In November 2018, Michigan voters approved the Regulation and Taxation of Marijuana Act, and though medical marijuana has been legal in Michigan since 2008, dispensaries were not a part of this setup. But new legislation set up a framework for the licensing and operating of medical marijuana dispensaries, which in Michigan, is referred to as “provisioning centers.” If you are looking for licensing assistance for cannabis in Michigan or are making the first steps to opening a marijuana provisioning center, you need to know the expected costs upfront. Here is a breakdown of the costs and categories associated with opening a medical marijuana dispensary in Michigan.

Acquisition of Property and Build Out

This is the largest expense. Whether you are acquiring a property or renting a building, the cost can be significant. While leasing premises is a cheaper option in the short-term, the costs can be excessive when you start to factor in the overall amounts of money put aside for rent, when it could go towards marketing or promotion instead. Therefore, it is recommended to acquire the property. When you own a property, you will always have this in your favor as the license will run on the property, but the license is only attached to the property, meaning you need to apply for more than one license if you plan on acquiring more locations.

Licensing Fees

Acquiring the necessary licensing is done through the Michigan Marijuana Regulatory Agency, or MRA. The costs associated with this are two-fold. The first fee is an application fee that costs $6,000. This must be submitted prior to the application. The second fee is what is known as an Annual Regulatory Assessment which has to be paid before the license is issued. This Regulatory Assessment for a new provisioning center license totals $44,000.


Legal Fees and Professional Fees

It is vital to consult professionals to guarantee that you are covering every base. The myriad of professional concerns associated with licensing assistance for cannabis in Michigan doesn’t just comprise legal professionals, but there are also bookkeepers, architects, as well as a business consultant that may be essential. In addition, there will be standard operating procedures that need incorporating. These will comprise inventory assistance, waste management, as well as general housekeeping.


Insurance Costs

the typical small business can expect to pay up to $5,000, and this is purely for the general liability policy. When you factor in additional insurance for the provision of dispensing marijuana you have to consider your business goals. Within the cannabis industry, you may decide to diversify your efforts and become a marijuana cultivator. In addition, you may dispense cannabis-infused products but also transport marijuana, and each of these components results in different aspects of insurance coverage.


The Equipment

General business costs will also include equipment. Standard marijuana equipment includes packaging products. This can vary depending on the customer’s preference and the type of product. Complying with regulatory guidelines will mean having to package marijuana in items like pop-top containers, as well as handlers using nitrile gloves or disposable synthetic gloves. This is in addition to standard items like computers, furniture, and point of sale systems.


Employee Salary

One of the most significant costs for any business upfront is the employees’ salary. Generally speaking, it can take an average business between 2 and 5 years to turn a profit, but this depends on a variety of external factors. However, in order to guarantee a significant and effective starting point in terms of proficiency and productivity, the right employees are essential. Employees need to be paid regardless of the profit the business makes. Running at a middle level in Michigan, you should consider roughly a minimum of $60,000 to cover approximately 3 months of employees’ and manager’s salaries.


Security Costs

One of the biggest expenses in modern business is guaranteeing its security. Because of the sensitivity associated with a medical marijuana business, this can be broken down into two key costs: physical security and online security. Having a physical security system that complies with the Department of Licensing and Regulatory Affairs is essential. On-site security and surveillance can cost upwards of $20,000. 

In addition, you have to guarantee your computer systems are secure. The modern nature of providing security in a technical sense does not just consist of anti-virus software but it’s about providing high-level encryption on your website. For customers planning to purchase items via your website, you must guarantee your website is complying with rules and regulations, but incorporating a merchant account is an extra layer of essential security that provides peace of mind for customers.

The costs of starting a medical marijuana provisioning center are not just about the legal components, but you should also consider the total amount relating to business start-up costs.