Local Growth The importance of cannabis microbusinesses

The “marijuana microbusiness” was created as part of Michigan’s cannabis legalization ballot initiative, which passed in November 2018, and the phones of every cannabis attorney’s office have been ringing with calls from eager would-be owners ever since. Let’s take a look at what we know so far about these new businesses, and why once they are accepted by Michigan communities, they could be just the answer many of us have been waiting for.

A cannabis microbusiness allows a person to grow, process, package and sell at retail up to 150 cannabis plants, all in one location. It is, first and foremost, a licensed commercial business. It is not part of the unregulated, legal, recreational conduct permitted by Proposition 1, also called the Michigan Regulation and Taxation of Marihuana Act (MRTMA). In other words, you’re not going to be doing this out of your house, and you will absolutely need a state license. You may or may not also need the permission of the municipality in which you want to operate. While unlike the Medical Marihuana Facilities Licensing Act (MMFLA), which requires a municipality to expressly opt-in to the MMFLA and so allows a municipality to passively exclude medical cannabis businesses by simply doing nothing, MRTMA presumably requires action on the part of a municipality to prohibit these businesses.

We say “presumably” because the Marijuana Regulatory Agency (MRA), the state administrative agency in charge of regulating and administering MRTMA, has not yet published the set of emergency rules designed to regulate the commercial recreational industry. We are therefore cautiously operating on a lot of presumptions at the moment. It is also presumed that a cannabis microbusiness license will be somewhat easier to get than the medical cannabis facilities licenses have been, thanks to the language in MRTMA that prohibits any licensing requirements that are “unreasonably impracticable,” which basically means really hard or really expensive.

“One presumption we should not be making, however, is that communities will welcome cannabis microbusinesses with open arms, even now that cannabis is legal.”

 

One presumption we should not be making, however, is that communities will welcome cannabis microbusinesses with open arms, even now that cannabis is legal. Although the early rush of hundreds of municipalities to exclude recreational cannabis businesses was generally a preemptive response to the opt-out requirement, the sheer speed and volume of the opt-outs is an early indicator that these businesses will not be an easy sell. However, what distinguishes the cannabis microbusiness from the rest of the licenses could be its best feature and its most attractive selling point.

You can only own one. You also cannot own anything else, so if you own a cannabis microbusiness, you cannot also own a grow, processor or provisioning center. This means that the cannabis microbusiness will be the traditional mom-and-pop, locally-owned business many Michigan residents originally wanted to operate, and the local economic model contemplated by many of the founders of the Michigan cannabis industry. This means that cannabis microbusinesses are not going to be acquisitions targets for “Big Canna,” or big anything, and that they cannot be easily franchised.

For the first two years, you have to be a resident of the state of Michigan in order to hold a cannabis microbusiness license. While it is possible that the MRTMA drafters meant for this to restrict ownership to Michiganders, the definition of “person” in the Act includes corporations and limited liability companies, so it is presumed that a non-Michigan resident can open a Michigan company and qualify for ownership. However, we have yet to see the emergency rules, which are due out sometime in June according to the MRA, so there may be additional clarification when the regulations are published.

In short, communities may be more welcoming of these microbusinesses specifically because they will be small and locally-owned, and they are designed to stay that way. Together with the fact that they are sure to be less expensive to license and open, and owners will probably not have to compete against larger cannabis operators for these locations, no wonder the buzz around them is growing.

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