Medical cannabis is legal in Michigan, and this summer, the state voted on eleven new measures related to cannabis treatment. This guide will provide you with an update on Michigan cannabis, as well as some tips for starting a cannabis business in the state.

In case you missed it, we also have a quick primer on cannabis in Oklahoma, the 30th state to legalize medical cannabis this summer. As more states come online, we’ll continue to provide updates on their cannabis taxes, rules, and regulations. Today, please read on for more information about cannabis in Michigan!

Is cannabis in Michigan legal?

Medical cannabis has been legal in Michigan since 2008 when 63% of voters approved the legal growth and use of cannabis for medical conditions in the MMFLA. This summer, voters extended the medical conditions approved for cannabis treatment by 11 new conditions. Now, medical cannabis can be purchased for arthritis, autism, and chronic pain, among other conditions (bringing the total to 22 approved medical conditions). As of this June, there are just over 289,000 medical cannabis cardholders in the state – a relatively large market for a cannabis entrepreneur to serve.

Recreational cannabis is not legal in Michigan. There is a proposal to legalize cannabis on the ballot this fall. The November proposal voters will consider includes the following provisions (among others):

• Legalize the possession and sale of up to 2.5 ounces of cannabis for recreational use for people over the age of 21;
• An individual may keep up to 10 ounces of cannabis at home;
• Establishes two cannabis taxes with a 10% excise tax at the retail level, plus Michigan’s 6% sales tax;
• Gives communities jurisdiction to decide whether they’ll allow cannabis businesses in their towns;
• Create three categories of adult-use cannabis grow operations: up to 500 plants, up to 1,000 plants or up to 2,000 plants

Because this provision is coming up in just a few short months, we recommend that prospective cannabis businesses in Michigan begin the application process now. As we witnessed in California, medical cannabis businesses have an advantage on new businesses when recreational cannabis is approved by voters. Medical licensees are able to serve recreational cannabis customers faster, and with less competition, than new recreational licensees. New businesses entering the cannabis market face red tape, approval delays, and much fiercer competition than medical businesses.

How to open a cannabis business in Michigan

If you are interested in Michigan has five types of cannabis licenses you might apply for:

• A Class A, B, or C grower license: the different classes refer to the number of cannabis plants you are allowed to grow (500 plants, 1000 plants, or 1500 plants). A grower is permitted to cultivate, dry, or cure cannabis for sale to a processor or provisioning center.
• Processor license: this license allows for someone to extract resin or create cannabis-infused products for transference to a provisioning center.
• Provisioning center license: this license is essentially the same as a dispensary license and allows for the purchase of cannabis from a grower or processor for sale to qualified patients.
• Secure transporter license: this license grants permission for a business to transport cannabis/cannabis products between growers, processors, testers, and dispensaries.
• Safety Compliance Facility license: this allows businesses to perform tests to certify that cannabis is free from pesticides and insecticides.

To apply for any of these licenses, you must be approved by LARA (the Department of Licensing and Regulatory Affairs), Michigan’s regulatory body in charge of cannabis. Submitting a Michigan cannabis license application takes place in two steps:

1. Pre-qualification: includes a full background check of the applicant and all supplemental applicants.
   1. During pre-qualification, applicants must disclose those individuals and businesses with an indirect or direct ownership interest. Read more in Sections 401 and 404 of the MMFLA to determine which individuals or businesses need to be included in your disclosure.
2. License Qualification: in this step, you must submit information about the location of your business and demonstrate you meet the rules and requirements of the MMFLA.

If an applicant has the location of the business secured, then they can take on the pre-qualification and qualification steps at the same time, thus speeding up the process. We have a guide on finding the best real estate for your cannabis business to help you with this process. For more information about LARA’s application process, read the details on their website.

In the following sections, we’ll describe the requirements you must meet to apply for the grower, processor and provisioning center licenses.

Michigan Cannabis Grower Application Guidelines

Cannabis cultivators in Michigan need to comply with the following regulations to qualify for a cannabis permit:

1. Cultivators may only grow the following number of cannabis plants based on their specific license:

• • Class A – 500 plants
  • Class B – 1000 plants
  • Class C – 1500 plants
• Cultivators and growers must have both a state and local grower’s license. Check with your local jurisdiction to make sure you meet the requirements to apply for a cannabis license.
• The application fee for a cannabis license in a local city/municipality may be up to $5000, plus a nonrefundable state application fee of $6000.
• An applicant is ineligible if he or she has been convicted of or released from incarceration for a felony within the past 10 years, or has been convicted of a controlled substance-related felony within the past 10 years.
• An applicant is ineligible if he or she has been convicted of a misdemeanor in any state within the past five years.

For more information on opening a Michigan cannabis growing operation, check out the LARA site.

Michigan Cannabis Processor Application Guidelines

Michigan cannabis processor licenses allow a business to purchase cannabis from a grower to extract cannabis resin and create cannabis-infused products. To apply for a cannabis processor license, you must meet the following requirements:

1. A processor must have both a state and local license to operate. Check with your local jurisdiction to be sure you meet all local regulations as they vary from city to city.
2. The application fee for a cannabis license in a local city/municipality may be up to $5000, plus a nonrefundable state application fee of $6000.
3. An applicant is ineligible if he or she has been convicted of or released from incarceration for a felony within the past 10 years, or has been convicted of a controlled substance-related felony within the past 10 years.
4. An applicant is ineligible if he or she has been convicted of a misdemeanor in any state within the past five years.

For more information on opening a Michigan cannabis growing operation, check out the LARA site.

Michigan Cannabis Dispensary Application Guidelines

Michigan calls cannabis dispensaries “provisioning centers,” but these businesses are essentially the same thing. A provisioning center license allows a business to purchase cannabis to sell, supply, or provide to a licensed patient or registered caregiver. To apply for a cannabis dispensary permit in Michigan, please review the following requirements:

1. Apply for a state and local provisioning center license; each county or city has their own separate requirements and regulations you must meet.
2. Pay an application fee to your local city/municipality of up to $5000, as well as a nonrefundable state application fee of $6000.
3. An applicant is ineligible if he or she has been convicted of or released from incarceration for a felony within the past 10 years, or has been convicted of a controlled substance-related felony within the past 10 years.
4. An applicant is ineligible if he or she has been convicted of a misdemeanor in any state within the past five years.

For more information on opening a Michigan cannabis growing operation, check out the LARA site.

GreenGrowth CPAs is committed to providing you high-quality advice when it comes to setting up your cannabis business. We have helped dozens of cannabis companies in California be compliant with state and local taxes and regulations. As we continue to grow, we will help cannabis entrepreneurs in other states. Please get in touch with our experts for any questions or concerns you may have.