Michigan Commercial Grow License Application

Under Michigan law, as it currently stands, possession of marijuana is illegal unless an individual has a medical prescription and is a registered qualifying patient with medical marijuana card holder or registered caregiver with the State of Michigan, as permitted by the Michigan Medical Marijuana Act, M.C.L. §333.26421 et seq. Therefore, growing marijuana for your own use, without a medical marijuana patient card or a registered caregiver card is not permitted and doing so subjects you to potential criminal liability. While there is a very good chance that recreational possession and use may soon be legal in Michigan, if the November ballot initiative passes, for now the law is clear.

Despite those general proscriptions against the possession of marijuana, the State has also passed the Medical Marijuana Facilities Licensing Act, M.C.L §333.27101 et seq., the provisions of which now make it possible to start a commercial marijuana growing business for the purpose of supplying the medical marijuana industry. If you are interested in obtaining a MMFLA Business License, it’s vital to understand the requirements under Michigan law. Applying for a license can be difficult, lengthy and time-consuming, but it’s essential if you want to carry out your operation legally. In Michigan law, marijuana is referred to as “marihuana”, which is the same spelling sometimes used by organizations like the DEA.

License Types

There are five types of licenses available to those who wish to start a commercial marijuana business in Michigan:

• Marihuana Growing Operation – licensed for growing marijuana and distributing it to a licensed processor or provisioning center (M.C.L. §333.27501). There are three levels of grower licenses; Class A – 500 Plants; Class B – 1000 Plants; Class C – 1500 Plants
• Marihuana Processor – licensed to buy marijuana from a grower and extract resin or create a marijuana-infused product for sale or transfer to a provisioning center (M.C.L. §333.27502)
• Secure Transporter of Marihuana – licensed to store and transport marijuana between facilities (M.C.L. §333.27503)
• Provisioning Center – licensed to purchase from growers, and process, sell, supply or provide products to qualifying patients (M.C.L. §333.27504)
• Marihuana Safety Compliance Facility – licensed to test marihuana for safety, potency and chemical make-up from growers and processors, prior to its being available for sale at a provisioning center (M.C.L. §333.27505)

If you want to grow medical marijuana, you will need a Marihuana Growing Operation license. You can apply for a license under the Medical Marihuana Facilities Licensing Act (MMFLA) with the Department of Licensing and Regulatory Affairs (LARA). You can also apply for more than one type of license so you could, for example, grow and process marijuana at the same facility.

License Requirements

In order to qualify for a commercial grow license in Michigan, applicants will need to meet a number of strict conditions. Of course, criminal background is one of the key factors that will be assessed. The MMFLA and the Administrative Emergency Rules, provide that certain types of offenses will automatically disqualify an applicant (M.C.L. §333.27401 and §333.27402). Regardless, all applicants MUST FULLY DISCLOSE ALL PRIOR CRIMINAL HISTORY to the board, or they risk being denied. Failing to fully disclose your criminal history is one of the most common reasons that an application will be denied (Board Meeting – LiveStream from 8/9/2018).

Applying for a License

If you want to apply for a Michigan grow license, you can do so online or using paper forms. There are two steps to the application, which are pre-qualification (step one) and license qualification (step two). The first step can be completed before a location for the facility has been established, which means you don’t need to secure a business location before you get started applying for a license. The forms, however, are not simple to complete, and are not the entirety of the application. The process and forms are complex, and you may want to seek attorneys who have the experience and resources to help you properly apply for a license.

Pre-qualification (Step One)

In the pre-qualification stage of the application, a thorough background check will be carried out on the main applicant and supplemental applicants, such as individuals and businesses with an ownership interest in the applicant. The background check will involve a search of the criminal histories of all of the applicants through the State and Federal Databases to ensure there are no disqualifying criminal convictions. According to the MMFLA, there are a significant number of disqualifying conditions and/or convictions of which applicants need to be aware. Specifically, M.C.L. §333.27402 provides:
(2) An applicant is ineligible to receive a license if any of the following circumstances exist:

(a) The applicant has been convicted of or released from incarceration for a felony under the laws of this state, any other state, or the United States within the past 10 years or has been convicted of a controlled substance-related felony within the past 10 years.

(b) Within the past 5 years the applicant has been convicted of a misdemeanor involving a controlled substance, theft, dishonesty, or fraud in any state or been found responsible for violating a local ordinance in any state involving a controlled substance, dishonesty, theft, or fraud that substantially corresponds to a misdemeanor in that state.

(c) The applicant has knowingly submitted an application for a license under this act that contains false information.

(d) The applicant is a member of the board.

(e) The applicant fails to demonstrate the applicant’s ability to maintain adequate premises liability and casualty insurance for its proposed marihuana facility.

(f) The applicant holds an elective office of a governmental unit of this state, another state, or the federal government; is a member of or employed by a regulatory body of a governmental unit in this state, another state, or the federal government; or is employed by a governmental unit of this state. This subdivision does not apply to an elected officer of or employee of a federally recognized Indian tribe or to an elected precinct delegate.

(g) The applicant, if an individual, has been a resident of this state for less than a continuous 2-year period immediately preceding the date of filing the application. The requirements in this subdivision do not apply after June 30, 2018.

(h) The board determines that the applicant is not in compliance with section 205(1).

(i) The applicant fails to meet other criteria established by rule.

The pre-qualification stage also looks at the financial fitness of the applicants, and their spouses, to determine if they meet the minimum financial requirements for the grow license they are seeking, and to ensure that the financial backgrounds of the applicants are in order and do not have unexplainable sources of funds or transactions. The Administrative Emergency Rules controlling the licensing process have set minimum funding limits for each of the grower license classifications. For a Class A license, the applicants must show $150,000.00 in attested assets, with $37,500 of that being liquid. For a Class B license, the applicants must show $300,000.00 in attested assets, with $75,000.00 of that being liquid. For a Class C license, the applicants must show $500,000.00, with $125,000.00 of that being liquid. These figures are minimums, but without an attestation of assets showing these minimums, a license will not be granted.

Application Fees

There is an application fee to be paid to the State of Michigan before the application can be processed, which is $6,000 for each type of license, irrespective of the type of license for which you are applying. There are also municipal licensing fees that must to be paid to most cities where facilities are permitted to be located. Most municipalities charge a $5,000.00 non-refundable fee, though there are some that charge less. The State fee can be paid online or in person. Form and place of payment vary from city to city. Some permit online payments, some require in person payment by check, cash or credit card.

License Qualification (Step Two)

In this stage of the application process, the applicant needs to provide information about the location of the operation and what type of license they’re applying for. As part of this step, you will also be required to submit a “business plan” that has very specific requirements. Cookie cutter models, which you may find online or elsewhere, are not looked upon kindly. You will need to ensure that your business plan is not only specifically completed for your business, but which also demonstrates a strong understanding and plan for both pre and post-licensing compliance, along with an understanding of the applicable Administrative Emergency Rules. Having the advice of competent counsel to consult with you regarding the preparation of your business plans and all of its necessary subparts enhances substantially the likelihood of success of your application. For example, you have to ensure that your business plan includes a security plan, marketing plan, facility plan, staffing plan, technology plan, recordkeeping plan, waste disposal plan, community plan and others, in order to be complete. Contact our office and set up an appointment to discuss more about the details of what you need to do and include in your plan to help ensure that you have the best chance to pass both State and municipal licensing. If you already have a location secured before submitting an application, you can submit materials for both pre-qualification and license qualification at the same time.

Location of your building is so important because the Medical Marihuana Facilities Licensing Act says that the Department of Licensing and Regulatory Affairs can only issue a license if the municipality has authorized marijuana facilities and is compliant with Section 205 of the MMFLA. In order pick a property, you need to find a city that has opted in (check our MMFLA page to see if your municipality is opted in), and you will have to ensure the building is qualified for a Medical Marijuana Facility License under the municipality’s ordinances and zoning regulations. Again, you will want to consult with a knowledgeable attorney who understands the unique zoning and municipal requirements that apply to these types of facilities, as the type of facility and the permissible zoning areas vary from city to city (check our MMFLA page to review all of the published city ordinances for opted-in municipalities).

While your application is being processed, a representative from the Bureau of Medical Marihuana Regulation (BMMR) will be assigned to you. They will communicate with you while the application is being assessed. The Bureau representative, along with members of the Michigan State Police may come out to the proposed location to do one or more random, unannounced, site reviews and/or compliance checks prior to review by the full board.

Approval

Once all of the minimum qualifications are met and Step One is complete, the BMMR will present the license to the Medical Marihuana Licensing Board (MMLB). When the MMLB approves a license, the applicant will be asked to pay a regulatory assessment for each license. The Board recently set the regulatory assessment fee at $48,000.00 for 2018 for Class B and Class C growers. The regulatory assessment for Class A growers was set at $10,000.00. The head of the Bureau for Medical Marijuana Regulation, Andy Brisbo, indicated at the August 2018 meeting of the licensing board, that the Bureau was working to set an across-the-board regulatory assessment for all license types for 2019. The Board may adjust, either increasing or decreasing, the regulatory assessment for each license, with potential for variation between the different licenses and classes of grow licenses each year.

The annual regulatory assessment fee pays for LARA’s operational costs, the enforcement of the MMFLA to ensure compliance with the regulatory statutes and Administrative Emergency Rules, as well as the services provided by the Attorney General, the State Police and Department of the Treasury. It also provides costs toward the statewide monitoring system and provides $500,000 annually toward licensing substance abuse disorder programs. A separate regulatory assessment must be paid for each license type.

Applying Using the Paper Application and Online Application

To apply using the paper version of the application, you need to submit the forms in person, by mail or using the online portal. The forms must be filled out in blue or black ink. When submitting the application online, applicants need to fill out the forms, save each one not requiring a signature individually and print out those that need signatures so that they can be notarized. Signatures need to be handwritten and not electronic. You can create an online account at https://aca3.accela.com/MIMM/Default.aspx.

Required Documents and Information

There are various documents and information that you need to provide. Each applicant needs to include a passport quality photo and a copy of their government-issued ID. The Entity/Individual Prequalification Packet (EIPP) is the first part of the application and contains a prequalification document checklist.

The applicant must identify which license he/she is applying for, and what type of facility he/she is proposing. The applicant also needs to provide personal and business information, as well as information about who is completing the form (you can hire a professional to do so). There are a number of attestations to sign, and more information, including residency information and entity structure, prior names and addresses, trademarks, etc.

Supplementary documentation you will need to send includes:

• Official business registration document
• Copy of bylaws and other governing documents (corporations)
• Certificate of good standing
• Approval to conduct business transactions in Michigan
• Trademark, service mark or insignia registration documents
• Copy of organizational structure
• Authorizing resolution
• Certificate of assumed name

Applicants must then declare ownership interests and other interests. There is a section for financial information, which requires information on financial accounts from the last three years. Documents required are a CPA attested financial statement and copies of statements for each listed account for the last three years. Applicants also need to disclose information about real estate, debt, insolvency and bankruptcy. Tax information is required too, including tax returns for the past three years. Applicants need to provide information about criminal history and litigation history as well.

Step Two of the application is the facility license application (FLA). A separate one must be filed for each type of license, if you’re applying for more than one. This also includes a document checklist to help you make sure you have everything you need. Sections include demographic information, business premises and municipality information, and business and employee information. There are three more attestations that need to be signed. This second part of the application is shorter but still must be filled out comprehensively.

It can take a long time to complete the process of applying for a marijuana commercial grow license in Michigan. You need to be prepared to complete the application with all necessary information, signed attestations and supplementary documents. You also need to be prepared to pay the necessary fees. Make sure you know what is required before submitting an application. If you really want to ensure that you are doing things properly and that you have the best chance to get your grow license application approved, you should contact a knowledgeable attorney. Our office has helped many potential applicants, including provisioning centers (formerly known as dispensaries), growers, processors, and transporters. Our office has the experience and knowledge you need to give you the best chance to get your license successfully past the Board and approved.