Opening Your Marijuana Facility
Interested in becoming part of Michigan’s Green Rush but don’t know where to start? Investors who are looking to get into the marijuana industry should take a serious look at opening a facility in Michigan. There are plenty of amazing Green-Zoned properties right here in the Mitten State. Here we offer a step-by-step guide, explaining how to open a marijuana facility in Michigan.
Decide What Type of Facility
Do your research before deciding what type of facility you would like to open. There are many options to choose from. Your first decision will be whether to open a recreational or medical facility. Read about the differences HERE.
In certain municipalities, there is the option to cultivate marijuana outdoors, indoors, or in a greenhouse, so this should also be considered as an option. Other types of facilities include processors, safety compliance facilities, secure transport, consumption lounges, and dispensaries/retail facilities. More information about license types can be found HERE.
Prequalification: What is it, how long will it take and what do I do next?
First of all, it is important to allow for approximately six months to complete prequalification.
The application process requires two steps: the prequalification, and the final licensure. Step 2, final licensure, occurs near the end of the entire process, after the facility has been built out.
The first step of the marijuana establishment application process is prequalification. The main applicant must submit a prequalification application, as must as any supplemental applicants, to LARA, Michigan’s Department of Licensing and Regulatory Affairs. During prequalification, background checks are completed on the main applicant and any supplemental applicants. The main applicant is the entity. For example, the limited liability company, corporation, partnership or individual, also known as sole proprietorship, seeking to hold the marijuana establishment license. Expect to pay a $6,000 application fee. Both the main applicant and the supplemental applicants must submit step 1 prequalification applications, although only the main applicant is required to pay a fee. The Marijuana Regulatory Agency(MRA) will begin to process prequalification applications once the $6,000 prequalification application payment is received.
This process can take anywhere from 3 – 6 months depending on how complicated your business is. A business with a lot of partners that own many other businesses is going to have a lot more documentation that they need to submit for review than an individual with no partners who has never been in business before.
Once step one has been completed, the applicant can continue by finding and purchasing a facility and completing construction. Only after construction is completed can the main applicant submit the licensing application(s) for step 2 and obtain the full License. We will mention more details about this later in the article, after “Build Out Facility”.
Find a Lender or Financing if Needed
If working capital is needed, Bricks & Mortar Cannabis can help guide you to trusted lenders.Traditional banks typically do not write mortgages on cannabis-based properties, so private lenders are typically the best choice. It may take longer than expected to secure a mortgage.
One great option to take a look at is Copper Street Lending. They specialize in financing marijuana businesses, so they understand the unique needs of the industry. Their dedicated team of professionals works hard to get you approved and secure capital for your business. By working with various private and hard money lenders, they will present you with a variety of options so you can choose the best deal for your needs.
Hire Professionals to Work With
Find qualified professionals, including an architect, attorney, property inspector, contractor, etc. When you find the right property, you need to be prepared to move quickly. This means knowing who you are going to work with for your site plans and applications ahead of time. You should also have a contractor lined up who can quote construction costs for you immediately. Make certain the professionals you plan to work with are experienced in marijuana permitting and licensing.
Select a Location
Start researching available real estate options and municipal rules as soon as possible. It may take a few months to find the right location. Buying a property in a niche market, such as the cannabis industry, requires a specific scope of knowledge. A traditional real estate agent typically does not have expertise in this area of business.
Green Zone Certified Agents specialize in cannabis real estate deals, and are the best option to help you find the best qualifying location. From municipal permitting, to zoning requirements, specialty building requirements, unique contract negotiation terms, access to cannabis market data, deal management, and industry-specific knowledge, we at Bricks + Mortar Cannabis are highly experienced and strive to find the perfect property for your needs. For more information on our expertise click HERE.
Submit an Offer
Before you make an offer on a property, you should thoroughly understand the municipal approval process. You don’t want to move forward with a deal only to find out that it doesn’t qualify for a marijuana facility, or that all of the available permits have already been issued. Some municipalities also require that you complete pre-qualification with the state before applying for a permit. If you aren’t prequalified and you want a property owner to wait for you to go through the process, you should be prepared to offer a non-refundable deposit or some other strong incentive for them to let you tie up their property.
Be ready to move really fast when you find the right one. Good properties often have multiple offers, within only a couple of days of going on the market. Make sure you are organized and ready to move quickly when the right property comes up. Sellers will want to see proof of funds, such as a bank statement, or a letter from a private lender or investor, along with their bank statement.
Obtain a Municipal Permit
Obtaining a municipal permit is a crucial step; one that can take 3 to 6 months, sometimes longer. Municipalities often require state prequalification to be completed first. Steps to obtaining your municipal permit can vary greatly depending on municipality. Each municipality has its own zoning laws. Different locations in certain municipalities are Green Zoned, which means marijuana facilities are allowed. Finding the right Green Zoned Agent can help guide you through these steps.
Build Out Your Facility
Building requirements will depend on the type of marijuana facility you have chosen to open, as well as which municipality it is located in. For example, many facilities will have certain security requirements, while other types of facilities will require odor removal systems, heat and light systems, and more.
Ensuring that you have contractors and architects on board with experience in the cannabis industry will help make this process much smoother. You should plan for at least 6 – 12 months to build out your facility, potentially longer due to COVID related material and staff shortages.
Submit License Application for Step 2
As previously mentioned, only after construction is completed can the main applicant submit the licensing application(s) for step 2. 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 inspections and reviews have been completed and the license fee is paid, the operator will receive their full license and be allowed to open.
Vet and Hire Staff
Depending on the type of facility you open, you will need a variety of staff members. For example, a grow operation will need management and security employees, as well as packagers, trimmers, and employees who care for the plants. A dispensary on the other hand, would also need security, as well as budtenders, management, and more. Regardless of the type of marijuana facility you choose to open, hiring reliable security guards and trustworthy employees should be at the top of the list.
Try to market and publicize your new business as much as possible. Use social media, email campaigns, and word of mouth to your advantage. Schedule, market, and host a Grand Opening!