

– Whether the applicant has “a history of noncompliance with any regulatory requirements, all legal judgments, lawsuits, legal proceedings, charges, or government investigations, whether initiated, pending, or concluded, against the applicant, that are related to business operations, including, but not limited to fraud, environmental, food safety, labor, employment, worker’s compensation, discrimination, and tax laws and regulations, in this state or any other jurisdiction”

12. Expect background checks and inspections

State officials will be scrutinizing both the individuals that want to start recreational marijuana businesses, their business plans and the physical facilities involved. 

Understanding who regulators consider to be “applicants” for state licenses is important. 

Though it varies slightly according to how the business is incorporated, the basic definition of an applicant is anyone with more than 10 percent ownership of the company. In some cases, this includes their spouses as well. 

Every applicant will have to undergo a background check, and should expect to submit a year’s worth of tax returns and to disclose criminal and financial background information. 

Additionally, the businesses have to have a physical building and must pass a prelicensure inspection within 60 days of submitting their license application to the state.

13. Be aware of local laws

Cities and townships have the ability to ban recreational marijuana businesses from opening up their doors — and more than 600 have done so at this point. 

Municipalities also have the ability to start local licensing programs for adult-use marijuana businesses — but they don’t have to. 

That means if a city or township hasn’t banned recreational marijuana — and has no local licensing requirements for the industry — businesses only need a state license to operate. 

It’s important to note that even if a city or township has banned medical marijuana businesses, that has little to no impact on the recreational marijuana industry. Even though most of the major adult-use business license types require the applicant to hold a medical marijuana license as well, that doesn’t mean the recreational business has to open up shop at the same location of the medical marijuana business.

14. No proof of capitalization is needed

Prospective businesses don’t have to show state officials proof that they have money available to start their company. 

That’s important to note because medical marijuana business applicants are required to show officials proof of capitalization. In the medical industry, potential businesses have to have from $200,000 to $500,000 in assets in order to be licensed.

Originally Posted in MLive Here – MLive provides many great news articles about Medical and Recreational Marijuana in the State of Michigan. Do a Search.

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