Michigan Cannabis Startup Guide

Starting a cannabis company in Michigan? We’ve put together a state-specific guide covering everything from available license types to fees, regulations, and what you should include in a Michigan cannabis business plan. Jump to a section by clicking below, or go straight to our sample cannabis business plan.

Michigan medical and recreational cannabis business startup guide and planning banner

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Overview
Cannabis license types
Fees and other barriers to entry
Are cannabis business plans required in Michigan?
What to include in a business plan
How to research city regulations
Helpful links
Get expert help

Overview of legal cannabis in Michigan


Medical marijuana use has been legal in Michigan since 2008, but companies have only been able to get cannabis business licenses since 2016. Currently, Michigan patients with a certification from a qualifying doctor can possess up to 2.5 ounces of usable cannabis. More than 245,000 patients have registered for medical marijuana use.

Adult-use cannabis was legalized in January 2020, but the program’s implementation has been slow. For example, Detroit, the state’s largest city, applications weren’t accepted until January 2021. Under its laws, adults over 21 can posess up to 2.5 ounces of cannabis and grow up to 12 plants in their homes. It is estimated that there are as many as 1.5 million cannabis customers as of 2020, and recreational sales are expcted to to $1 billion in 2021. There are no restrictions on the types of marijuana that can be sold in the state of Michigan.

Note: Michigan’s medical program spells marijuana “marihuana” because that’s how it’s spelled in the Marihuana Tax Act of 1937. However, either of the two spellings are deemed acceptable.

Cannabis business license types


Michigan offers five main licenses for both medical and recreational cannabis: growers (aka cultivation), provisioning centers (aka dispensaries aka retailer), secure transporters, processors, and safety compliance facilities.

Growers: These businesses, also called grow operations or cultivators, grow cannabis plants indoors or outdoors. Marijuana is then either sold to a processor or “provisioning center” (dispensary).

Provisioning centers (aka dispensaries aka retailer): This is a retail storefront where cannibis products can be sold. For its medical license, Michigan refers to the retail operation as provisioning centers. Retailers must have cannabis tested and labeled before selling it to the public. They can’t sell alcohol or tobacco products, just cannabis.

Processors: Processors buy cannabis from licensed growers, then process and/or create infused products and sell them to retailers.

Secure transporters: These businesses transport marijuana between licensed medical cannabis companies (such as from a grower to a retailer). They must follow strict regulations, such as entering a route plan into Michigan’s monitoring system and carrying cannabis in sealed containers.

Testers/safety compliance: Safety compliance facilities have to be accredited. After that, they can test cannabis for CBD and THC content, fungicides, insecticides, mycotoxins, and other elements.

If you don’t want to grow, test, transport, process, or sell cannabis, you still have plenty of options. You can create an app, payment processing service, advertising and branding agency, ad network, consulting firm, pest management product, automated plant watering system, security service, packaging and labeling service, or anything else you can think of -- the sky’s the limit.

Fees and other barriers to entry


Local governments may forbid cannabis companies or certain locations, so check city and county regulations.

Application fees: All license types have to pay $6,000 in application fees, whether they are recreational or medical.

License fees:License fees for medical cannabis are based the amount of cannabis the business transfers. For growing, annual fees will range from $10,000 to $67,000; for retail, it ranges from $45,000-$67,000; for processors, it ranges from $45,000 to $67,000; and for tranporters, it ranges from $36,000-$52,000. Safety compliance facilities have no fees.

For adult use cannabis licenses, annual fees for cultivation are $3,000-$50,000, $30,000 to $50,000 for processing, and $20,000 to $30,000 for retailers, ransporters, and safety compliance facilities.

Tracking: Michigan requires cannabis businesses to use a third-party inventory control and tracking system called Metrc (more details here).

Chauffeur’s license: Businesses seeking a secure cannabis transport license have to ensure each of their drivers has a Michigan-issued chauffeur’s license.

Background check: Medical marijuana business license applicants have to undergo a background check as part of their application pre-qualification.

Do you need a cannabis business plan in Michigan?

A business plan is not required to get a medical marijuana business license in Michigan, but it will certainly make the process easier. Your application already has to include a facility plan, technology plan, marketing plan, staffing plan, and inventory and recordkeeping plan, some of which naturally overlap with a business plan. And if you plan on raising funding from investors, you definitely need a business plan.

What to include in your business plan


Here’s what a Michigan medical marijuana business plan should include:

  • Product/service description: Will you run a dispensary, grow operation, testing lab, processor, transporter, or something else? What’s unique about your business? Be as specific as you can. If you’ll open a dispensary, which strains of flower or whose manufactured products will you sell?

  • Market research: If you’re opening a dispensary, how many people live within five miles? If you’ll wholesale flower or edibles for recreational use, how many dispensaries will you sell to? If you’re creating an app, who will be the user base, and why would they use your app instead of someone else’s? Use concrete numbers verified by a third party whenever possible (instead of estimates).

  • Competitors: Who will you compete with, both directly and indirectly? What do they do well and poorly? What is their online reputation? How will you differentiate your company?

  • Management team: Summarize your qualifications and those of others on your management team. Obviously include cannabis industry experience, but it’s fine if you don’t have any. Highlight leadership skills, customer service, and business development experience in other industries.

  • Financials: You need a five-year financial forecast with projected annual revenue, operating expenses, costs, and net profit. Each year’s projected revenue should include revenue, margin, and direct costs. Forecast revenue by estimating how much product you’ll sell (based on market potential), retail price, production cost, and how much you’ll spend on payroll, rent, and other expenses. Your cash flow statement will show that you’ll have enough cash to stay operational. You might want to include a sensitivity analysis (best- and worst-case scenarios), which shows 15% higher and 15% lower revenue than your initial forecast. For marijuana cultivators, it’s important to do a sensitivity analysis based on future potentialities of the wholesale price per pound. You can also include a break-even analysis, showing which month you will be profitable.

  • Michigan-specific requirements: If not included elsewhere in your application, you should include whether you will accept excess marijuana from caregivers and patients who grow it themselves, how you will test it to ensure quality, and how you’ll distribute it to patients without selling it.

  • Investor proposal: If you are presenting your plan to investors, how are you valuing the shares? Consult with your attorney to make sure you are within state and federal compliance. Sometimes, you’ll need your attorney to draw up an offering memorandum, often called a private placement memorandum (PPM). A PPM informs potential investors on the details of the investment vehicle (your company) and potential risks associated with the investment.

How to research city regulations


Google your city or municipality name and “cannabis regulations” or “marijuana laws”. If your city or municipality’s website doesn’t have information about cannabis, check recent local news coverage or contact your city clerk, city manager, or town hall.

Helpful Links

Get expert help


Confused or overwhelmed yet? That’s normal. With such a highly regulated industry, and one with different rules in every state, starting a cannabis company can be very complex. Get help with your cannabis business plan from Masterplans, the industry leaders. We’ve worked with hundreds of cannabis entrepreneurs like yourself to create investor-ready documents and presentations so you can not only meet regulations but get the funding you need. Click below for your free, confidential consultation:

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