The Michigan Cannabis Microbusiness License is a vital part of Michigan’s cannabis industry, allowing business operators to grow, process, and sell cannabis plants. These operations can cultivate and create extracts and edibles out of their own product.
Michigan’s Microbusiness License is a highly coveted license, and there’s no guarantee that an applicant will be approved. The state has strict regulations in place regarding the cannabis industry, and only those businesses that are able to meet all the requirements will be considered for a license.
Keep reading to learn more about microbusiness licensure in MI.
Need help obtaining a Cannabis Microbusiness License in Michigan? Contact us now to speak with one of our experts and take the first step to getting your license today.
What is a Marijuana Microbusiness?
Michigan’s implementation of Proposition one made recreational marijuana legal and formed new types of cannabis company licenses in the state. Even though most adult-use cannabis licenses demand applicants initially obtain a Michigan medical marijuana license, the Marijuana Microbusiness license does not.
A Michigan Marijuana Microbusiness is a business that can grow, process, and sell cannabis plants and manufacture products. They are allowed to cultivate up to 150 plants and produce extracts. But, they cannot sell to other state-licensed businesses; they can only sell marijuana and products directly to customers who are at least 21 years of age.
To put it simply: A Marijuana Microbusiness is like a small-scale cannabis farm and factory in one. They’re responsible for every stage of the weed growing and selling process, from cultivation to manufacturing to distribution.
The Marijuana Microbusiness license was designed for entrepreneurs who want to enter the legal Michigan cannabis industry, but don’t have the capital to invest in a large-scale operation. These types of businesses are allowed to stay small and keep their overhead costs low, which makes them more accessible to a wider range of people.
How Do I Get a Microbusiness License in Michigan?
To obtain a Cannabis Microbusiness License in Michigan, applicants must first submit an Application for Pre-Qualification to the Michigan Department of Licensing and Regulatory Affairs (LARA). This application will determine if the applicant is eligible to receive a license.
If the applicant is found to be eligible, they will then need to submit an Application for a Microbusiness License, which must include the following, minimally speaking:
- A non-refundable application fee of $6,000
- A detailed business plan
- Proof of legal ability to occupy the proposed premises
- Evidence of financial responsibility
Once the application is submitted, LARA will review it and make a determination on whether or not to issue the license.
It’s worth noting that the Michigan Cannabis Microbusiness License is a highly coveted license, and there’s no assurance a candidate will be granted one. The cannabis sector has stringent rules in place, and only firms that can satisfy all of them will be considered for a license.
Interested in getting a Microbusiness License in Michigan? Contact us now to learn how we make the process as straightforward as possible while increasing your chances of approval.
Michigan Microbusiness License Requirements
For those interested in obtaining a microbusiness license, you’ll have some requirements to meet. These licenses are initially only for Michigan residents. Furthermore, licensees aren’t allowed to get other recreational cannabis licenses.
As a microbusiness operator, you’ll also be forbidden from selling to other licensees; you’re solely allowed to sell to consumers at least 21 years of age.
Microbusiness License Michigan Cost
The cost of a Microbusiness License in Michigan goes well beyond the expense of obtaining a license; there’s also the cost of compliance. State regulators are diligent about making sure that all microbusinesses are in full compliance with the law.
To ensure that your business is up to snuff, you’ll need to hire a consultant to help you with the process. A good consultant will be able to guide you through the application process and ensure that your business is in compliance with all state regulations.
Furthermore, the cost of running a microbusiness can include many other expenses. Costs like cultivation buildouts, retail spaces, security, wages and staff, marketing, utilities, legal and accounting services, product supplies, testing, and other expenses all play their role while operating a microbusiness in Michigan.
Michigan Marijuana Microbusiness FAQ
I’ve heard that marijuana businesses cannot deduct any expenses for tax purposes. Is this factual?
All businesses, not only microbusinesses that work with marijuana, have to adhere to Internal Revenue Code $280E. That IRS code prevents those businesses from being able to deduct certain expenses for federal income taxes. The only exception is their cost of goods sold – aka, the costs that go into inventory.
After the inventory is sold and gone, though, the cost associated with it can be deducted at that point. However, other expenses related to business operations, such as team salaries, are not yet deductible under federal tax law. Our cannabis-specific CPAs can help you determine methods for reducing your tax risks and liabilities, effectively minimizing your exposure as much as possible given current restrictions.
Is banking available for marijuana microbusinesses?
Our firm has established relationships with cannabis-friendly banks in Michigan that are okay with marijuana-based businesses. In the majority of instances, we can help set up a dependable banking solution for our clients.
Can I start a microbusiness at my residence?
No, most of the time, this is not an option. A microbusiness has to perform its activities in a legally zoned location as dictated by the local government. It must also comply with commercial health and fire safety regulations, along with some other rules.
What are the fees for a marijuana microbusiness?
Applicants interested in getting a marijuana microbusiness license in Michigan have to pay $6,000 as an initial application fee. If the applicant’s business is approved and granted a license, they’ll have to pay a regulatory fee of $8,000.
Does my municipality have to “opt in” to allow microbusinesses?
The adult use rules for Michigan operations do not say anything about requiring a municipality to “opt-in” to permit marijuana business operations, as the medical usage regulations do. Rather, a municipality must “opt-out” of letting cannabis business activities occur within their area. However, before committing to operate in that city, it’s important to check if there’s any official municipal legislation that aims to allow adult use marijuana company operations – otherwise, you may be leaving it to chance as to whether the municipality will or won’t opt out later.
How much does it cost to start a marijuana microbusiness?
Besides the licensing and regulatory costs, a microbusiness in the cannabis industry will need to plan for expenses associated with processing, retail space areas, growth, marketing, equipment, security, legal and accounting services, and wages and staff, utilities,. Running a legal marijuana company necessitates that entrepreneurs consider numerous variables. Feel free to contact us and speak with one of our cannabis CPAs for further information about how we can help focus your budget on your operation’s success.
What information do I need to disclose in order to apply for a microbusiness license?
You’ll need several pieces of information to finish an application for a microbusiness license in Michigan. For all applicants, a complete background check and overview of financial history from the last year is required.
Do you have to be a Michigan resident to apply for a marijuana microbusiness license?
Yes. Anyone applying for a cannabis microbusiness license must be a resident of Michigan at the time they submit their application.
Is there a minimum capitalization amount required to apply for a marijuana microbusiness license?
No, adult-use marijuana businesses don’t have to meet any capitalization requirements – this, of course, includes microbusinesses. However, applicants should budget and save enough money beforehand to adequately handle all costs involved in acquiring the license and operating the business.
What can I do with a marijuana microbusiness?
A single marijuana microbusiness is legally allowed to cultivate up to 150 cannabis plants at a time. These plants can also be processed and sold as products by a microenterprise.
Can I buy inventory from other marijuana businesses as a microbusiness?
Unfortunately, cannabis microbusinesses may only produce, utilize, and distribute their own products. Microbusinesses are not permitted to trade with other licensees.
What taxes do marijuana microbusinesses pay?
A marijuana microbusiness will have to pay a 6% sales tax and an additional 10% excise tax on their total sales. Furthermore, these operations are subject to federal and state income taxes on taxable income, just like any other business.
