By: Scott Roberts and Elijah Simkins
As Michigan cannabis lawyers we’ve seen a lot of changes in the Michigan cannabis market and the rules governing the recreational market. This update will discuss two major updates for Michigan microbusinesses, the first being the licensing of the state’s second microbusiness, and the second being the proposed “Class A Microbusiness” license type, both of which are discussed in detail below.
Second Microbusiness Licensed in Michigan
In fall 2020, the Marijuana Regulatory Agency licensed the first MRTMA Microbusiness in the State of Michigan. Our client, Sticky Bush Farms out of Onaway, Michigan, received the first microbusiness license on September 8th, 2020. We are excited to announce that another client, Purple Punch Station, just received the second microbusiness license in the State. Purple Punch Station is a mom-and-pop business located in Decatur, Michigan. With several more projects on the way, we are excited to see the microbusiness concept start to catch on.
What do these two Michigan Microbusiness licensees have in common? One thing that Sticky Bush Farms and Purple Punch Station they have in common is that they were proactively working with their local communities. One of the key barriers to starting a microbusiness is getting a municipality on board. This means not just getting them to opt into the MRTMA, or even getting the municipality to allow microbusinesses licenses, but to allow them in areas where they actually make sense. We have seen at least one municipality allow microbusinesses, only to restrict the property in such a way that they were not viable for the typical mom-and-pop business owner.
Both companies are also “mom and pop” businesses located in more rural areas outside of Southeastern Michigan. For many, this is the perfect situation for aspiring microbusinesses as they are able to start up and operate at lower costs and are not dependent on doing several million in revenue to be profitable, which is often the case for many Metro Detroit area dispensaries.
That is not to say that Microbusinesses wouldn’t do well in more populated areas. We are working on a handful of microbusiness projects and hope to soon introduce the Microbusiness concept to the Metro Detroit area. While these projects will cost more to start up and operate compared to many of the more rural locations, they would be able to more than make up for that in terms of revenue. The key, as we have said in previous articles, is to find a way to differentiate your microbusiness from other local cannabis retailers. Whether that would be unique strains, higher quality product, lower prices, or some other differentiating factor, finding a way to set your microbusiness apart will help to ensure its long-term longevity as prices continue to drop in the MRTMA wholesale market.
Microbusiness Class A License
As some of you may already know, there has been legislation proposed to change the MMFLA and MRTMA in a number of ways. Originally, this was planned to be passed in the 2020 lame duck session, but that never happened. However, the proposed legislation lives on and continues to be refined by the MRA, lobbyists, and the Michigan legislature, working in tandem.
More recent versions of the legislation have proposed some key changes with respect to microbusinesses. The current microbusiness license is governed by the MRTMA, and was intended to help those transition from the caregiver market to grow, process and sell their own products, however, relying solely on your own crop can be a risky venture. In the wake of this research, the MRA is proposing a potential new license type called the “Class A Marijuana Microbusiness”, which addresses some of the hurdles faced by microbusiness owners. The Class A Marijuana Microbusiness license differs from the existing microbusiness license in the following ways:
- Cultivation of up to 300 mature marijuana plants, increased from 150 plans;
- Purchasing/obtaining mature plants from other licensed growers;
- The ability to utilize an outside processor;
These may not seem like huge sweeping changes to the microbusiness license, but they could add a lot of value if adopted. By increasing the plant count to 300 and allowing the ability to procure mature plants from other licensed growers insulates the risk of the business owner against crop failures and selling out of product. Additionally, allowing the use of outside licensed processors will help the business owner broaden their product line and potentially save initial costs on processing equipment, which can be incredibly expensive depending on the products the business plans to make. While this new license type has not been officially adopted, there is a lot of excitement that this could bolster the marijuana small business market.
These are exciting times to be in the Michigan cannabis industry. With the microbusiness license beginning to pick up steam, and offer opportunities to smaller groups, there are still plenty of opportunities to enter the Michigan cannabis market. As Michigan cannabis attorneys, we are excited to help the first couple of Michigan microbusinesses navigate their way to getting licensed and open. We hope to have several more such projects down the road and look forward to introducing the Michigan microbusiness license to the Metro Detroit cannabis market.