UPDATE: October 8, 2020
Beginning March 1, 2021, Michigan will grant recreational-only licenses to businesses, according to a Michigan Marijuana Regulatory Agency Bulletin released on October 6th. In an effort to minimize the illegal marijuana market, businesses that do not hold a medical marijuana facility license will be able to apply for an adult-use license.
As the requirements to qualify for recreational marijuana licenses are eased, medically licensed businesses may be negatively impacted. The value of medical marijuana licenses is expected to plunge. As a result, many medical marijuana facility owners are planning to shift to adult-use licensing.
As the commercial marijuana market in the state grows, the impact of the illicit market still continues to be a major concern. Cannabis products from the illegal market are not grown or processed under the same conditions required in the regulated market. Nor are they tested by state-licensed safety compliance facilities for unsafe contaminants. The illicit market fills the void where licensed facilities are not available to meet consumer demand.
According to data provided by the Michigan State Police, 83% of seizures of illicit marijuana products occur in municipalities that do not have state-licensed marijuana establishments.
As municipalities throughout the state consider ordinances to allow marijuana establishments, the current eligibility restrictions act as a barrier to many budding entrepreneurs. Greater municipal participation is critical to reducing the impact of the illicit market.
Once licensed by the state, new recreational cannabis facilities will aid in boosting Michigan’s marijuana product supply, as well as provide more convenient retail access to Michigan residents.
According to Michigan’s top cannabis regulator, Michigan is considering making recreational-only licenses available to marijuana businesses a year ahead of schedule. The Michigan Regulation and Taxation of Marihuana Act of 2018, which legalized adult-use cannabis in the state, included provisions that kept non-medical cannabis license holders from entering the adult-use market until 2021. This was an effort to give a competitive advantage to the operators who had developed the state’s medical cannabis industry.
As of now, certain types of Michigan marijuana businesses must acquire and hold a medical marijuana license before being allowed to apply for an adult-use license. These include Class B, Class C, and Excess Marijuana Grower licenses, as well as Transport, Retail, and Processor licenses. Medical marijuana licensing is not required for adult-use Class A Growers, Microbusinesses, Consumption Establishments, Safety Compliance Facilities, or events.
This rule limits the entrepreneurs who may not have the funds for both types of licenses, and unnecessarily prolongs the licensing process.
To acquire a medical marijuana license, a business must first achieve prequalification. This is done by submitting documents for consideration, and paying a $6,000 fee. All persons who are involved in the potential marijuana business will have a background check. If the medical marijuana license application passes the first step, the business will enter the license qualification phase. License qualification requires specific information about the physical location of the applicant’s business, as well as which type of facility license the potential licensee is applying for. After license qualification is completed, the application is presented to the Medical Marihuana Licensing Board. Upon approval from the MMLB, the applicant will be required to pay a regulatory assessment for each license. Once the assessment is received, the license is issued. If the business is granted a medical marijuana license, it now qualifies to apply for an adult-use marijuana license. At this point, many of the previous steps must be repeated, including paying another $6,000 application fee.
Michigan’s Marijuana Regulatory Agency (MRA) is discussing whether to remove the requirement that businesses must hold a medical cannabis business license, in order to apply for an adult-use license. This means that entrepreneurs may be able to apply for a standalone adult-use cannabis licenses as early as November first of this year. The plan, if approved, would open up new business opportunities in Michigan’s adult-use industry. This includes the possibility of more social equity licensing. The state’s program remains restricted though, because only about 60 municipalities have approved adult use facilities, while roughly 1,400 have opted out.
MRA spokesman, David Harns, says a final decision hasn’t been made yet. Discussions are still ongoing with stakeholders and industry regulators. The potential plan to allow stand-alone recreational licenses a year ahead of schedule was disclosed by Andrew Brisbo, executive director of the Michigan Marijuana Regulatory Agency (MRA), in an interview with Crain’s Detroit Business. Brisbo told Crain’s that obtaining both a medical and recreational license might be too high of a barrier to entry, especially in cities like Detroit.
Michigan’s legislation offered the Marijuana Regulatory Agency the option to remove these provisions after one year, and Andrew Brisbo says industry stakeholders and regulators are deciding whether to open the market up to non-medical cannabis licensees. This is an effort to address social equity issues and promote the creation of social equity programs.
Despite the low municipal participation rate, Michigan recreational marijuana sales are already rivaling medical cannabis sales – both categories have exceeded $200 million in sales since last December. The Marijuana Business Factbook estimates that Michigan’s recreational marijuana sales will reach $400 million to $475 million in 2020.