How to Open a Cannabis Dispensary in Michigan

Recreational cannabis has taken the United States by storm in recent years. In Michigan, state-licensed sales of recreational cannabis became legal in December 2019, prompting dozens of Michigan-based professionals to consider opening their own dispensaries across the state.

However, opening a state-legal cannabis dispensary requires adequate knowledge of compliance laws, adherence to several pre-qualifications, and approval through a licensing process. 

Because owning a dispensary comes with unique statewide regulations and tax requirements, you should conduct ample research before opening your business. Unfortunately, one misstep could lead the state to shut down your dispensary altogether. 

To help you through the process, we’ve created a quick guide to opening a cannabis dispensary in Michigan. Read ahead to learn the ins and outs of this venture, what mistakes to avoid, and how MI Tax CPA can assist you along the way. 

1. Obtain a Valid License

Before you can open a cannabis dispensary in Michigan, you will need to acquire a license through a state-mandated application process. The process involves two steps: meeting several pre-qualifications and submitting your application. 

Meet Pre-Qualifications

The Michigan Department of Licensing and Regulatory Affairs requires all dispensary owners to meet the following pre-qualifications before it will consider their applications: 

• Must not have had a felony in the past ten years
• Must be 21 years or older
• Must not have any misdemeanors involving controlled substances within the past five years
• Must not have any local ordinance violations within the past five years
• Must not have any past law enforcement, legal, or traffic violations

The Board has a right to deny your license after reviewing your criminal history.

To show the Board that you meet these qualifications, you will need to fill out a Pre-Qualification Packet and submit a copy of your government-issued ID, a passport photo, and other supporting documentation. The Board will review these documents and conduct a full background check. 

You will also need to pay a $6,000 non-refundable fee when you submit your pre-qualification documents—this money will cover the background check costs and any processing fees. 

Submit Your License Application

Once the Board approves your pre-qualification documentation and background check, you will need to specify which license you wish to obtain. The state offers permits for growers, processors, provisioning centers, secure transporters, and safety compliance facilities.

If you wish to apply for more than one license, you will need to fill out an application for each one. Your application will include information such as your estimated opening date, estimated annual income, a cannabis product inventory, and a cannabis retail marketing plan. 

Unlike other states, Michigan has not limited the number of cannabis licenses it will award throughout the state. However, it has allowed local municipalities to put their own caps on the number of cannabis-associated businesses they will permit in the area. 

Be sure to check local regulations during your application process to ensure your city has not reached its dispensary limit.  

2. Choose Your Location

Choosing the right location is an essential aspect of owning a legal cannabis dispensary. Dispensaries need to be 1,000 feet away from liquor stores, other dispensaries, and drug-free areas. 

Once you find a location, you will need to obtain permission from your city before moving forward. Each municipality has its own zoning requirements regarding business locations. 

The Marijuana Regulatory Agency (MRA) in Michigan has put a Social Equity Program in place that encourages communities previously affected by marijuana prohibition to participate in the legal marijuana industry. As a result of this program, opening your dispensary in one of the designated Michigan communities may reduce your renewal and license fees. 

If you think you may need extra help navigating city permissions and finding the right location, you may want to hire a local attorney. 

3. Hire a Cannabis Accountant

Owning a cannabis dispensary looks different from owning a traditional restaurant or store, especially in terms of your business’s finances. 

Hiring an experienced CPA is an easy way to keep your finances on track and ensure that you stay aware of ever-changing fees and tax laws. CPAs can also take care of your payroll, a responsibility that many new business owners overlook.  

Because the cannabis industry is a newly legalized market, not every CPA knows how to advise these businesses adequately. As you search for the best cannabis accountant, consider these standards that your CPA should meet: 

• Has proper training in cannabis inventory accounting
• Will be able to properly advise you during tax season and help your business adhere to federal tax laws
• Is an expert about Michigan’s cannabis regulations 
• Keeps your data secure and adheres to ethical guidelines

MI Tax CPA employs knowledgeable CPAs with up-to-date training, so you can feel confident that our accountants will serve your dispensary well. 

4. Stay Compliant

Michigan law requires dispensaries to meet strict compliance laws to stay in business. A few prominent ones include the following: 

• Only sell to individuals who are 21 or older
• Only sell to individuals who present a valid ID or passport
• Do not sell food or alcohol at the dispensary
• Do not allow consumption of marijuana in the dispensary unless you have a specific license to do so

 

You should become very familiar with Michigan law before opening your dispensary to make sure you understand all issues of compliance. Be sure to read through the Marijuana Regulatory Agency’s facility and establishment information for additional details about dispensary compliance and retail store regulations. 

Contact Our Professional Dispensary Accountants Today

Opening a legal cannabis dispensary in Michigan can be a tricky process, but understanding the requirements, application process, location factors, and compliance laws above will put you ahead of the game. 

Another way to ease the process of opening your dispensary is to leave your business’s finances to knowledgeable professionals who will handle your taxes, payroll, personal data, and capital with care. MI Tax CPA has extensive experience navigating the cannabis industry, and you can trust our accountants to give your business the best chance of financial success. 

Call MI Tax CPA today for a free consultation.