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How to Open a Marijuana Dispensary in Michigan

Created by FindLaw's team of legal writers and editors.

Last Updated: 9/10/2019

Starting a marijuana dispensary in Michigan requires strict attention to compliance issues and regulations. The laws allowing adult-use of recreational and medicinal cannabis were passed in 2018 by Michigan voters, but legal frameworks for cannabis-focused businesses are still in development. Expect the laws and regulations to change as businesses open and the frameworks develop.

The agencies estimate commercial sales from dispensaries will not begin until Spring 2020. However, you can plan by knowing the laws and requirements before you begin your business plan.

Note: Michigan state legislatures use different spelling to describe cannabis, so you may see the laws and regulations use the term “marihuana” instead of the more common term “marijuana.” This spelling comes from the spelling in the federal Controlled Substance Act, which used the spelling from the Marihuana Tax Act of 1937. It is antiquated spelling but cannot be changed without an act of Congress. Michigan law also refers to dispensaries as “provisioning centers.”

What to Expect During the Process

You can expect to have a prequalification phase to fill out all the documents and submit them for consideration. Everyone involved in a marijuana industry business will have a background check during this phase. If your application passes the first step, then you will enter the license qualification phase.

This requires more specific information for the specific licenses you are seeking. The following sections give an overview of the specific elements you need to consider when opening a recreational or medical marijuana dispensary.

Michigan Marijuana Facility Licenses

Your dispensary can sell both recreational and medicinal marijuana. You must apply through the state government for a Medical Marihuana Facilities License. through the Department of Licensing and Regulatory Affairs. Read about the full act and its requirements in Michigan’s official document. This license covers jobs from growers, processors, transport, provisioning, event organizers, lab testing and medical marijuana facilities, and dispensaries.

Consider Your Location Before Starting Your Dispensary

The first thing to consider is where you want to locate your Michigan dispensary. You need to find the right building or lot to build on and get permission and licenses from the city. Your building must be 1,000 feet away from liquor stores, other dispensary and drug free zones, such as schools or daycares. Check the locations of existing dispensaries or marijuana businesses online to narrow down acceptable locations.

Michigan has a unique initiative to help communities previously affected by marijuana prohibition and criminal enforcement. The Marijuana Regulatory Agency (MRA) started a Social Equity Program in 2019 to promote adult use of marijuana from local dispensaries. Applying for any of these program locations will have reduced fees for your dispensary licenses and renewal fees.

Business Models for Your Dispensary

The cannabis company model you create, the investors you select and the partners you choose can all have an impact on your license approval. Know that every person – from an investor to an employee – will be carefully background checked throughout the process.

There are also unique elements to consider, such as allowing dispensary-only sales or if you will support medical marijuana home delivery shipment and sales. During the process, you will need to submit a site plan that covers everything from the building layout to security to trash management, and you may need to lobby for approval.

Staying Compliant at Your Michigan Dispensary

Federal law sets the minimum age for recreational marijuana use at 21 years old and the state requires a government-issued license or passport. Medical marijuana licensees can also apply for a recreational license when they are 21 years old. Checking proper licenses is essential during all cannabis product sales.

The table below reviews typical laws, compliance issues, and regulations you need to follow for your marijuana business in Michigan:

Michigan Marijuana Laws

General Business Considerations

The market in Michigan is fast-moving and lucrative for marijuana and cannabis products. You may want to perform a competitor analysis on local pricing. In Michigan, retail products are legally restricted to the following amounts per customer per day:

  • 2.5 ounces of marijuana
  • Seven grams of vapor cannabinoid extract or concentrate
  • 16 ounces of marijuana-infused solid products
  • 36 fluid ounces of liquid marijuana-infused products
  • 12 cannabis plants
  • 15 grams of concentrated cannabis

You must have a marijuana software tracking system to keep a record of the time, date, price and quantity of each customer’s sale.

Taxes

According to the Michigan Department of Treasury’s Revenue Administrative Bulletin (RAB):
  • 3% tax on gross retail paid by the provisioning center to the Michigan Treasury Online (MTO)
  • 6% sales and use tax on statewide sales
  • 10% additional tax on recreational marijuana (tax rate is still pending approval)
  • Late fees apply on license renewals (MMFLA Section 333.27402(11))

Cost to Open a Dispensary

  • The application fees are around $6,000
  • All cannabis businesses help pay the $500,000 annual fee for substance abuse disorder programs (MMFLA Section 333.27603)
  • Licensing fees cost between $10,000 and $66,000

Retail Store Regulations

According to MMFLA Section 333.27504:
  • Retail stores cannot allow consumption of marijuana unless they have a specific license and designated smoking areas
  • No selling food or alcohol at a dispensary
  • All customers must be 21 years old

Dispensary Owner Requirements

  • No felony within 10 years
  • No misdemeanors involving controlled substances within five years
  • No local ordinance violations within five years
  • Must be 21 years old
  • Any past issue with law enforcement or legal violations (except for traffic violations)
The Board can consider any criminal history and decide to deny your marijuana business license.

Organizations to Know in Michigan

Note: State laws are always subject to change through the passage of new legislation, rulings in the higher courts (including federal decisions), ballot initiatives, and other means. While we strive to provide the most current information available, please consult an attorney or conduct your own legal research to verify the state law(s) you are researching.

Related Resources

Learn About Marijuana Dispensary Owner Basics

Call a Business Attorney When Opening A Marijuana Dispensary

Marijuana use in Michigan is moving steadily toward mainstream recreational use. As the cannabis regulations develop, there will be changing rules and regulations to follow to ensure compliance. Get your business off the ground and start on the right foot with the help of a cannabis business attorney that knows Michigan laws.