With the November 2018 ballot passing of recreational marijuana in Michigan, legislators have been working to create growth opportunities and have a positive impact in disadvantaged communities. In July 2019, the Marijuana Regulatory Agency announced the details of their Social Equity program for Michigan. This program allows individuals from all walks of life, even those with prior marijuana convictions, to participate in the marijuana industry. They are able to acquire licenses for adult- use facilities, establishments, organizing, and events.
The Social Equality program applies to 42 Michigan cities where at least 30% of the population lives below the poverty line. The state picked the communities based on the number of marijuana convictions and the communities’ poverty rate, designating them as disproportionately impacted by marijuana enforcement laws. The program gives participants a variety of fee reductions for their applications, licenses, and renewals. The total discount will depend on how many of the criteria are met.
Applicants in the program will also have access to industry educational resources, and easier access to governmental agencies that regulate taxes, environmental laws, business registration, health and human services, and occupational safety, according to the Detroit Free Press.
There is one main requirement in order to obtain a fee reduction. You must be a resident of one of the 42 cities for the last 5 consecutive years. This criteria will give you a 25% reduction. There are two additional opportunities to receive more reductions. If you have a marijuana related conviction, with the exception of distribution of a controlled substance to a minor, you can receive another 25% reduction. You may receive an additional 10% reduction if you have been a registered primary caregiver for at least 2 years between 2008-2017. The conviction and caregiver reduction requirements are optional. The most important part of the fee reduction is making sure that each individual/team of individuals has majority ownership (more than 50%) of their entity.
The application itself is a two-step process. Step one is the prequalification phase. A background check, as well as a financial background check, will be conducted. Step two is an establishment review. The MRA looks into the municipal compliance, verifies if the municipality has opted out or not, and is following local ordinance. The establishment must also pass an inspection from the BFs and MRA enforcement section. Once MRA has received the application, they will require supporting documents for each criteria. For residency, the documents include, but are not limited to: W-2, rental agreement, and voter registration card. In order to verify any marijuana related convictions, a copy of the judgment of sentence is required. To verify 2 years of caregiver experience, an authorization of release of MMMP information form is needed.
There are several license types that can be obtained and potentially have fee reductions through the social equity program. The applicable license types available to Michigan residents are: Grower Class A, microbusiness, safety compliance facility, designated consumption establishment, marijuana event organizer, and temporary marijuana event.
Grower Class A license holders cultivate marijuana, then sell or transfer it to marijuana establishments. This license fee is $4000.00. Microbusiness’ cultivate no more than 150 marijuana plants. They process, package, and sell or transfer marijuana to individuals who are 21 years of age or older. They also sell to marijuana compliance facilities, but not to other marijuana establishments. This fee is $8,000. Safety Compliance Facilities are licensed to test marijuana, including certification for potency and the presence of contaminants. This licensing fee is $25,000. Designated consumption establishments are commercial spaces that are licensed and authorized to permit adults 21 and older to consume marijuana products at the location on the license. This license fee is $1,000.00. Marijuana event organizers are individuals that are licensed to hold a temporary marijuana event. Each of these licenses are also $1,000.00. Temporary Marijuana Event licenses are a state license that can be obtained in order to hold a marijuana event, where onsite sale or consumption of marijuana products is permitted. Temporary marijuana events have two fees. $500 per day, plus $500 per licensee authorized to sell marijuana at the event.
There are also several medical marijuana facility licenses that have the opportunity to receive reductions. Grower Class B license holders have the ability to grow up to 500 plants, while Grower Class C can have up to 2,000 plants. The Class B growers have an initial fee of $8,000, and Class C growers have an initial fee of $40,000. Processors and retailers obtain marijuana from growers, then process and package the marijuana, to be sold or transferred to retailers. The initial fee for processors is also $40,000. The initial fee for retailers is $25,000. Secure transporters obtain marijuana from marijuana establishments in order to transport it to other establishments. This initial fee is $25,000.
The main goal of the social equity program is to create a regulated market that will help reduce the existing black market. The hope is to see at least half of the marijuana businesses in each targeted community be a part of the social equity program. A map of the 42 communities can be found at https://www.michigan.gov/images/lara/mraSocEqMapFull_660789_7.JPG. Along with the map, LARA also provides many wonderful resources. They are links to social equity and state agencies who can assist with any questions or concerns. LARA also provides a schedule for social equity informational events. The MRA’s social equity team can also be reached via email or phone at MRA-Socialequity@michigan.gov ; 517-284-8599.