Marijuana Business Magazine February 2020

Marijuana Business Magazine | February 2020 108 Main measures MMJ business regulations State tax requirements Sampling of state licensing & application fees Initiated Law 1 of 2018 The state issued emergency laws governing adult-use establishments to be in place for six months starting July 2019, and they were extended for another six months in December 2019. The emergency rules indicate Michigan will issue regulations related to all aspects of business operations, including testing, packaging, labeling, security, recordkeeping, transportation, advertising, marketing, cultivation, storage and sale of marijuana. The timeline for issuance of final rules is still unknown. 10% excise tax plus 6% sales tax Application There is a nonrefundable $6,000 application fee for all license types. License Class A Grower (up to 100 plants): $4,000 initial license fee; $3,000 to $5,000 annual renewal fee based on gross weight transferred. Class B Grower (up to 500 plants): $8,000 initial license fee; $6,000 to $10,000 annual renewal fee based on gross weight transferred. Class C Grower (up to 2,000 plants): $40,000 initial license fee; $30,000 to $50,000 annual renewal fee based on gross weight transferred. Retailer: $25,000 initial license fee; $20,000 to $30,000 annual renewal fee based on gross sales receipts. Processor: $40,000 initial license fee; $30,000 to $50,000 annual renewal fee based on gross weight transferred. Testing lab (safety compliance facility): $25,000 initial license fee; $20,000 to $30,000 annual renewal fee based on number of tests completed.   What to watch As of press time, 80% of Michigan’s cities, townships and municipalities had opted out of adult-use marijuana production and sales, and only 1.9% had opted in. However, experts believe that some of the opt-outs will be temporary and that more communities will opt in once final rules are in place and the industry is better understood. To provide an initial inventory for recreational consumers, medical businesses were allowed to transfer up to 50% of inventory they had on hand for at least 30 days from the medical system to the recreational system. However, Michigan already had been plagued by medical marijuana shortages before recreational sales began, and initial reports indicate that adult-use cannabis shortages exist as well. But as more existing businesses attain recreational licenses and begin cultivating adult-use product, shortages likely will come to an end. Prices are likely to be high until supply and demand come into balance. Michigan recreational marijuana sales began Dec. 1, 2019, after the state bumped up the start date from a proposed spring 2020 launch. Initial sales were strong, netting $6.5 million in the first month and drawing visitors from neighboring states. But some challenges exist, most notably supply shortages—particularly flower—and an extremely low level of local approval, with 80% of communities statewide opting out of recreational production and sales. Despite Michigan’s challenging rollout, Marijuana Business Daily estimates recreational sales in the state will hit $1.6 billion by 2023. – Maggie Cowee Market AtA Glance | Michigan