Our theme for the month of February is “plants.”
Since Prop. 1 passed in Michigan four years ago, the market for recreational and medicinal cannabis has been hot.
In Berrien County alone, I covered five new cannabis businesses. My coworkers have probably written about half a dozen more. To put it in perspective, there have been five new restaurants (three of which were national franchises) during that same time. The market is young, and businesses are trying to corner their share of the demand and stake their claims while they can.
Not just in the metaphorical sense. Municipalities, in the case they allow marijuana growing, processing, or distribution facilities at all, will often place caps on the number of businesses allowed.
Clearing the red tape alone costs tens of thousands of dollars. Make no mistake, to get into the cannabis industry requires savvy regulatory sense and a pretty fat chunk of change/investors.
What’s below is an incomplete and hasty generalization of the process. This is not meant to be legal advice, but a fast and furious run-through of the many hoops applicants have to jump through.
To start, applicants have to submit $6,000 to the Marijuana Regulatory Agency (MRA) alongside application documents. That $6,000 fee is nonrefundable. Should the background check cost more than expected, you’re on the hook for the additional money.
What’s grounds for denial? Merely submitting the money and parts of the application in the wrong order will warrant a notice of deficiency. If the MRA wants additional documentation, you’re sent a notice of deficiency. Unless rectified in five days of receiving a notice, your application is dead in the water. Wait another two years and then you can send the MRA another $6,000 to try again.
But if you manage to complete this step, you’re pre-qualified. You’ve qualified to see if you qualify.
You then waive a lot of rights to privacy, giving the government written permission for “investigations of compliance, regular inspections, examinations, searches, seizures, and auditing of books and records and to disclosure to the agency and its agents of otherwise confidential records, including tax records held by any federal, state, or local agency, or credit bureau or financial institution, while applying for or holding a marihuana license as authorized under the acts and these rules.”
(The MRA does not have a standardized spelling of marijuana, despite the myriad of rules it subjects applicants to.)
Then, those applying can purchase the property, go to municipal planning commissions and board meetings to gain approval, and submit more documentation of insurance, financial responsibility and expected financial gain. This includes your fingerprints, the signature of the local clerk, and verification the municipality has not prohibited the type of facility you’re going to operate.
After you submit an application for the license, you have to schedule an MRA inspection and a fire safety inspection, within sixty days of submission. Miss the window, and your application will get denied. Also, inspections cost money.
Once the inspections are successfully completed, you can then pay to receive a license. Depending on what license you’re applying for, this can range from $1,000 to $40,000. But this is all on top of the cost of the CPA you’ll have to hire to approve the documents (explicitly required by the MRA) and a lawyer you’ll need to understand all of the documents (implicitly required by the MRA).
Every legally operating dispensary and provisioning center has doled out thousands for the opportunity to exist.
And then, they have to cut a profit.
Juliana Knot graduated from Calvin in 2021 with a degree in philosophy, mathematics, and German. She covers Southwest Michigan business and agriculture as a reporter for the Herald-Palladium.
