Applications for Medical Marihuana Licenses Continue to Rise

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Soon after Michigan’s Licensing and Regulatory affairs department posted the 48 page medical marihuana facilities application online Jan 8th, a substantial amount of interest began to accumulate. Cities across the state that have chosen to “opt in” to the program have already begun issuing city-based licenses to interested parties seeking state-level licensing. Lansing is one such major city, receiving 85 license applications by their designated cut off on Dec 22nd. Of these applicants, only 20 will be approved with the possibility of another 5 being issued in a second round, as per the city’s ordinance. Despite the state provisions allowing dispensaries to operate without a license until June 15th (later changed to September 15th), Lansing has moved this deadline up for dispensaries within the city borders. This means that for the 65 applicants who will not receive one of the initial 20 licenses, failure to shut down may result in facility padlocking and up to a $1,000 fine per day. Despite this, the application for consideration under the Lansing ordinance will not be refundable for those who are denied. Currently, multiple entities who were not initially considered are going through the appeals process with the city and are awaiting hearings.

Not all cities with applicants have taken such a firm stance against existing facilities who may not receive a state-issued license. Bangor Township approved over 30 applications in late October, and has continued to review and approve more since. Two of the larger facilities to be built already expect to provide 450 jobs in total to the community, with the Township believing it will ultimately lead to more than that. Workers, for instance, will promote the growth of restaurants for lunches and potentially housing as well. Such developments will provide dramatic levels of income and financial stability for these forward-thinking municipalities. With application fees to the city at $5,000 and expected tax revenues to come in as well, such growth promotion cannot be understated and cities on the fence are beginning to take notice.

In Leoni Township, near Jackson, only six dispensary licenses were slated for issuance. A “first come, first serve” basis was instated by the township forcing potential applicants to line up almost a full week before applications were to be accepted on November 1st. One such application even offered to buy the former East Jackson Robinson Elementary School, and turn it into a cultivation facility. The interested party, Dromos Group, offered $840,000 ($60,000 below the city’s asking price) for the former education center. Unfortunately, the offer expired on December 12th without consideration by the Township Board, as language in the purchase agreement caused delays. Despite only having six licenses for dispensaries, the township set no limit on the issuance of growing, processing, or testing facilities. It would seem that this effort on the part of legislators is to keep the majority of sales outside the city while still taking advantage of the growing cannabis market.

A large number of cities in addition to the ones mentioned above have opted in, or are currently drafting language to do so. More than 500 (and growing) applications have been submitted to these various cities. It will be interesting to see what protocol other municipalities will take for companies approved that do not receive a state-based license. Under the state laws such an entity will not be able to operate even though they were approved by the city. Will their license position in cities with limited licenses need to be re-issued to another company, or will the non-approved entity be able to sell their city position to a state-approved business? Maybe they will have the option of transferring their license to another recently approved municipality? There are still more questions than answers as the market unfolds, but for all involved it is a collective learning process with much more to come.


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