Michigan Cannabis Market
Adapting to a State Regulated System
Similar to Colorado, Michigan has had cannabis businesses in operation before there was a state regulated program. Now, those businesses are going through the local licensing process in order to become licensed by the state.
Michigan voters approved Proposal 1 in November 2018, legalizing adult-use marijuana across the state and authorizing the Department of Licensing and Regulatory Affairs (“LARA”) to issue business licenses. Another less publicized aspect of Prop 1 is that the law legalizes industrial hemp in Michigan and authorizes LARA to regulate the production and sale of industrial hemp and hemp-derived products.
The measure became legal on December 6, 2018, and cannabis licensing applications for adult-use businesses are now available. Until December of 2020, microbusiness and Class A Grower applicants must be residents of Michigan, while Class B and C Grower, Secure Transporter, and Retailer applicants must hold medical marijuana state operating licenses.
Entrepreneurs looking to get licensed by the state for medical marijuana and/or the adult-use program should already be in the planning stages to secure properties, develop facility design, raise capital, win local approval, and recruit key team members.
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Cannabis Business Guidance in Michigan
In the medical marijuana market, application and licensing costs will be a challenge for some existing cultivators and dispensaries, which provides an opportunity for new entrants with the financial strength to operate in a regulated market.
With no statewide limits on the number of licenses, the largest medical patient base in the U.S., and the addition of an adult-use market, Michigan is brimming with opportunities for new business development.
Market Conditions in Michigan
Michigan already has the largest medical patient base in the U.S. In fact, the patient base is two times the patient count that Colorado had before medical was legalized in 2010. With more than 283,000 registered patients, rapid growth, and good qualifying conditions for medical patients, entrepreneurs and business operators face strong demand. Positive market conditions are bolstered by a diverse population and need for economic infusion.
Strong growth projections are tempered by heavy business regulations, strict operating procedures, and professional staffing requirements. Risks include local zoning laws, changes to local regulations, and additional testing requirements that can suddenly put an existing operation out of business if not properly addressed.
Michigan Cannabis Industry Projections
Registered medical marijuana patients (2019)
Compounded annual growth rate
Source: "The State of Legal Marijuana Markets" by Arcview Market Research/BDS Analytics, 7th Edition.
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