Michigan Microbusiness and Licenses: All You Need to Know

Ever since the Michigan Regulation and Taxation of Marihuana Act (MRTMA) passed in November 2018, one of the most talked about opportunities in Michigan’s adult-use market is the microbusiness license. Michigan microbusinesses are all the rage.

Individuals and companies eager to apply for a microbusiness license wonder exactly what the requirements would are and what the application process looks like.

Thanks to the Marijuana Regulatory Agency’s (MRA) 10 topic-based administrative rules, everyone who’s interested in pursuing a microbusiness license should take the time to read the regulations to understand the requirements and overall application process.

The administrative rules contain an exhaustive amount of information.

As an alternative, see below for a quick summary of the microbusiness license.

Interested in a microbusiness license in Michigan? Do you need help navigating Michigan’s complext marijuana industry? Request a consultation now.

What is a Microbusiness?

In Michigan, a microbusiness license allows a person or company to:

1. grow up to 150 cannabis plants,
2. process cannabis into concentrates, edibles, or other infused products,
3. package the finished products, and
4. sell to adults who are over the age of 21.

However, a microbusiness cannot sell or transfer any products to any other adult-use establishments.

In other words, a microbusiness license allows you to operate as a vertically-integrated cannabis business that grows, processes, and sells its own cannabis at retail to adults over 21 years old-and no one else.

Imagine if Founder’s Brewing Company or Bell’s Brewery, two of Michigan’s most award-winning craft breweries with an incredible catalog of popular beers to choose from, could only sell their products at one place.

The consumer demand for Founder’s and Bell’s unique, high-quality craft beers would attract visitors from all across Michigan and nationwide to buy products from each company’s only location.

This is the type of business model under a microbusiness license.

It provides an opportunity to carve out a niche in Michigan’s cannabis industry by cultivating, processing, and selling unique strains of flower and other “craft” cannabis products straight to consumers.

As Michigan’s cannabis industry continues to grow and evolve, it’ll become increasingly important for each licensed company to differentiate its brand and products from the others.

It might also be a good time for cannabis businesses to look at providing enhanced customer service, like secure and diverse financial transactions with the use of high-risk merchant accounts and other ways of easing the customer experience and building trust and legitimacy.

Additionally, based on how the law and regulations are written, the microbusiness license is a perfect way for individuals and small businesses to enter the market and make an impact by delivering unique products to Michigan’s consumers.

Who is eligible for a Microbusiness License?

As mentioned, not all individuals and companies were allowed to apply for a microbusiness license at the beginning.

For the first two years, only Michigan residents were eligible.

Additionally, during that time only, one (1) microbusiness license could be issued to a particular person or company.

After those two years (or after one year if the MRA determines additional licenses are necessary), non-residents are now allowed to apply for a microbusiness license.

Under the MRTMA, the MRA is also able to pass a rule to allow individuals or companies that own other licenses in Michigan to pursue a microbusiness license after January 2023.

Interested in a microbusiness license in Michigan? Do you need help navigating Michigan’s complext marijuana industry? Request a consultation now.

Where can I apply for a Microbusiness License?

Before deciding to apply, it’s important to determine whether microbusinesses are allowed by the municipality.

For now, municipalities fall into one of three categories:

1. Prohibited.
2. Allowed.
3. No decision.

These are discussed in greater detail below.

Municipalities That Prohibit Microbusinesses

Under the MRTMA, a municipality can completely prohibit adult-use establishments within its boundaries.

If so, the municipality is required to notify the MRA of its decision.

A list of communities that have notified the MRA that they have “opted out” can be found here.

The list is updated frequently, so be sure to visit the MRA’s adult-use website for further updates.

If the municipality where you’re seeking to establish a microbusiness has “opted out,” you cannot apply for a microbusiness there.

The easiest option would be abandoning your search there and locating potential properties in a municipality that does allow microbusinesses.

However, it’s important to remember that a municipality’s decision to “opt out” isn’t permanent.

A municipality can always change its mind after becoming more educated or observing other municipalities who have allowed microbusinesses within their boundaries.

Additionally, newly elected officials may take office who are more favorable to “opting in” and allowing microbusinesses.

You can also hire a firm like ours to lobby on your behalf.

If neither of those happen and the municipality continues to prohibit all types of cannabis businesses, a ballot initiative may be a viable option to explore.

This is also something a firm like ours can help to do on your behalf.

Municipalities That Allow Microbusinesses

If a municipality hasn’t completely banned adult-use establishments, the MRTMA allows the municipality to limit the number of businesses within its boundaries, including microbusinesses.

Communities that allow microbusinesses will likely adopt an ordinance to “opt in” which will contain more information about how many licenses are available: the permitted zoning district(s) and distance requirements, if any, that apply to microbusinesses; as well as an application process and selection criteria for issuing local approval.

Now that the administrative rules have been released, more and more municipalities are likely to decide whether to “opt in” since there are more clear guidelines from the state.

Once there’s reliable confirmation that a particular municipality allows microbusinesses in the community, it’ll be important to review the ordinance to determine what properties may be suitable for a microbusiness and other information related to the local application and approval process.

Municipalities That Have Not Officially Decided

For applicants who wish to establish a microbusiness in a municipality that’s silent on adult-use establishments, the answer to “where” and “what municipality” is a bit complicated.

The MRTMA requires municipalities to “opt out” of the program, which requires the municipality to pass an ordinance or resolution and notify the MRA.

If the municipality doesn’t officially “opt out,” then the MRA may be “compelled” to issue an adult-use license to an applicant who has a location in that municipality.

However, this doesn’t necessarily mean that an applicant will be successful in opening up an adult-use business in the municipality.

There are certain local permits and approvals that are required (site plan approval, building permits, change of use/occupancy, certificate of occupancy, etc.) before lawfully opening and operating a business.

In other words, just because a municipality doesn’t “opt out” doesn’t mean that an applicant who submits an application to the MRA will “sneak by” the municipality and automatically obtain a license.

The local municipality will need to ensure that the establishment is in the proper zoning district and satisfies other criteria within the local ordinance code.

For that reason, it’s best to be open and transparent with municipalities to ensure that you’re able to identify a suitable location that allows you to obtain a microbusiness license in the municipality.

How do I apply for a Microbusiness License?

The application process is similar to how the MRA handles medical facilities under the MMFLA.

See below for a brief overview of the fees/costs for Michigan microbusinesses and the application process:

• Fees/Costs:
  • Application Fee – $6K
  • Initial Licensure Fee (to be paid prior to obtaining license) – $8K
  • Renewal Fee (based on gross retail sales):
    • Bottom 33% – $6K
    • Middle 33% – $8K
    • Top 33% – $10K
• Application Process
  • Step 1 – prequalification application (criminal/financial background check for certain individuals within the applicant company)
    • Must disclose 1 year of all financial account statements/tax documents and other information related to your personal and business history
      
  • Step 2 – facility license application (drawings/plans and operational narratives)
    • Must have physical location (and local approval, if applicable)
    • Must provide detailed drawings of the proposed facility and an “establishment plan” addressing all aspects of your company’s proposed operations to ensure compliance with the law and regulations

Since this is only a brief summary of what’s required, it’s important to reach out to an experienced cannabis attorney who can provide you with a more detailed overview on adult-use establishments, the law and regulatory requirements, and how you can successfully apply for a microbusiness.

Interested in a microbusiness license in Michigan? Do you need help navigating Michigan’s complext marijuana industry? Request a consultation now.