How to Open a Dispensary in Michigan: Step-By-Step 2024 Guide

Michigan dethrones California as the top cannabis market in the US, selling over $24.2 million in cannabis products as of May. Forecasts say the Wolverine state’s cannabis market will balloon to $4 billion in 2028. 

Since Michigan became the 10th state to legalize recreational cannabis, the number of dispensaries has grown to 994. This puts Michigan in the fourth spot for the largest number of cannabis stores across states. 

If you’re mulling applying for a Michigan dispensary license or putting up a store in general, now’s the best time to see how the process goes. Read here a detailed step-by-step guide on how to open a dispensary in Michigan. 

The Detailed Steps of Opening a Dispensary in Michigan

Before proceeding, you must know whether you’re eligible to own a cannabis business in Michigan. Once you check all the following minimum requirements, you may continue with drafting a business plan:

• You must be at least 21 years old.
• You have not committed a felony for the last ten years.
• You have no record of any misdemeanors involving controlled substances in the last five years. 
• You have not violated any local ordinance for the last five years.
• You have no history of issues with law enforcement or legal violence (traffic violations are exempted).

Step 1. Draft A Business Plan

A business plan is a blueprint for determining your company’s character, goals, and how you intend to achieve them. You may draft your business plan using the templates online. However, since it needs to be submitted for the licensing application, input from consultants, co-owners, and professionals must be obtained during the drafting process. 

Here are the sections of a business plan:

• Executive summary (includes information about target customers, solves what problems, differentiating features, etc.)
• Company description (includes mission, history, goals, etc.)
• The ownership and employee hierarchy of the company
• Market research and potential
• Competitive analysis
• Product and service description
• Inventory sourcing plan
• Diversity and equity plans
• Physical location
• Safety and security plan
• Technology Plan
• Marketing and sales strategies
• Financial plan and budget

You don’t have to add or follow the sections in order rigidly. Customize your business plan according to the type of cannabis business you have in mind. 

Step 2. Establish Your Business Entity

If you don’t have a business entity yet, it’s time to apply for one. A business entity is one of the most basic requirements in signing a lease, hiring staff, etc. So, you need to secure one as soon as you have a lawyer to handle the technicalities and actual filing. 

After successfully filing a cannabis business entity in Michigan, you will need to secure a business tax ID, business bank account, and business insurance. 

Here’s a guide from the State of Michigan’s Licensing and Regulatory Affairs to get a sense of the type of business entity you want.

Step 3. Secure Your Location

Dispensaries are unique stores that require extra steps. Because Michigan is an “opt-out” state, not all municipalities and areas allow them. Even if a jurisdiction allows cannabis businesses to flourish in the area, there would be specific regulations, such as zoning rules, to abide by. 

As a general zoning rule, any Michigan-based dispensary must not be within 1000 feet of schools, childcare centers, other cannabis stores, liquor stores, or zones tagged “drug-free.” Dispensaries in residential areas are also rare since owners need to have written approval from the district. 

You don’t need to secure a commercial lease in your chosen location immediately (at least for the pre-qualification phase of licensing). However, you need to have a location solidified before phase 2, the actual Establishment Licensing application. 

Step 4. Ascertain the Costs

As your business plan becomes clearer, you can now put together a reasonable budget for your store. Here are the huge costs that will take up most of your budget:

• Real Estate: Renovation expenses, ongoing rent, mortgage, and downpayment. 
• Licensing: Application fee ($3,000), licensing fee and renewal ($15,000)
• Operational cost: Utilities, freelance fees, marketing, etc. 
• Employee salary: Salary, benefits, taxes, etc.
• Hardware: Security, tech, store, furniture, etc. 
• Inventory cost: Cannabis products
• Taxes: 10% excise tax on top of 6% sales tax.

Sources suggest that the upfront cost of putting up a cannabis dispensary in Michigan is between $47,000 and $136,000. You would need around $250,000 to $1 million to maintain the business. These are rough estimates. The total cost significantly varies depending on the size of your dispensary and other variable costs, such as marketing. 

Now that you have a ballpark figure, securing the fund is the next step.

Step 5. Obtain Financing

You may feel discouraged initially, as some financial institutions can be quite cold to a weed business. However, you have several funding options available if you just search. Here are some of them:

• Self-funding: The easiest way to secure funding is if you have legally acquired cash. 
• Family and friends: Another easy way to find investors is to persuade interested family members or friends. Family-owned cannabis businesses are popular. 
• Partners: Many cannabis businesses are built upon partnerships. They can be active contributors to executive decisions or silent partners. 
• Loans: Some banks allow business loans for this type of industry.
• Private funds: This source type involves private equity, venture capital, or angel investors. You’ll get huge funds from this, but your stake in the company will be lower. 
• Crowdfunding: This type of fundraising seeks help from the public using online crowdfunding platforms. 

Step 6. Create an Accela User Account

The first step in applying for a dispensary license in Michigan is creating an Accela User Account. To do so, go to www.michigan.gov/craonline and click “Register for an Account.”

Enter your login information, and don’t forget to check the box beside “I have read and accept the above terms. Click CONTINUE once done. 

Click the button beside the type of contact you have. 

Fill out at least all of the required fields with a red asterisk. Click submit. 

You’ll be directed to this page with your login details once successful. 

Now, you can use the login details you created to log in as a main applicant in Phase 1: Pre-qualification Licensing.

Step 7. Apply for a Pre-Qualification Licensing Process

The first phase of the licensing process is the “Pre-Qualification Licensing.” In applying, you must identify whether you’re the main applicant or one of the supplemental applicants. Either way, both should apply for pre-qualification, or the business can’t proceed to phase 2. 

To differentiate, here is CRA’s definition of main and supplemental applicants:

Main Applicant

The main applicant is the business entity or sole proprietor seeking a dispensary license. He must pay a sum of non-refundable $3,000 as an application fee. 

Supplemental Applicant

A supplemental applicant doesn’t need to pay a fee to submit a pre-qualification application. Who are supplemental applicants? The nature of a supplemental applicant depends on the dispensary’s business structure. The state outlines them here:

• Limited Liability Companies
• Publicly or Privately Held Corporations
• Sole Proprietorships
• Partnerships and Limited Liability Partnerships
• Limited Partnerships and Limited Liability Limited Partnerships
• Multilevel Ownership Enterprises
• Nonprofit Corporations
• Trusts

Once you’ve determined the type of applicant you are, it’s time to collect the following documentation before applying online: 

• Attestation: Five attestations and a signed and notarized acknowledgment of these attestations. 
• Entity information: Governing docs, certificate of good standing, approval to conduct business in Michigan, certificate of assumed name, copy of organizational structure, authorizing resolution, and social equity plan. 
• Regulation documents: Copy of marihuana licenses and a summary for reasons of denial, restriction, revocation, suspension, or nonrenewal (only if applicable). 
• Tax compliance: Copy of notice of tax liability due
• Litigation documents: Any litigation documentation (only if applicable).

Here are detailed instructions on the specific type of documents needed for the following applicants:

1. Main Applicant Entity
2. Supplemental Applicant Individual Instructions 

Completing this documentation before the pre-qualification process is important because you must complete the application in its entirety. If you leave your application incomplete, you only have five days to remedy the issue. 

To submit these documents, you must log in to your Accela User Account using the login details you provided. Click either “Adult-Use Establishment Licensing” or “Medical Facility Licensing” according to the type of cannabis business you wish to erect.

Let’s say you chose “Adult-Use Establishment Licensing.” You now need to click “Create an Application.”

Once you have clicked the box before the text, “I have read and accepted the above terms,” tap “Continue Application.” You will be directed to the page where you have to select “Adult-Use Step 1: Pre-qualification Application” and check the box before your appropriate identity, which can either be:

• Entity Registration
• Sole Proprietor Registration
• Supplemental Individual Registration

After that, click “Continue Application.”

You will be directed to a page where you must fill in the fields with accurate information that applies to you. Click “Continue Application” after a page has been completed or click “Save and resume” later. 

After completing the process, wait for an email containing payment instructions for the non-refundable application fee.

Step 8. Apply for Establishment Licensing

After the main and supplemental applicants successfully achieve the pre-qualification licensing, the main applicant may now apply for phase 2, which is the establishment licensing. Here are the most important points to remember during this process:

1. During this process, CRA background checks your business details, proof of financial responsibility, municipality information, and general employee data. 
2. The CRA will inspect your physical store within 60 days of the application submission. This is why it’s important to secure this before applying. 
3. Your establishment must pass the Bureau of Fire Services (BFS) review within 60 days of submitting the complete application. 
4. Collect the following documents before the actual application process of phase 2:

• Attestations: Four attestations and a signed and notarized acknowledgment of these attestations. 
• Business specifications: A copy of the Certificate of Use and Occupancy, deed or lease agreement, proof of financial responsibility, business location plan, floor plan, business plan (includes technology, marketing, staffing, inventory, and recordkeeping plan), DBA documentation (if applicable), and Certificated of Assumed Name (if applicable. 

Log in to the same initial page where you logged in for pre-qualification licensing. Click “Adult-Use Establishment Licensing” or “Medical Facility Licensing” and click “Create Application.” After ticking the box on the disclaimer page, you will be directed to a page with different application options. 

Select “Adult-Use Step 2: License Application” and click the circle with your license type. Click “Continue Application.”

Fill the required details, attach the document, and review your information. 

Step 9. Review Michigan Dispensary Laws

Now that you’re on your way to realizing your physical store, it’s a good idea to review the current marijuana retailer rules in Michigan. This will help align your next steps better with the current laws. 

Step 10. Layout the Inside of the Dispensary

Part of the cannabis store layout process involves finding the location before designing the space. This order is a norm among dispensaries since only a few available commercial areas in Michigan allow weed businesses. 

Here’s a short list of what you need to address in your store’s interior layout:

• Your customers’ comfort as they move around your store. Do they have access to everything? Can they shop without bumping into things and people?
• Where and how will customers pay? 
• Is there a separation between in-store and online order pathways?
• How will your product be displayed without spoiling but still near enough for close inspection?
• The entrance, waiting, bathrooms, and parking space.
• Security of your store’s entrance
• Inventory space
• Staff area

Step 11. Secure Your Cannabis Store According to Michigan’s Dispensary Security Regulations

Michigan, in general, has strict cannabis commercial establishment security measures. Install the following security tools and measures to adhere to these basic rules:

1. Restricted areas should only generally allow employees. If a non-employee needs to enter, he should be accompanied by another employee. 
2. Secure locks in interior rooms, windows, entry doors, and exit doorways using commercial-grade door locks or keypad access. 
3. Exit doors should comply with the safety rules of NFPA 1, local fire codes, and Michigan building codes.
4. Alarm systems
5. Video surveillance should have a minimum resolution of 720p. 
6. Adequate room lighting.

Step 12. Hire Staff

Hire a team by following the general staffing plan you submitted during the establishment licensing application process. The roles could be:

• Store manager
• Budtenders
• Cannabis sales associates
• Security
• Inventory person
• Compliance Specialist

Step 13. Stock up on Inventory

You’ll need to find suppliers for your inventory if you’re a retailer license holder and a non-vertically integrated business. These could be cannabis farmers, wholesale sellers, distributors, and manufacturers. 

Consider the following in your search for suppliers:

• The cannabis products they offer
• Quality of products
• Fulfillment/logistical system
• Prices (preferably in wholesale mode)
• COA
• Legality of their operation
• Reputation

Step 14. Purchase the Technology and Other Hardware

You have more freedom regarding what technologies and hardware to buy, except those the government requires. Your overall goal in buying them should be to elevate the customer experience, hasten the process, and be compliant. 

• Internet
• Printers
• TV
• Cash drawers
• Computers
• Barcode scanners
• Kiosks
• Customer relationship management software
• Payroll tools
• Accounting tools
• Marketing tools like SEO
• Website

Step 15. Device a Marketing Plan

Marketing will spread the word about your business. A dedicated marketing team will prevent you from stagnating and, instead, scale. Hire a team to work on the following tasks and continue improving them:

• Functional in-store or online retail store
• Social media presence
• Promotional tactics like loyalty programs, seasonal discounts, etc.

Step 16. Prepare for Opening Day

Congratulations! You have completed the process of legitimizing your business, establishing a strong brand image, and implementing a functional system, and are now preparing to open your store to the public. 

Here are some tips to make the opening day extra awesome. 

• Offer amazing deals
• Throw in fun activities
• Give free tees and other merchandise
• Announce the day beforehand on social media and leverage influencers

Final Thoughts

Opening a dispensary in Michigan is a feat in itself. By following the steps above, you’re one step ahead of your competition and have avoided many potential issues along the way. Another way to fast-track your way to success is to partner with cannabis brands with proven experience and profitability when it comes to the products they offer. 

Meet The Hemp Doctor Wholesale. Fifteen years since inception and hundreds of hemp-based cannabinoid products later, we’re stronger than ever. We would love to share our success with entrepreneurs like you. Browse through our catalogs now!

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