Michigan gets its first applications for recreational marijuana businesses

Kathleen Gray | Detroit Free Press

While most of the business owners who submitted their applications for recreational marijuana licenses did so online on Friday, Michael Mathews and Nicholas Maher wanted a more personal experience.

So the Grand Rapids residents drove to the offices of the Michigan Department of Licensing and Regulatory Affairs in downtown Lansing at 3 a.m. with hopes of being the first in what they thought would be a very long line to submit their application for a marijuana micro-business.

There was only one problem, though. They were at the wrong office.

By the time they figured out their mistake and made it to LARA's Marijuana Regulatory Agency offices a couple of miles away, they were the second in line to personally hand in their applications on the first day the state started accepting applications for the new recreational marijuana market.

It was still a significant moment for the budding entrepreneurs.

"We have an entrepreneurial spirit and this is something we're passionate about," said the 24-year-old Maher. "We wanted to take advantage of this as soon as we could."

The micro-business is a new category of marijuana license, which allows the owner to grow, process and sell up to 150 plants from one location.

They were bested by Calvin Mahew, a courier for the Butzel Long law firm in Detroit, who lugged nine boxes of documents into the MRA offices at 8:45 a.m. and became the first person to submit an application in person. The three clients: Crockett Cannabis, Future Green Holdings and Karvol Enterprises.

"Y'all don't smoke weed in the back do you?" Mathew joked with state employees, including several Michigan State Police officers, who quickly said NO!

After paying the $6,000 application fees for each client, Mahew was on his way.

By 8 a.m. Friday, when the Marijuana Regulatory Agency's offices opened for in-person marijuana business hopefuls, six medical marijuana businesses had already submitted applications online for nine different categories of licenses. By 5 p.m., that number had grown to 34 businesses applying for pre-qualification status and 18 of those also submitting the second step of their application, which, if approved by the state, will get them a state license.

The state won’t say what type of businesses submitted applications until they are either approved or denied. But three applicants — Exclusive Brands, a vertically integrated business with a grow operation, processing plant and retail store in Ann Arbor; Country Boy Farms in Chesaning and Agri-Med LLC, which has two medical marijuana dispensaries in Muskegon and Numica — were given preliminary approval and pre-qualified for a recreational license.

"We were aggressively working to be the first recreational applicant to get pre-qualified," said Omar Hishmeh, CEO of Executive Brands, which submitted its application at 12:17 a.m. Friday. "And we hope it's going to be a smooth transition to the recreational market."

Agri-Med is also eligible for social equity discounts, meaning that the owner has been a resident of one of 41 communities identified by the state as being especially hard-hit by the war on drugs. The eligibility translates into a 25% discount on the $6,000 application fee and on the regulatory assessment when the business is awarded a license.

These businesses, which have medical marijuana licenses, have already gone through criminal and financial background checks for their medical license, so the pre-qualification status for the recreational license was easy.

But the business owners still will have to go through a second approval process, which includes operations in a city that will allow marijuana businesses, as well as building and fire inspections. That process will take at least a few weeks, said David Harns, spokesman for the Marijuana Regulatory Agency.

More: Recreational weed probably won't be for sale in Michigan until March, April

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But given that the first pre-qualification for medical marijuana licenses from application to approval took 125 days under the old Michigan Medical Marijuana Licensing Board, a five-member politically appointed body that has since been abolished, this first turnaround taking only one hour was notable.

"That's an incredible turnaround. I think it shows the dedication of our staff and the fact that they were just as excited as I was," said Andrew Brisbo, director of the MRA. "I'm sure the applicants are equally as excited to have things moving that efficiently."

The agency now makes all licensing decisions and the wait time for licenses has been reduced significantly.

While the state started taking applications for the recreational industry, sales of marijuana for adult recreational use aren't expected to start until March or April of next year after the first crop of licensed marijuana is harvested. From seed to retail store, it takes about three to four months.

One thing that may have affected the number of applications coming in on Friday was the fact that 1,368 communities across the state have passed ordinances that prohibit marijuana businesses from locating in their towns. Many of those communities are expected to revisit those ordinances once the market starts to stabilize and allow marijuana operations.

"Many want to see either what the permanent regulations look like and others want to see what it looks like in other communities of a similar size and scale to see how it all unfolds," Brisbo said. "And then many more that just need a little more time to work through how they wanted their ordinances to work."

The applications come nearly a year after Michigan voters approved a ballot proposal in November 2018 by a 56% to 44% margin that legalized the use, possession and sale of weed to adults 21 and older. People also are allowed to grow up to 12 plants in their home for personal use.

Under the ballot proposal, the state had until Dec. 6 to come up with the rules that will govern the recreational market. Those rules were complete by July and the first licenses are expected to be issued before Thanksgiving.

Contact Kathleen Gray: 313-223-4430, kgray99@freepress.com or onTwitter @michpoligal.