You might be thinking about opening a marihuana provisioning center in Michigan. Now, after the passage of the Medical Marihuana Facilities Licensing Act or the MMFLA (M.C.L. 333.27401 et seq.) that is possible, but only if you obtain municipal approval and a State issued operations license. “Provisioning Center” is the legally permissible term under Michigan’s Bureau of Licensing and Regulatory Affairs, Bureau of Medical Marihuana Regulation, for what was previously referred to colloquially as a “dispensary.” The current regulations no longer permit such businesses to be referred to legally as “dispensaries” and the State requires that they be referred to as marihuana provisioning centers. A provisioning center is basically a business where qualifying patients under the Michigan Medical Marihuana Act or the MMMA (M.C.L. 333.26421 et seq.) may come to purchase medical marihuana for medical use. While a provisioning center can be a profitable venture, there are a few things you to know before you move forward.

Can You Transport Marijuana In A Private Vehicle?

Currently, under Michigan law, the general rule is that possession and transport of marihuana in a vehicle is prohibited by law, and subjects you to criminal penalties. Only registered qualifying patients and registered caregivers under the MMMA may transport marihuana in a motor vehicle. Even then, they must do so in strict compliance with the MMMA. Cannabis may only transported in a locked, closed container in the trunk of a vehicle, where it cannot be accessed by the driver or persons in the passenger compartment. You may also not have more than 2.5 ounces of usable marihuana, per registered qualifying patient. Caregivers may transport usable marihuana for up to five patients (and themselves as well if the caregiver is also a qualifying patient) or up to 12 plants per patient (again, including plants for the caregiver, if they are also a qualifying patient). Under the MMFLA, however, provisioning centers that are licensed by the State and their local municipality, must only accept marihuana into their facility that is brought by a MMFLA State Licensed Secured Transporter, or, if they have a grow or processing center co-located (attached to or on the same property) and transport of the marihuana will not occur on a public roadway, it can be moved as set forth by LARA, BMMR under the Administrative rules.

 

How Much Marijuana Can You Provide?

A licensed provisioning center under the MMFLA may not sell more than 2.5 ounces of marihuana per day to a registered qualifying patient. A provisioning center that is licensed may also sell to a registered primary caregiver, but not more than 2.5 ounces per qualifying patient attached to the caregiver’s license. If you are licensed by the State to operate a provisioning center, you will have to use a point of sale system that has software that is complaint with the Statewide Monitoring Database, which uses a software program called METRC. The State permits the use of twenty-four (24) software programs that are METRC compliant. Every customer who enters a provisioning center, you will have to use a point of sale system that has software that is compliant. Every customer who enters a provisioning center must have their card run through the Statewide Monitoring Database to ensure that they have not already been provided their maximum daily allotment of 2.5 ounces from another licensed provisioning center. A provisioning center must also update the qualifying patient’s profile on the Statewide Monitoring Database after sale, so that the Database will show how much medical marihuana was purchased by the patient at your provisioning center.

 

What License Do You Need?

You need a full license provided by the state to operate as a Michigan provisioning center. If you are growing marijuana, you will also need to make sure that you apply for a Michigan commercial grow license application. You may want to speak to an MMFLA lawyer, such as Fowler & Williams, PLC, about this to ensure that you are fully licensed, or you will be closed down. Most importantly, DO NOT begin operating your provisioning center without a State license being issued to you under the MMFLA. While the process of obtaining a license is complex and requires a substantial amount of time and money, the profitability of these provisioning centers far outweighs the cost of obtaining one. If you can qualify for a license and get through the application process to obtain a provisioning center license, you should do so before you begin operating.

 

Can You Get More Than One License?

Yes, you can apply and qualify for more than one license. This is useful for any business or individual who wants to set up a provisioning center and a grow or processor at the same time. According to the law, there is nothing stopping you from doing this. Further, you can obtain multiple provisioning center licenses so that you can operate multiple provisioning centers in different cities. The licenses do not attach to the person or the business that is applying, allowing you to use it anywhere you want. Rather, the licenses attach to the property you list on your application for the business. Therefore, if you want to open multiple provisioning centers, you will have to submit multiple State applications. If you desire to obtain different types of licenses (say a grow or processor license) in addition to a provisioning center, you can co-locate them at one facility, but you must submit separate applications for each license type, and must meet the minimum financial and background requirements separately for each license type.

 

How Much Will A License Cost?

The cost for the license application to the State is $6,000.00 per application, regardless of license type applied for, including for a provisioning center. There are also municipal application fees, which can be up to $5,000.00 per application. Each municipality is different, and they can charge different fees, and they can vary the fees depending on which type of license you apply for. Generally, however, they charge the maximum allowed, which is $5,000.00 per license application. Further, after you receive a State license, there are regulatory assessments that must be paid yearly, both after issuance and each year after when the license is renewed.

In 2018, the assessments vary.

  • Secured Transporters and Safety Compliance Facilities (testing labs) have no assessment ($0.00).
  • Class A Growers have a $10,000.00 regulatory assessment.
  • Class B and Class C Growers, Provisioning Centers and Processors have a $48,000.00 regulatory assessment.

The State has said that beginning in 2019 there will be a standardized regulatory assessment that will apply to all license holders, regardless of the type of license issued. For now, however, the assessments will remain as noted above. You will also find that there are other professional fees that you will have to pay in order to ensure that your application is complete, and that your business plan, with all of its necessary parts, is up to par with the State’s application requests. Those costs can vary dramatically, and are hard to predict.

Needless to say, the application and licensing process is an expensive endeavor, but in a market that is slated to do about $891,000,000.00 in annual sales this year, up from about $741,000,000.00 in 2017, the return on investment could be substantial.

 

Should You Have A Lawyer?

While not mandatory, you should certainly make sure that you are obtaining advice from an MMFLA lawyer before you consider opening a Michigan provisioning center. It’s important that you get the best possible legal advice and that you are following all the regulations and requirements. Only an attorney experienced in handling cases under the MMMA and licensing work under the MMFLA, like Fowler & Williams, PLC, can ensure that you have all the tools and guidance that you need to give your application the best chance at success. Failure to make sure that your application is complete, and that it provides support for your ability to presently comply and ensure future compliance with the Administrative rules, your application is much more likely to be rejected or denied, and your dream of opening a provisioning center brought to an unceremonious ending.

 

How Much Will This Business Cost?

You can expect the total start-up fees for this type of business to be anywhere between 400 and 500K, at a minimum. While the State requires a minimum capitalization requirement of $300,000.00 (one quarter of which must be liquid funds), that will not be sufficient, realistically, to start the business. You will need to potentially purchase land or property in an opted-in municipality. (Here is an up to date list of Michigan Municipalities currently opted-in to MMFLA) There will be mandatory fees, costs, and professional services that you need to obtain to ensure that your application is accurate and complete, and to ensure that you are currently in compliance with all laws and regulations, as well as ensuring future compliance. This includes everything from licensing to a full team of employees and much more. It’s certainly not cheap, and you need to be prepared for a heavy investment. However, as noted above, the marketplace is large, and continuing to grow.

 

Can You Go Mobile?

No, you cannot run a mobile provisioning center as it is currently illegal to operate one in the state of Michigan. However, this could change, and that’s why it’s important to speak to a medical marihuana attorney regularly, so that you are keeping up to date with changes to the law. Cannabis law is an evolving and changing field, and as a result, there may come a time where the MMFLA or the MMMA is amended to allow for a mobile provisioning center.

 

What Are You Legally Able To Do?

As a provisioning center, your sole purpose is to provide safe medical marihuana to registered qualifying patients. You may only sell marihuana or marihuana infused products that were grown by a MMFLA licensed grower or processed by a MMFLA licensed processor and the products have been tested by a MMFLA licensed safety compliance facility with proper labeling and tracking. You may not sell these products prior to your obtaining a license, unless you were operating with city approval prior to February 15, 2018 and you have already submitted an application to the State seeking a license.

Soon a change in law will likely allow for recreational cannabis sales. If the ballot initiative passes, for the first two years after the State passes recreational cannabis facility regulations and begins accepting licensing applications, only facilities licensed by the MMFLA to sell, grow, process, transport or test medical marihuana will be legally permitted to apply for recreational marihuana licenses for the same activity. Thus, obtaining a provisioning center license under the MMFLA, gives you the opportunity to enter the recreational market, where others will not.

 

What Are The Requirements?

In order to apply for a provisioning center license, you need to ensure that you do not have a disqualifying criminal conviction, and that you meet the minimum capitalization requirements, which as noted earlier are $300,000.00 with 25% liquid capital. You will also have to obtain an appropriately zoned building in a city or township that has “opted-in” to the MMFLA to permit such facilities to operate within their boundaries. Whether your own it or lease it does not matter, but you must have the building. After that, you will have to produce a business plan that contains all of the required elements from the state, including a security plan, facility plan, marketing plan, staffing plan, technology plan, recordkeeping plan, waste disposal plan, and more, showing that you will comply with the State’s regulations now and in the future.

 

Conclusion

We hope this provides you with some of the information you need before opening a Michigan provisioning center. Needless to say, the process is expensive, complex and time consuming, but the reward and ROI can be substantial. In reality, obtaining a competent MMFLA and MMMA attorney, like Fowler & Williams, PLC, can help streamline and simplify the application process, and take most of the work off your plate.

If you want information, or want to come in and talk about applying for a provisioning center license, we would love to have you come in for a consultation.

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