Moving Forward Examining the new Michigan microbusiness license

A cannabis microbusiness is one of the six adult recreational use licenses created by 2018’s Proposition 1, known in its statutory form as the Michigan Regulation and Taxation of Marihuana Act (MRTMA). It is without question the license with the most interest, perhaps due in part to its novelty, but primarily due to its appeal as the answer to the hopes of small industry startups. It is, in other words, the true mom-and-pop local shop that many cannabis community members and activists had originally envisioned a decade ago.

Part of the problem with the licenses created under the 2016 Medical Marihuana Facilities Licensing Act (MMFLA) is that the capitalization requirements established in the administrative rules create a high monetary threshold that most new businesses do not have to meet, and a threshold many would-be applicants cannot hope to meet. The emergency rules promulgated under MRTMA contain no capitalization requirement, and therefore free applicants from the burdensome world of private lending. The microbusiness license is also the only recreational adult use license other than a safety compliance facility that does not require an MMFLA license as a condition for application. With these two barriers out of the way, the prospective field of qualified applicants is substantially widened, and cannabis business licenses feel much more within the reach of working-and middle-class Michiganders.

A cannabis microbusiness is a commercial cannabis facility that permits the cultivation of up to 150 plants, the processing of the cannabis from those plants, and the retail sale of those cannabis products all in one location. It is the cannabis equivalent of a microbrewery, and with many of the same restrictions. A cannabis microbusiness operator may not hold any other cannabis licenses or sell the cannabis products it manufacturers anywhere else. Moreover, for at least the first year, and potentially for the first two years, of the program due to start Nov. 1, a microbusiness owner cannot hold another microbusiness license.

The limitations on these businesses, seen in a prudential light, is why they are so attractive to their fans. No big out-of-state or international publicly-traded company will want one, and the competition for these licenses and the real estate they occupy will be on a significantly more even playing field, and therefore more inclusive.

“The emergency rules promulgated under MRTMA contain no capitalization requirement, and therefore free applicants from the burdensome world of private lending.”

 

No capitalization requirements, no MMFLA prerequisite, no competition from “big cannabis”—that’s  the good news. The less good news is that most of Michigan’s municipalities have opted out or will opt out of MRTMA, primarily due to the generalized community anxiety surrounding recreational cannabis retail businesses, aided in no small part by a recent misinformation campaign designed to frighten local governments into believing that MRTMA requires them to adopt an “all-or-nothing” position (stay tuned on this issue).

Even more problematic is where to locate these businesses. Microbreweries can be found throughout Michigan and in many shopping centers, but unlike beer, cannabis is fragrant stuff. Most commercial grow facilities may have excellent filtration, but once you start harvesting, processing and selling cannabis, the odor will be hard, if not impossible, to contain. For my part, I’d much rather have the scent of cannabis wafting through the air than the smell of, well, pick any fast food chain. That being said, most communities will want to locate these facilities out of commercial areas, and more than likely into the more distressed, light or heavy industrial parts of town, limiting their retail foot traffic.

Cannabis also remains a very expensive, highly risky, federally illegal business with little established infrastructure and a miserably high tax rate. In other words, if you’ve never owned a business, this is not where you want to start, even if this is the only place you can.

But start they will, despite anything I, or any other seasoned industry insider, will say. This is the license for the little guy, the quintessential neighborhood cannabis café, the classic mom-and-pop. These are the businesses that the drafters and core supporters of the 2008 Medical Marihuana Act intended, and they are well worth the attention of Michigan’s municipalities, because the owners of these businesses will assuredly be operators and community me

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