Navigating Licensure of a Legal Cannabis Facility in Michigan
Take a look at the instruction booklet for the licensing process for a legal cannabis facility in Michigan and you might feel the same existential dread I felt when I first scrolled through its 123 pages. “What in God’s name have I done?” I thought to myself. “What have I gotten myself into now?”
That was June of 2019, when one of my business partner’s had just finished his prequalification, and we began planning a large-scale cultivation facility in Michigan’s Upper Peninsula (a project that was later scrapped in favor of a co-processing and co-packing facility). Now, 18+ months into our licensing journey… we are turning in Part 2 of our state application, which should initiate a state inspection, which would initiate a Bureau of Fire Safety Inspection, which would initiate our licensure.
If that process seems burdensome, it’s because it is. But it’s also part of a larger web of hurdles and checkboxes and hoops and fees that every applicant has to deal with. Here’s the (brutal) path we have to take to get here.
1: Prequalification, $6,000
This process is basically the colonoscopy of background checks. In addition to an FBI check and fingerprinting, they dig into every nook and cranny of you and your spouse’s life: businesses, finances, litigation, relationships, and beyond. Best of all, your financials must be signed off on by a CPA before submitting.
2: City Licensing: $5,450
Because or facility is based in the Land of the Free, (Kalkaska, MI, for those who don’t know), our local process was relatively easy, but of course, it came with a price tag. There’s a $450 fee just to apply, and a second, $5000 fee once approved. These fees will have to be paid again when we add our Adult Use license, and again when we add our cultivation rooms. Hurrah.
3: City Site Planning: $900 + Architectural, Engineering, and Surveying
This process is separate from the licensing application, and requires sealed and certified architectural drawings, MEP drawings, and surveying, and well as an intensive interview with city officials and the Chief of Police to go over planned operations and construction. While the meeting was a stressful one, and the architectural side came with a hefty price tag, it ended up being one of the smoother parts of the process.
4: MRA State Licensing Application: $40,000
The State Application (Part 2, after the Prequalification, basically consists of two checklists, each with 10+ forms to complete or additional documents to gather. (See image) Several of these require a notary, an insurance agent, or a local official to co-sign. I’ll describe some of the more troublesome items below.
4a: County Occupancy Permit: $75
This permit, issued on the County level, is a check on A) any new construction we are undertaking, and B) that any completed construction is safe to be occupied. Because we have two buildings, one which is operational now, with no construction work being done, and a second, with a full scale laboratory grade retrofit planned for the next six months, the process is a bit more convoluted. While this process has been relatively easy, there was one interesting caveat I will mention: when I turned in the Application of Occupancy Permit form, I was greeted with a second form, an Application for Site Plan Review. This second application, which had to be filled out by my architect, only served to initiate the review of the first application I had turned in previously. What. The. Actual. F%$#.
4b: Insurance: $20,345
Acquiring insurance was by far the most painful part of our licensing journey. Each applicant for cannabis licensing is required to have an insurance policy in place before applying. In the course of a couple weeks, I found out that a single, heavily lobbied State Congressperson, snuck a provision for MRA regulation into bill, which requires cannabis business to hold a very specialty insurance product, one which no industry standard carriers will offer, nor bundle into your property/liability insurance. This insurance policy must cover $100,000 in liability from a few extremely novel adulterants entering your cannabis product and causing bodily injury, and again, all major carriers have decided to exclude this from their policies. So, for a $5,000 price tag, and for no other reason than to check a damn box on the application, you can buy an additional policy. This ‘policy’ is such utter bullsh*t, in fact, that they will issue it to you, and sign a legal attestation for the state of Michigan stating your policy is in place, without even having your application in hand or filled out at all. “You just need to pay the fee. You can fill out the forms up to two weeks after we issue the policy. We will send the attestation same day.” On top of that, in order to purchase your policy, you have to buy a $500 membership to an ‘Agricultural Safety Association’ — and agree to pay that fee annually! And remember, this is on top of a $15,000 annual policy that actually insures the company against losses and damages. This is literally a full blown grift. A very lucrative cottage industry was created by an unscrupulous Congressperson and whosever pocket he sleeps in at night.
Ah, America, the brave.
4c: Floor Plan: Hourly Architect Fees
The Floor Plan required by the state is different in a number of ways than the site plan and architectural drawings turned into both the city and county. While I will spare you the details, the intricacies are numerous and end up pretty far outside what is considered ‘normal’ architectural planning. Of course, the plan must be signed and sealed by a licensed architect. In other words, it cost us more money.
4d: Certified Mail Letter Notification + Local Attestation: $3.45
I’ll include this not because it was difficult, only because I think it illustrates the insane redundancy of the MRA licensing structure. Two of the points to complete on the checklist are as follows: 1) Produce an attestation signed by the local government stating that you are licensed locally, and they are aware you will be moving forward with licensure by the state. You must provide a copy of this attestation with your application. 2) Send a letter via certified mail, to the local government, stating that you are licensed locally, and they are aware you will be moving forward with licensure by the state. You must provide a copy of this letter, and the certified mail receipt with your application. So basically, the local government attests to the state that you can move forward with state licensing, and you need to send the local government a letter telling them you are indeed, moving forward with state licensing.
5: MRA Facility Planning and Inspection Prep: $20,000+
The state inspection of cannabis facilities generally covers three areas: Safety, Security, and Operations. The majority of the points covered in the process apply to retrofitting the property with commercial grade security features: commercial locks, central alarm system, and an indoor/outdoor camera system with every inch of the facility covered. The inspection and review also takes into account the operational security planning your team has done, and how that planning integrates with the layout and aspects of your building. How does cannabis enter the facility? How do you move it from secure storage to a work area? Who has access to secure storage? Who has access to the cameras? How do you handle non-employee visitors? Etcetera, etcetera.
6: Fire Safety Inspection Prep: $3,600
The BFS inspection and application is meant to check only on the fire safety standards and evacuation plans for your facility. Becuase we are doing solventless extraction, the process is pretty simple for us. Still, to meet fire code, we had to add one exterior door and enhance a second with commercial locks/closure. $$$
Now that all this is done, we sit back and wait for inspections, which should take place over the next 60 days, and no doubt will bring additional headaches. Running a business by growing weed in the good ole days definitely wasn’t as easy as people made it seem, and this sure as hell isn’t either.
Feel free to reach out to me anytime at nrussell@pmc-sc.com or on IG @natesaysdoless.
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