Marijuana has been a hot topic for quite some time, and with the advent that Michigan became open to recreational marijuana businesses on November 6th, 2018, there has never been a better time to open a dispensary. Opening a dispensary in Michigan is one of the numerous options to make the most of the medicinal side of marijuana. You could also start a marijuana testing facility, a marijuana transport business, or cultivate marijuana yourself. If you don’t know where to begin or have considered opening a recreational medical marijuana business in Michigan, let’s provide you with the essential information, and ask you some important questions.
What Are Your Reasons for Starting This?
Opening any business requires a fair degree of commitment. You need to understand why you want to do this in the first place. It may come from a very personal perspective, that you believe marijuana to be a better alternative to alcohol or tobacco. On the other hand, you may believe medical marijuana to be the best way to treat modern ailments. When something has just become legal, much like after the prohibition era, it makes perfect business sense to jump on this for professional and financial gain.
Undertake the Necessary Research
Every state has its own rules and regulations towards selling marijuana. In Michigan, the state permits that marijuana can be sold for recreational and medical reasons. Acquiring the requirements for licensing can be a lengthy process, and if you want to acquire more than one license from the department of Licensing And Regulatory Affairs (LARA), the $6,000 application fee needs to be paid with every type of license. And it’s all dependent on the local municipality to restrict the number of facilities which may very well have an impact on the type of business you wish to set up.
Once you have decided on the type of business you wish to set up, you need to delve into the more business-oriented aspects. Creating a business plan is essential, and while a marijuana business is a new venture, especially with the most recent legalization of it, you can find that creating a business plan is very similar to making one for any other type of business. It’s all about the supply and demand. After this, you should determine the location of the company. This has a bearing on the licensing depending on the local municipality, which we’ve already touched on. The most important piece of advice would be to get a lawyer and a CPA. Because there are so many rules to follow, you need to stay in compliance with the law. The NORML website provides a database of lawyers across the United States who deal in the marijuana industry.
Funding in the marijuana industry is pretty similar to funding a business in general. If you’ve never financed any sort of business before, you may very well think that’s because it’s a risky endeavor, or that there aren’t available options. But raising money in the modern day, especially with crowdfunding, is very much dependent on the need for the product in a specific area. Many businesses turn to crowdfunding, but there are other methods as well. Debt financing is one option available in the cannabis industry, as is equity financing. But you may wish to go to financers like angel investors, who will have a stake in your business for a share of the profit. As risky an endeavor as it is opening a dispensary in Michigan, there are funding options. Just because it’s a more left field approach to businesses, it doesn’t mean that there are ways for you to fund it.
And on the topic of money, it’s crucial to have an understanding of the taxation process. Specifically, U.S. Code 280E, a tax code that can be difficult to navigate, especially when budgeting is concerned. As marijuana is a Schedule I narcotic, you are only able to deduct the cost of goods sold from your revenue prior to doing your taxes. For example, if you bought a product for $200, and you sell it for $400, you need to pay the taxes on that $200 profit as well. If you don’t address this early on, you could get a massive tax bill out of the blue!
Getting Your Business Off the Ground
Once all this has been rectified, you need to find a rental property. Because the marijuana industry is forever changing, this could throw up potential problems further down the line after you found an appropriate property. The key is to find a compliant wound, which means that it has to be more than 1000 feet from a church, as well as a school, a residential zone, and from another compliant property.
Once this is in place, it’s time to conduct market research, and see what competition there is in your area. Finding a demand for a particular type of product means undertaking the necessary research. You need to identify your customers and note potential gaps in the market. Because if there is no demand for marijuana in your desired area, but it’s the only place you can find a compliant property, you could very well be cutting off your nose to spite your face.
You also need to know your demographic (as well as the psychographic). These aspects will determine the pricing of your product. Marketing the product is a very grand prospect because you need to identify the gaps in your market, but also find the right platforms to promote your business. If you are running a dispensary, you need to get on Weedmaps, as well as Leafly, which are two applications that allow patients to find dispensaries in their area. You could also market through social media, like Facebook, Instagram, as well as Google My Business. In addition to this, you need to set up a website that is compliant with the appropriate Search Engine Optimization (SEO) tricks.
Opening a dispensary in Michigan is the perfect opportunity to capture the mood of the state. With the legalization of marijuana, the options to make a profit from this has never been better.