Adult-use marijuana sales recently began in Michigan, and some are already calling the recreational roll out a model of what not to do. The Marijuana Regulatory Agency ruled that medical shops could transfer their license over to recreational December 1st, earlier than expected, causing an influx of sales and shortage of supplies.
Still, over $3 million in sales were made during the first two weeks of open shops. Since recreational marijuana sales are new to the state, some may be conflicted about getting involved in the industry while it’s fresh. Let’s look at the process.
Application and Licensing Fees
First things first. Before applying, prospective retailers need to submit a prequalification application that looks at background checks of everyone involved along with other qualifications. Then they will have to apply for a license. Before applying, they’ll also need to have a compliant location secured, which we will go over next.
The application fee for becoming a Michigan dispensary is steep, coming in at $6,000. This fee is non-refundable, so prospective business owners should only apply if they are absolutely ready to go. The initial licensure fee is next. Accepted applicants have to pay the initial licensure fee to get the operation running.
This fee is $25,000. The renewal fee is broken down by the retailer’s placement, with the bottom 33% paying $20,000 to renew, the middle 33% paying $25,000 and the top 33% paying $30,000. Applicants may pay lower fees if they qualify for the social equity program.
Other Application Requirements
If applicants weren’t already involved in the Michigan cannabis industry prior to adult-use sales, they will have to get a medical license before applying for recreational sales. This rule will remain in place for the first two years.
“It’s a little weird,” said Allison Ireton, the co-founder of Michigan’s Bloom City Club. Her dispensary had just been granted its recreational license the day before our phone call, and she noted that only one of the locations is eligible at this time.
“An entity has to have one medical license in order to apply for the first two years. Even though Bloom City Club has a licensed medical dispensary, a different entity is running the other location so it doesn’t have a recreational license,” said Ireton.
Currently, only the Ann Arbor location is licensed for recreational sales. Prospective dispensary owners will be considered ineligible if “the applicant does not hold a state operating license pursuant to the MMFLA and is applying for a marihuana retailer, marihuana processor, class B marihuana grower, class C marihuana grower, or a marihuana secure transporter license under the act and these rules.
The requirements in this subdivision do not apply after December 6, 2021,” according to Rule 9 (F) of the Marijuana Regulatory Agency’s emergency rules.
Securing a Location
Before submitting an application, prospective retailers will need to have a location secured. Dispensaries may not be located under 1,000 feet from other dispensaries, liquor stores, and drug-free zones like schools. The dispensary will also need to be located in a municipality that has not opted out.
According to Ireton, licenses can be viewed as unlimited if you go to the right municipality. The hardest part is finding the money.
“Because local municipalities are in charge of the activity and how many dispensaries they’ll allow, you’re not competing too hard. If you go to another state and want a medical marijuana license, you may have to apply where only 10 applications are available and compete with 200 people for 10 licenses,” said Ireton, explaining that it’s not as competitive in Michigan.
Since some municipalities do not have a cap for licenses, prospective retailers just need to find a location that is compliant with regulations in the right community.
Ann Arbor and Cannabis
The city of Ann Arbor, Michigan has long been lenient on marijuana rules and home to cannabis dispensaries, including Bloom City Club. It currently has no caps on licenses, making it a great place for prospective businesses to pop up. Ireton volunteered at a public defender’s office in the past and realized how cannabis-friendly the city was before starting Bloom City Club.
“In the city of Ann Arbor, it was a $25 fine if you were in possession, but the county that Ann Arbor sits in will get you a misdemeanor,” said Ireton. “It seemed strange to me. If you didn’t get caught outside of Ann Arbor, it was just a ticket and you’re done.”
Eventually, as the legal landscape started to change in the state and Ireton realized she owned property that would work as a dispensary, she decided to go for it alongside her business partner. No legal framework for dispensaries existed in 2015 when they began operating. In 2016, a law was passed allowing applications for state licenses, and the state acknowledged that that people were already operating in the gray market and allowed them to apply to continue operating.
“Once it became a state-sanctioned activity with rules and regulations, I hit my sweet spot as a regulatory attorney,” said Ireton. “Doing applications, keeping up with rules and regulations, and just like any business, there are a lot of them. You get the rules, and then they change. And then they change again.”
Starting a Michigan Dispensary
Not everyone started early on in the industry, but that doesn’t mean they can’t start a dispensary now. The cost of getting started in Michigan is high. Between application fees, renewal fees, and prerequisites, a lot of money will go into starting and maintaining a dispensary. Outside of fulfilling the requirements and paying the fees, securing a location may be the most difficult part.
Luckily, many municipalities do not have caps making it easier to find a location that meets all requirements. Ireton believes the industry has a lot of opportunities, you just have to navigate all of the requirements and expect the rules to change again and again. “If you want to get into the industry and you have people that will back you because you’re passionate, you can find an opportunity in Michigan for sure.”