Michigan’s state slogan is “Great Lakes, Great Times.” But the great times end when trying to get a marijuana business licensed in the Wolverine State. Rather, it’s a long and tedious two-step process where one misstep gets an application thrown out.
Michigan legalized medical use in 2008 through the Michigan Compassionate Care Initiative. Just over a decade later, the state legalized adult-use marijuana sales. The Michigan Regulation and Taxation of Marihuana Act (MRTMA) established the Marihuana Regulatory Agency, within the Department of Licensing and Regulatory Affairs (LARA), to regulate marijuana licenses and adult-use businesses.
To gain a license, applicants must pass prequalification requirements, then submit a proposed security plan that shows how their business will meet minimum security requirements.
“The Michigan regulatory model is a lot like the California model. Licensing requires a detailed background screening, and local and state approval,” says Charlena Berry, a principal consultant for Cannabis Business Growth, where she has prepared many license applications for prospective cannabis businesses in Michigan.
However, approvals at the city and state level come only after Michigan applicants prequalify, and that’s where things get tricky.
“The prequalification stage is extraordinarily robust and difficult to pass through,” Berry says.
The state requires every applicant to share a year’s worth of tax returns, disclose past criminal histories, and submit two years of financial documents. “What’s unique about Michigan is your spouses have to do the same—even if they are not involved in the business,” Berry adds.
One misstep in prequalification will get the application thrown out. The state initially denied former Lions wide receiver Calvin Johnson’s application for a medical marijuana facility over unpaid parking tickets in Atlanta. Johnson appealed and eventually received a license, but Berry says the situation reflects how difficult it is to pass muster during prequalification.
“I start every Michigan licensing process with a background check,” Berry says. “Because if we do not include something, the state views the applicants as liars and irresponsible, and will not prequalify them.”
Michigan also sets deep capitalization requirements. For a 1,500-plant Class A license, for example, applicants must show they are capitalized up to $500,000, with at least 25% of that in cash. They also need a CPA to attest to their financial stability.
Step 2: The Application
After prequalification, applicants can finally apply for a license 60 days out from an inspection of their proposed facility.
The application must include a certificate of occupancy from the city, proof of insurance, and a business plan that features a technology plan, a marketing plan, a staffing plan, and an inventory and recordkeeping plan. “These things must be written in a way that meets state requirements. There are rules around inventory and recordkeeping for the state and for local municipalities,” Berry says.
Retail stores, large-scale growers, processors, and transporters must be owned by a Michigan medical marijuana company at first. The law mandates that only Michigan business owners with a medical marijuana provisioning center, grow center, processing, or secure transporter license can apply for a recreational license.
“There are very few adult-use businesses that are legal in Michigan,” Berry says. “Few retailers have gotten to the finish line on adult-use cannabis. That’s because the best way to access marijuana in Michigan is through medical retailers. There’s also the time it takes for businesses to migrate from a medical establishment to an adult-use business. And just because a city has approved medical marijuana, doesn’t mean it has acted in for adult-use marijuana.”
Security Tech Mandates
Security systems fall under the applicant’s technology plan. The State of Michigan mandates security cameras and alarm systems, but not access control.
Every marijuana licensee must keep the facility securely locked. The mandate requires locking interior rooms, windows, points of entry, and exits with commercial-grade, non-residential door locks that meet local fire code and Michigan building codes.
Though the requirements do not specifically mention access control systems using a key fob, card, or biometric access system, Berry includes these systems in every application. “The state requires you to record and track the movement of people within the facility,” she says, noting access control systems simplify meeting this mandate.
Berry adds that with a keyed system, one rogue employee requires owners to rekey every lock. But “access control allows them to quickly delete a person’s credentials,” she says. “In the long run, you will save money with a centrally controlled access control system versus trying to keep up with tracking every physical key to every room.”
Michigan rules also call for an alarm system. However, that’s as specific as the recommendations get. Berry advises following the basics of good security, which includes motion sensors inside and outside the facility, glass-break sensors, and door sensors. “Adequate lighting and security cameras should deter an individual, but if they do not, sensors will notify you if anyone gets in,” Berry says.
The state is more specific for video cameras, stating, “A licensee shall have a video surveillance system that, at a minimum, comprises digital or network video recorders; cameras capable of meeting the recording requirements, in the rule; video monitors; digital archiving devices; and a color printer capable of delivering still photos.”
The state requires permanently mounted cameras to record continuously at a minimum of 720p resolution and storing time- and date-stamped footage for a minimum of 30 days. Michigan regulations also require that the video surveillance system record the following:
- Areas where workers weigh, pack, store, load, and unload for transportation, prepare, or move marijuana products within the business.
- Limited access areas and security rooms, with transfers between rooms being recorded.
- Areas storing a surveillance system storage device with not less than one camera recording the access points to the secured surveillance recording areas.
- Entrances and exits to the building from indoor and outdoor vantage points.
- The areas of entrance and exit between marijuana establishments of the same location if applicable, including any transfers between marijuana establishments.
- Point-of-sale areas where the business sells or displays marijuana products.
- Places where the business destroys marijuana and marijuana products.
Business operators must position security cameras where they can clearly record activity within 20 feet of all points of entry and exits. Cameras must allow for the clear and certain identification of any person, including facial features, and activities, including sales or transfers, in all areas that require recording. The state recommends installing sufficient lighting to ensure clear identification in outdoor spaces.
Though Michigan does not require security cameras in every room, Berry advises recording every space, except for bathrooms. “Just record the whole facility, then you don’t have any doubt of compliance. And the cost of a few extra cameras is far less than the cost of compliance issues or theft,” she says.
Jumping through Michigan’s regulatory hoops may seem a little tougher than other states, but the security the rules provide makes sense. The laws protect people, products, and profits. “The state may not regulate Walmart and other retail businesses the same way, but even those businesses put measures in place to protect their products,” Berry says.
About the author: Patrick Chown is the owner and president of security system integrator, Safe and Sound Security. Safe and Sound Security offers security system installation, cannabis security plans, and cannabis security consulting to cannabis companies.
