Michigan Cannabis Industry Set to Become an Open Market

Applying for a Michigan cannabis license is about to become an open market. Intending to minimalize the illegal cannabis market in Michigan, the Michigan Marijuana Regulatory Agency published an advisory bulletin on October 6, 2020, stating the Agency would be relaxing its eligibility requirements for adult-use cannabis business licenses.

Under the authority of Section 9(6) of the Michigan Regulation and Taxation of Marihuana Act (MRTMA), the Agency previously began accepting applications for adult-use cultivation, dispensary, processing, and transport licenses on November 1, 2019. However, applications were only accepted from current Medical Marijuana Business license holders and Michigan residents applying for a Microbusiness license or Class A Growers license. This requirement was included in Section 9(6) to purposely give an advantage to existing medical marijuana businesses. These eligibility requirements expire in November of 2021; however, provisions in Section 9(6) permitted the Agency to relax the eligibility requirements early, authorizing them to begin accepting applications from any applicant under the authority of Section 9(6) of the Michigan Regulation and Taxation of Marihuana Act (MRTMA) on March 1, 2021.

An open market has effectively been created as applicants no longer need to be residents of Michigan and are also not required to hold a medical marijuana business license. The State can begin accepting applications from any applicant for licensure as an adult-use marijuana retailer, processor, class B or C grower, or secure transporter so long as the Agency has determined that additional state licenses are necessary to minimize the illegal market in the State, meet the demand for marijuana, or provide access to marijuana in rural areas. Additionally, Michigan is one of few states that has no cap on the number of cannabis business licenses issued, making Michigan’s cannabis market very enticing for new and experienced cannabis entrepreneurs.

In addition to these changes at the state level, more local municipalities are considering licensing cannabis businesses. There is recently proposed legislation to allow for sales to commence in Detroit, Michigan’s largest city. In Michigan, municipalities are permitted to opt-in or opt-out and impose additional regulations and ordinances. Along with other cities, Detroit has chosen to prohibit and make recreational sales illegal in the city. Hopefully, this may change soon, “Many are now profiting from the same plant that has led to countless criminal convictions which devastated countless families within our city. The time has come for equity currently not present within Detroit’s cannabis industry,” councilman James Tate said, as quoted by the Detroit News.

Although the State is accepting more applications, merely applying does not guarantee you will be awarded an operational license. An open market brings significantly more competition and sophistication to the State – including highly successful multi-state operators (MSO). To be granted an operational license, your application must be comprehensive and outshine the others. Among other things, this requires substantial capital, a compliant site location, a robust and detailed business plan with accurate financial modeling, comprehensive operating procedures, and a well-planned facility. Once operational, running a successful and profitable business will become even more challenging as the market opens up, and producers and product supply increases. Start setting yourself up for success today; now is the time to start planning to win.

Michigan has established a highly successful cannabis industry, opening licensing to non-residents and from those that don’t currently have a Medical Marijuana Business license will bring new opportunities to cannabis entrepreneurs, effectively making for a more robust, healthier, and safer cannabis market. As supply begins to outweigh demand, the elevated competition will positively impact consumers as it forces licensees to provide better products and services at competitive prices. Adult-use consumers can also expect an expanded offering of never-before-seen manufactured products with unique formulations. Andrew Brisbo, executive director of the Michigan Marijuana Regulatory Agency, believes that Michigan cannabis sales could reach $1 billion in 2020 and has the potential to grow to as much as $3 billion in the coming years.

If you are interested in learning more about new cannabis business opportunities or scaling or optimizing your existing operation to remain competitive in this new market in Michigan, contact us today.