Let’s be honest, if it was easy to start a legal cannabis business in Michigan, everyone would do it. But the business opportunities the Michigan cannabis industry presents are especially attractive not because it’s an easy business to get into, but because it’s can be quite difficult. The stakes are high, and the competition can be fierce. There are likely hundreds of companies vying to be the next Weedmaps, and we’ve seen situations where there are dozens of cannabis companies going after only a handful of available municipal licenses.
One of the most common mistakes in the Michigan cannabis industry is the failure of business owners to properly budget their projects. A dirty little secret of commercial real estate is that you can pretty expect your project to go over-budget. You need to account for this fact from the beginning, especially since cannabis projects, particularly cultivation facilities, are notorious for going well over budget. We commonly recommend adding a 15% contingency to any construction budget to account for expected cost overruns, though sometimes even this number isn’t enough.
Now that you’ve chosen your niche and have a plan, the next step is to form your company and choose your team. There are many considerations to take into account when selecting your business structure. While forming LLCs and corporations is incredibly easy in Michigan, selecting your team and properly structuring your company are not quite as easy. For plant-touching companies, you will at a minimum need a cannabis business attorney and accountant who specializes in cannabis. You will probably want to set up consultations with several professionals and companies providing these or other services before choosing the right attorney or accountant for your project.
Step 7: Execute!
“Plant-touching” is industry lingo that refers to a business that, you guessed it, actually touches the marijuana plant. In Michigan, that refers to cannabis cultivation, dispensaries, processors , safety testing labs, secure transporters, and microbusinesses. We will also include cannabis lounges and cannabis events in this category due to the fact that Michigan requires them to obtain an MRTMA license.
Many municipalities “cap” the number of licenses they allow for specific facility types, and there may be a limited window to apply for these limited number of municipal licenses. Most municipalities will cap the number of dispensary (also referred to “provisioning center” and “retailer”) licenses they allow, though some also cap the number of growers, processers, and other license types. Thus, even if you find a property in a municipality that allows cannabis and is properly zoned, you also need to make sure the municipality is actually accepting applications for your license type.
While there is lots of opportunity in cultivation, processing, dispensaries and other “plant touching” businesses, there is also opportunity in the ancillary business sector. This was the path that I initially chose. I had worked in business, real estate and healthcare law prior to 2017, and saw the opportunity to pivot my law firm to servicing cannabis companies. In truth, it wasn’t all that much of a change, I just changed the type of clients I was going after but was still doing pretty much the same work. Similarly, you may have an existing skill, service or business that could be pivoted to the cannabis industry. Maybe you are an accountant, insurance agent, real estate broker, general contractor, or have some other professional skill that can be easily translated into the industry. If so, then your easiest path to having a legal marijuana business is to simply pivot your existing business to service the cannabis industry.
Now that you are prequalified and have a municipal license, the next step is to build out your facility and apply for a state operating license. MRA recommends waiting until you are less than sixty days from being fully built out for operations before applying for the “Step 2” or “Part 2” cannabis facility licensing step with the state.
Even if you don’t have a directly translatable professional skill, there are other ways to enter the cannabis ancillary services market. There are thousands of opportunities to break into the Michigan cannabis industry via ancillary services and products. You could develop an app such as WeedMaps, you could manufacture smoking accessories such as dab rigs, or provide some other product or service. Similar to the licensing and branding path, one of the big advantages of ancillary services is that you don’t need to go through the expensive and time-consuming task of obtaining a cannabis license.
This state has enacted legislation explicitly providing the opportunity for those with marijuana convictions for activities that have since been decriminalized/legalized to have past marijuana convictions expunged, vacated, otherwise set aside, or sealed from public view.
The sale of 5 kilograms – 45 kilograms is a felony, which is punishable by a maximum sentence of 7 years imprisonment and a maximum fine of $500,000.
This state has local jurisdictions that have enacted municipal laws or resolutions either fully or partially decriminalizing minor cannabis possession offenses.
In Ann Arbor, the penalty for being caught with marijuana is a $25 fine for the first offense, $50 for the second, and $100 for the third offense. Marijuana is not decriminalized on the University of Michigan’s campus.
The cultivation of 25 – 200 plants for personal use is a misdemeanor. A term of imprisonment may be imposed if “the violation was habitual, willfull, and for a commercial purpose or the violation involved violence.”
Possession in or within 1,000 feet of a park is either a felony or a misdemeanor, based on the judge’s discretion, and is punishable by a maximum of 2 years imprisonment and a maximum fine of $2,000.
An adult may not grow marijuana plants “if the plants are visible from a public place” or if the plants are growing outside of a secure area. A violation of this section is punishable as a civil offense with a fine not to exceed $100 and forfeiture of the marijuana.
An adult may transfer up to 15 grams of marijuana concentrate to another adult as long as there is no remuneration and the transfer is not advertised or promoted to the public.
An adult may possess up to 2.5 ounces of marijuana; up to 15 grams of marijuana may be marijuana concentrate.