Over the past 15 years, the legality of marijuana in Michigan has changed several times. It began with medical caregivers in 2008, advancing to medical facilities in 2017, and finally the legalization of recreational marijuana in November 2018. Now that recreational marijuana has become legal, there has been an expansion of license types that are available for both medical and recreational marijuana use.
There is a substantial difference between the perspective on medical and recreational marijuana, and the licenses are treated very differently. By definition, medical marijuana is marijuana that is recommended (prescribed) by a doctor in order to treat a medical condition. This was approved in Michigan in 2008 through the MMMA (Michigan Medical Marijuana Act). This allowed people to grow marijuana for their own use, or for the use of one of their five patients. This is known as the caregiver model. It was not meant to be a business and growers could only have up to 72 plants.
In 2016, the MMFLA (Medical Marijuana Facilities Licensing Act) was passed. This law allowed for the licensing and regulation of medical marijuana growers, processors, provisioning centers, secure transporters, and safety compliance facilities. It also allowed for certain licensees to process, test and sell industrial hemp. This was a big change that allowed for real commercial operations to open with thousands of plants. It also created a government framework for regulating and taxing the product. The State of Michigan put high capital requirements in place to prohibit smaller caregiver operators from entering the commercial space.
While medical marijuana was viewed as a health related product, recreational marijuana is typically used similarly to alcohol to intentionally change one’s state of consciousness. Initially, this was not allowed in Michigan. Now, with the passing of the Proposal 1 in 2018, recreational marijuana will be sold at recreational retailers to anyone who is 21 years or older, with a valid government issued ID.
With the passing of Proposal 1 in November of 2018, and the MRTMA law (Michigan Regulation and Taxation of Marijuana Act) effective in December of 2018, recreational marijuana is legal in the state of Michigan. Through this law, many new license types have become possible. The license types for recreational marijuana are similar to medical marijuana licenses, but vary based on class type and facility. Unlike with Medical marijuana facilities, recreational license holders will not be required to meet a capital requirement set by the state.
Not all businesses in the cannabis industry actually touch the plants. There are many other types of operations needed to keep the industry moving. These include the vendors that provide grow equipment and supplies to the cultivators, childproof packaging companies, insurance companies that cover the businesses, real estate companies that specialize in finding the property, and more.
The new Class A MicroBusiness was added in 2022. This new license is much more flexible than the original MicroBusiness. Much like the original, it allows in house cultivation and retail sales. Class A Microbusiness license holders are allowed to cultivate double the amount of plants of the original, with an allowed plant count of 300. Unlike the previous restrictions, the Class A MicroBusinesses are allowed to purchase processed products like edibles and oils from other licensed processors, however they can not process onsite.
The class A Microbusiness is allowed to purchase marijuana seeds, clones, and tissue cultures from other adult-use licensed growers. In addition, unlike the original microbusiness, Class A Microbusiness can supplement its own products with outside goods from other processors. This allows more stability in supply for a Class A MicroBusiness, as they aren't 100% dependent on the results of their own crop.
A marijuana cultivation facility is a business licensed to cultivate, trim, and package marijuana. The facility also has the ability to have marijuana tested by a marijuana testing facility, and to sell marijuana to retail marijuana stores, product manufacturing facilities, and other marijuana cultivation facilities.
The cultivation facility itself is not able to sell directly to consumers. Indoor marijuana cultivation permits only permit the operator to grow marijuana plants inside of a locked enclosed building, typically with some type of odor control system in place. When marijuana is grown inside a cultivation facility, outdoor conditions are recreated, but in an ideal manner. These circumstances cannot typically be created outdoors, due to the unpredictable effects of nature. However, while cultivating indoors, there is a much higher level of control.
By providing plants the perfect conditions to grow in, a higher yield can often be obtained. Indoor marijuana cultivation has typically been more common in Michigan, partially because of the stringent laws prohibiting any odor, and stigma of growing weed. Growing indoors can provide your business with privacy and security. Municipalities have gradually started allowing outdoor cultivation facilities, but it is still rare.
Cultivation licenses come in three different classes. Medical Class A growers are allowed to grow up to 500 plants, while Class B growers are authorized to grow up to 1,000 plants, and Medical Class C growers are able to grow up to 1,500 plants.
Recreational Class A growers are allowed to grow up to 100 plants, recreational Class B growers can grow up to 1000, and recreational Class C growers can grow up to 2000 plants. Class C licenses can often be stacked at one location, allowing one company to add multiple licenses to a location to increase their plant count, called an excess marijuana grower license. With this license, it is possible to hold 5 stacked class C marijuana licenses.
Outdoor marijuana cultivation farms grow the marijuana plants either completely or partially outdoors. They typically have lower start-up costs than building a full indoor grow facility. Outdoor cannabis grows do not require a building with a complicated set-up, an artificial light source, or a cooling and ventilation system. This leads to a smaller carbon footprint, and much lower operating costs.
Plants are also known to grow larger, as they have more space to spread and grow. They often produce higher yields, which leads to an increased profit margin. Many states, including Michigan, require the plants to be fully enclosed by fences or barriers that block outside visibility from the public view. No marijuana plants can grow above the fence or barrier. Fences must be secured and comply with the applicable security measures. There are multiple ways of growing outdoors. These include directly in the ground or potted, with or without a watering system installed. Potted plants may not grow as large due to a confined root system, but are much easier to relocate if needed.
Marijuana Retail Dispensaries are the storefronts of the marijuana supply chain. Recreational or adult-use dispensaries provide cannabis to adults over the age of 21. Dispensaries are one of the only business types that are allowed to sell marijuana to the general public.
Cultivators and processors sell their product to the dispensary, who then sells it to the consumer. Dispensaries can sell to consumers in person at the store, or sell the product to them online and deliver the product to the consumer's home. Known as a dispensary in most other states, they are also called provisioning centers or retailers in Michigan. Cities in Michigan frequently limit how many dispensaries are allowed, as they are the most visible businesses in the marijuana industry supply chain.
There are several types of greenhouses. Hoop houses are common and inexpensive, however they do not typically have the ability to contain odor. Since most municipalities require odor control, marijuana greenhouses are usually higher-end rigid structures that include HVAC systems and filtration.
Hemp is the same species as marijuana, however it contains much lower levels of THC (the chemical that makes marijuana psychoactive). Hemp is regulated differently than marijuana and is allowed at the federal level. It is grown for many industrial and medical purposes.
A microbusiness is an entity that is licensed to cultivate, process, and sell products from up to 150 marijuana plants, as long as they do it completely in-house. The plants are processed, packaged, and sold to individuals who are at least 21 years of age. They are not authorized to sell or transfer products to marijuana establishments at this time, though the may change in the future.
These microbusinesses cultivate, process, and sell the marijuana out of their own storefront. These dispensary business owners are not allowed to have more than one storefront, and are not able to obtain more than one license type. Bricks and Mortar has several locations available for sale that qualify as a microbusinesses.
A personal grow is a small indoor or outdoor operation that is only for the cultivators use. The product can't be sold commercially, and it isn't considered a business. Sometimes personal grows are located in houses or on hobby farms. Other times they may be located in commercial buildings.
Marijuana extraction, sometimes referred to as processing, is one of the fastest growing sectors in the cannabis industry. In fact, over 50 percent of cannabis sales are concentrates and infused products, both which are created by extraction. A marijuana processor is licensed to possess, process, package, and store marijuana. Processors purchase marijuana from growers, and extract it through one of various methods, such as Butane or CO2.
The extraction process removes the oil found in the trichomes from the cannabis plant, targets and collects the most potent compounds, and can remove some contaminates and impurities. Processing facilities then use this oil to create marijuana-infused products such as edibles, oils, and tinctures.
Cannabis extraction businesses create versatility for products and methods of administration. This creates many viable options for consumers. Processors are also licensed to sell, transfer, and purchase marijuana from other state licensed entities. Many processors create white labeled products for other companies.
Event organizers, temporary event licenses, and designated consumption establishments are also brand new license types, which can allow for things like having a marijuana bar at your wedding, or a restaurant that also wants to have a smoking lounge, and even things like festivals and other large events.
Designated consumption establishments are commercial spaces which are licensed and authorized to permit adults 21 years of age and older to consume marijuana products at the location. However, sales and distribution of marijuana is prohibited within these establishments.
Marijuana safety compliance testing labs test the composition of both medical and recreational cannabis. This includes measuring the THC and CBD to verify that the profile of a product matches the labeling, test it for impurities, moisture content, contamination, heavy metals, pesticides, mycotoxins, and more.
This is an important part of the supply chain to ensure consumer safety. A safety compliance facility is licensed to receive marijuana, and pick up marijuana samples from other marijuana licensed facilities or registered primary caregivers. Once they receive it, the marijuana is tested for contaminants. The test results and product are then returned to the marijuana facility. All laboratories have strict compliance standards.
A licensed marijuana transportation facility provides logistics, distribution, and storage of marijuana and marijuana products. A transport business may contract with multiple businesses. The facility is able to transport marijuana to a cannabis cultivation facility, a marijuana-infused product manufacturing facility, a marijuana dispensary, a medical marijuana testing lab, or another marijuana transportation facility. A secure transporter is authorized to transport marijuana between different facilities.
ONLY these licensed entities can transport marijuana in the regulated system. A transporter cannot transport marijuana to a patient or caregiver. Each delivery must be completed within 48 hours. All products must be kept in a locked container during the transport process, and all transactions must be entered into a statewide tracking system. All records and route plans must be available in the event of an inspection by LARA, or the Michigan State police. Each transporter is required to maintain general and product liability insurance, but many transporters have found it difficult to obtain insurance.
A transport business may contract with multiple businesses. There are no set prices for transporters. Some charge per mile, some charge a flat rate, and some a percentage of the product value.
Recreational Marijuana Cultivation: With recreational marijuana, Class A marijuana growers are only authorized to cultivate 100 plants, Class B growers can grow up to 500 plants, and Class C growers can grow up to 2,000 plants. It is also possible to obtain an excess marijuana grower license. With this license, it is possible to hold 5 stacked class C marijuana licenses.
Designated consumption establishments are commercial spaces, which are licensed and authorized to permit adults 21 years of age and older to consume marijuana products at the location. This is indicated on the state license. Each applicant must apply for this license with the city and the state, before hosting any consumption onsite. Social cafe and marijuana bars will be able to open, and adults over 21 will be allowed to consume marijuana within the establishment. However, sales and distribution of marijuana is prohibited within these establishments.
A microbusiness is an entity that is licensed to cultivate, process, and sell products from up to 150 marijuana plants, as long as they do it completely in-house. The plants are processed, packaged, and sold to individuals who are at least 21 years of age. They are not authorized to sell or transfer products to marijuana establishments. These microbusinesses cultivate, process, and sell the marijuana out of their own storefront. These dispensary business owners are not allowed to have more than one storefront, and are not able to obtain more than one license type. Bricks and Mortar has several locations available for sale that qualify as a microbusiness.
If a group or company wants to hold an event or festival where they will have marijuana available for sale, or allow onsite consumption, they will need a marijuana event organizer or temporary marijuana event license. The event must be held at the location indicated on the license as well as on the date(s) indicated on the state license. There are several cannabis related events that happen every year in Michigan, which may now be able to receive a legal license to operate. Hash Bash is held in Ann Arbor every year during the first week of April. It includes musical performances, competitions, awards and more. As long as you have a medical marijuana card, or have your own marijuana when you arrive at the festival, you will be able to enjoy the festival and partake in marijuana products.
A marijuana retailer (dispensary) is an entity who is licensed to obtain marijuana from marijuana cultivators or processors and sell it to the public (21 years or older).
The Marijuana License Application Process requires two steps: the prequalification, and the final licensure. All main applicants (person or entity seeking to hold the state license) and supplemental applicants (any interested parties and affiliates) must fill out Part One of the application process, and become ‘prequalified’ with the state. A background check must be completed for all main and supplemental applications. There is a $6,000 nonrefundable application fee for the main applicant. There is no application fee for any supplemental applicants. All main applicants must remember not to submit their application fee payment until all supplemental applications have been submitted. If the MRA receives the payment before all supplemental applications are submitted, a notice of deficiency will be sent. The main applicant then has five days to submit all supplemental applications, or your application may be denied. The Marijuana Regulatory Agency(MRA) will begin to process prequalification applications once the $6,000 prequalification application payment is received.
Once step one has been completed, the applicant must purchase or lease a premises, obtain approval from the municipality, and complete their full construction buildout before they can submit the licensing application(s) for step two. The supplemental applicants will not be required to complete step two. The MRA will thoroughly vet the intended marijuana establishment for business specifications, proof of financial responsibility, municipality information and general employee information. Each establishment must pass an MRA approved inspection within 60 days of submission of the application. If you are seeking a license as a grower, processor or microbusiness, you must pass a Bureau of Fire Services plan review as well. You cannot be issued a state license until all requirements in the Michigan Regulation and Taxation of Marijuana Act and administrative rules are met. After step two is completed, an applicant will be required to pay an initial licensure fee for each license type they have been approved for.
Once all of the inspections and reviews have been completed, and the license fee is paid, the operator will receive their full license and be allowed to open.
User Intent & CBD/THC Content: The most obvious factor distinguishing the two categories of cannabis is intent. For example, people who use marijuana recreationally often smoke it to achieve a high, rather than to ease chronic pain or other conditions.
THC is the mind-altering chemical in marijuana primarily responsible for producing euphoria. THC-based medications are often used to increase appetite and reduce nausea. The chemical is also used to decrease pain, inflammation and muscle control problems. That being said, not all chemicals in marijuana produce a euphoric effect. Many medical cannabis patients use the drug only for its therapeutic properties, aiming to minimize marijuana’s side effects, including the high. This is where cannabidiol, or CBD, is significant.
Cannabidiol is non-psychoactive: it does not have mind-altering effects. It also minimizes the euphoric effects of marijuana caused by THC. CBD can be useful in reducing pain and inflammation, as well as controlling epileptic seizures. It may also be effective in treating mental illness or addiction, according to the National Institute on Drug Abuse.
Recreational marijuana generally contains high levels of THC and lower levels of CBD. Medicinal marijuana is often rich in CBD, with less or no THC. Therefore, many medical marijuana users will feel the therapeutic effects without a high.
Quality: To state that all medical marijuana is of higher quality than all recreational cannabis would be incorrect. Recreational cannabis growers, producers, and manufacturers have recently taken both quality and potency standards to their highest levels to date. As competition rises, the recreational industry is having to step up product quality. Often, recreational cannabis products are not subject to the same scrutiny and testing processes as medical marijuana. In order for a medical cannabis product to be sold in a licensed dispensary, it must be extensively tested and verified as high quality. Advertised potency levels of THC and CBD, and product composition may be more accurate on medical cannabis packaging. This does not necessarily mean recreational cannabis is inferior, but generally speaking, approved medical cannabis products are of more consistent quality.
Taxes: The two categories of marijuana will be taxed differently when being sold in Michigan. Both are subject to the state’s 6% sales tax, but recreational marijuana will also carry a 10% excise tax while medical marijuana has no excise tax.
License & Permit Pricing: Under state law designed to ensure that the businesses will succeed, medical marijuana applicants have to prove that they have assets worth $150,000 to $500,000, depending on the license, to qualify for an industry license. In comparison, the recreational market rules don’t have any capitalization requirements. Michigan officials believe this will open up the market, allowing people who haven’t been able to qualify so far, to get a license. Application fees for both the state ($6,000) and local communities ($5,000), as well as regulatory assessments of $66,000, are charged for medical marijuana licenses. The comparable regulatory assessments for the recreational market are still $6,000 for the application fee, but the fees for different categories of licenses range from just $1,000, up to $40,000. The fee amount depends on the license type, with the largest grow and processor licensees charged $40,000, and the smaller businesses being charged $1,000.
Accessibility: There are several differences in ease of access to recreational and medical cannabis. First of all, you must have a physician’s recommendation in order to purchase medical marijuana.
You must have a qualifying physical condition in order to get a medical marijuana recommendation, and it must be renewed regularly. Recreational marijuana, on the other hand, can be bought by anyone over the age of 21. No medical card is required.
You can buy medical marijuana from a regulated dispensary showing your state-issued medical marijuana card. You can also easily buy recreational cannabis from a dispensary by showing identification proving you are over 21 years of age.
Perhaps the most important difference between recreational and medical cannabis lies in product availability. While just 11 states permit the sale and consumption of cannabis for recreational purposes, more than 30 have introduced legal medical cannabis legislation. This alone shows that those who qualify for a medical marijuana card have more convenient, broader access to cannabis than their recreational counterparts.
The actual shopping experience itself is similar, although recreational dispensaries are not legally allowed to provide medical advice. There are many dual-licensed stores that can supply both recreational and medical products, but the majority hold either one license or the other. Product availability also tends to be similar from one store to the next, though some states restrict the sale and use of certain cannabis products for medical use. For example, there are jurisdictions where cannabis edibles are legal, but patients are forbidden from smoking cannabis flowers in the traditional sense.
Workplace Tolerance: Regardless of the legal status of cannabis in a growing number of states, many employers continue to maintain a zero-tolerance policy regarding cannabis use. Even if recreational cannabis users exclusively consume cannabis in their free time, off the clock, and away from their employer’s premises, they can still be disciplined or terminated for breaching company policy. Employers across the United States also have the legal right to discipline or fire medical cannabis users. Again, even if they only consume medical cannabis on their private property and on their own time.
Tolerance for medical cannabis use by employees seems to be expanding. While recreational cannabis users are being fired for their lifestyle choices, terminations on the grounds of medical cannabis use are becoming less common.
The variation between recreational and medical cannabis is slowly but surely being acknowledged. It is important to recognize the difference. Stay informed, so you can decide which product is best for you, or which business opportunities suit your needs.
Bricks + Mortar Cannabis specializes in sales of both Medical and Recreational marijuana facilities. Check out our latest listings!
MMMA – Michigan Medical Marijuana Act
This legislation was passed in 2008 allowing for individuals and their assigned caregivers to grow and possess marijuana in limited quantities, as long as they had a prescription from a doctor. The legislation left a lot of items open for interpretation, creating many problems. For example, 12 plants are allowed per patient, but only 2.5 oz of flower. One plant can yield 1lb or more of flower, which puts a patient over their limit right after harvest. Grey areas like this got many people in trouble, even when they were trying to operate within the rules. To date, dispensaries have typically been operating outside of this law. Some municipalities have shut down dispensaries while others have allowed them to operate. The MMMA allows for caregivers to receive compensation for their expenses in growing and creating medicine.
MMFLA – Michigan Marijuana Facilities Licensing Act
The MMFLA was passed in fall of 2016 in an attempt to provide a state legal framework for marijuana businesses to operate. By applying for a permit with the local municipality, and then applying for and getting approved for a license with the state, these businesses will be allowed to operate under rules that the state has been laying out. There are currently five basic license types that will be issued, Class A, B, or C Cultivation, Processing (Extraction, cooking, packaging, etc), Provisioning (Dispensary), Safety Compliance (Testing labs), and Secure Transportation. These businesses will operate under restrictive state regulations, with requirements like reporting every purchase and sale to the state, undergoing extensive background searches, and following specific packaging standards. There is a substantial application process involved in this model, along with annual fees and many other requirements.
The cannabis industry is composed of legal cultivators and producers. It also includes consumers, ancillary products and services, regulators and researchers. These are all concerning marijuana and its industrial derivative, hemp. Also, the cannabis industry has been inhibited by regulatory restrictions for most of recent history. The legal market has emerged rapidly, as more governments legalize medical and adult use. Therefore, the cannabis industry has experienced a recent boom. Businesses are popping up everywhere, including Michigan.
Owning a facility that can be used for a vertically integrated facility can be very lucrative. Whether you’re looking to buy or sell, this is an option to consider because it can save you money and has the potential to make more money too.
By definition, vertical integration is “the combination in one company of two or more stages of production normally operated by separate companies”. For cannabis facilities, this could mean a co-located grower and processor, processor and provisioning center, or a different combination of those license types owned by the same company. A fully vertically integrated facility would be a grower, processor, and dispensary all under the same ownership.
Simply put, co-location is two or more license types on one parcel whereas vertical integration is two or more license types under the same ownership. A vertically integrated facility may co-locate depending on municipality regulations. Multiple licensees who are not vertically integrated may also be able to co-locate depending on municipality regulations.
Vertically integrated facilities have the ability to bypass a major step in the sales chain. If you’re a vertically integrated facility and co-located on one parcel, all of your harvests may be transferred to your in-house processor and subsequently to your in-house provisioning center without the need for a transporter. However, your product will still need to be tested by a licensed safety compliance facility. If you’re able to bypass using a transporter, you free from a product mark-up at each stage of production.
To break that down a little further, it costs a grower a certain amount of money to produce a certain amount of product. Because of this, he will have to a mark-up that price when selling to a processor in order to turn a profit. Consequently, a processor’s cost to produce an amount of product will result in a higher price to the provisioning center, and that mark-up is subsequently felt by the end consumer. A vertically integrated facility can sell products cheaper or at the same price without these additional costs, saving you money, making you money, and potentially saving patients’ money too.
If you choose to sell any products to other licensed facilities or transport products to your own licensed facilities located on a different parcel, you will still need to utilize a licensed transporter.
With a vertically integrated facility, you will see lower mark-ups and production costs, but you may be looking at a higher overhead cost. This is because while a sole grower or sole dispensary will have costs to build out their respective facilities, they each have only one need for their facilities. With vertical integration, you will need to have the capital to build out a cultivation space, an extraction space, and retail space.
Experienced, knowledgeable team members in all aspects of the seed-to-sale process are crucial. Know your strengths, know what areas you need team members to fill. On the cultivation side, you need to have a skilled master grower to get you from seed to harvest. You’ll need someone with experience in solvent or non-solvent based extraction methods to process your cannabis. If you plan to make edibles you may want to look into hiring a talented cannabis chef. This extends to your retail staff too. Your dispensary staff will be the ones who are in direct contact with patients and eventually with your adult-use customers. You want them to be knowledgeable about products, policies, and how those things may affect your clientele.
Michigan’s Medical Marijuana Facilities Licensing Act allows for vertical integration to a point. Growers, processors, and dispensaries can have the same ownership and may co-locate at the discretion of the municipality the facility is located in. Transport and safety compliance facility licensees cannot have any ownership stake in other license types, however, transport and safety compliance facility licensees are allowed to lease space adjacent to the other types of licenses
Each municipality has its own rules regarding cannabis facilities. This includes regulating vertically integrated facilities. Similar to their right to prohibit facilities entirely, a municipality may prohibit co-location and/or license stacking and vertical integration.
The state’s process requires a separate application and fee for each license. For example, if you plan to grow 4000 plants, process marijuana, and have a provisioning center all located at 123 Main St. you’ll be submitting 4 license applications. The breakdown of the licenses you need: 2 class C cultivation licenses (allow for 2000 plants each), 1 processing license, and 1 provisioning center license. You’ll also be paying the $6000 application fee for each license. The good news is that all of your applications can be approved or denied at the same time. Meaning no sitting and waiting after one approval to get the next three.
Zoning is so important. Your facility must be zoned correctly, not only for marijuana but for your specific license types within the industry. You must take buffers for schools, churches, and residential property into account. These buffers differ for every municipality. Cites set their own zoning standards for what zoning districts a facility may locate in. Also, the state requires that a cultivation facility be located in an industrial or agricultural zone. Luckily we’re already on top of all this research, so contact us for help with zoning questions or to find out if you have qualifying property to sell.
Once you have your properly zoned property, you need to make sure your build-out will suit your needs. What does that look like for a fully integrated cultivation, processing, and dispensary? You will need a lot of industrial space for your plants and processing equipment as well as retail space for your dispensary. A location with more traffic is ideal to help consumers find you especially if you’re planning to move into the adult-use market next year.
Contact us! We are constantly adding listings and researching municipalities as they opt into allowing facilities. We also have several listings with the potential for vertical integration!