Michigan officially legalized marijuana for recreational use in 2018, but the issuance of licenses to sell recreational marijuana was still limited to dispensaries that already had a medical marijuana license. That has now changed, with Michigan lawmakers opening up the cannabis license application process to more applicants and making it easier to obtain cannabis licenses as of March 1, 2021. What effect will this have on the cannabis industry, and will it attract investors from outside the state who are looking to sell recreational marijuana in the Michigan cannabis market? Keep reading this blog to learn more.
Michigan Changes Adult-Use Cannabis Licensing Requirements
In 2008, Michigan became the 13th state to legalize cannabis for medical use. It took another decade for Michigan to legalize adult-use cannabis in 2018, then another year for adult-use cannabis to be legally sold in Michigan, and still longer for the state’s cannabis market to open up competition for adult-use cannabis licenses. Under the terms of the state’s adult-use legalization act, which allows adults to possess up to 2.5 ounces of cannabis outside their residence and up to 10 ounces inside their residence, dispensaries needed to apply for and receive a state-issued license to sell recreational cannabis. However, the pool of eligible applicants for those highly coveted licenses was limited to dispensaries that already had an active medical marijuana permit.
The Michigan Marijuana Regulatory Agency (MRA) issued a press release that addressed the recent changes to Michigan’s cannabis licensing rules. MRA executive director Andrew Brisbo stated that “business entry into the adult-use marijuana market will be more accessible for all Michiganders, as the requirement to hold a license on the medical side of the industry will be removed.”
It is important to note the requirement to first obtain a medical marijuana license is not being removed for all adult-use marijuana licenses. Rather, the new rules will apply to individuals and businesses seeking certain types of recreational cannabis licenses:
- Marijuana Retailer
- Marijuana Processor
- Class B Marijuana Grower
- Class C Marijuana Grower
- Marijuana Secure Transporter
The changes to Michigan’s cannabis license application process were approved in October 2020, but they did not go into effect until March 1, 2021. Upon implementation, the new rules immediately invalidated old versions of the cannabis application. Anyone who wants to apply for a recreational cannabis license will need to use the new application forms.
The new licensing rules were spurred by criticism of the restrictions on new licenses and a belief among some that allowing fewer licenses to legally sell adult-use cannabis in Michigan was causing the illegal cannabis market to thrive, particularly in rural areas that lacked adult-use dispensaries. In the MRA’s original advisory bulletin announcing the new cannabis licensing rules, the state’s marijuana regulatory agency said that “where the regulated market is not available to meet consumer demand, the illicit market stands ready to fill that void.” As the illegal cannabis market filled the gap, the agency noted, the city of Detroit saw a sharp rise in marijuana-related shootings and drug-related homicides.
Expansion of Adult-Use Licenses Could Boost Michigan Marijuana Market
The expansion of the cannabis licensing process is expected to open the Michigan cannabis market to new retailers. This, in turn, should provide a huge boost to the Michigan economy generally and the state’s cannabis market in particular. Although adult-use marijuana has only been legal in Michigan for a little over a year, legal cannabis sales have shown a steady upward trend on a month-to-month basis. In January 2021, adult-use sales in Michigan generated more than $67 million in revenue.
Importantly, the Michigan cannabis market will now be opened up to individuals and companies from outside the state. Under the old adult-use licensing rules, only Michigan-based class A marijuana growers or marijuana microbusinesses owned by residents of Michigan could apply for an adult-use license without already possessing a medical marijuana license.
Contact Scythian Cannabis Real Estate
Scythian Cannabis Real Estate is a privately held cannabis real estate fund that works with some of the most sophisticated cannabis operators in major markets throughout the U.S., including Colorado, North Dakota, and Pennsylvania. Scythian also assists cannabis operators that are looking to expand into new markets like Illinois, Michigan, and New Jersey. For more information, email us today.
PLEASE NOTE THAT THIS BLOG IS NEITHER AN OFFER TO SELL NOR A SOLICITATION OF AN OFFER TO BUY SECURITIES IN SCYTHIAN REAL ESTATE FUND.
