Updates:

Recreational licensing opens; what it means for you

Meet Michigan’s first recreational marijuana business license applicant

LANSING, MI -- At 12:01 a.m. Friday, Nov. 1, Michigan took the final step toward ending marijuana prohibition.

The state began accepting applications for the licensing of recreational marijuana businesses.

The first application was submitted online by 12:17 a.m. and the first business to be pre-qualified -- the first step in the two-step licensing process -- was Exclusive Brands, 3820 Varsity Drive in Ann Arbor, Marijuana Regulatory Agency spokesman David Harns said.

The application indicates the company intends to operate as a recreational marijuana grower of up to 1,500 plants, a processor and a retailer, according to Harns. The company is currently licensed under the medical marijuana law to operate in the same capacity.

As of 8:10 a.m. Friday, six businesses had submitted recreational license applications online, Harns said.

Michigan approved legalization of marijuana with 56% of the vote in November 2018 and it’s taken nearly a year for Lansing regulators to develop and roll out a licensing system.

Here are answers to some commonly asked questions regarding recreational marijuana and licensing:

When can I buy marijuana at a store?

It’ll be a while. There’s not set date but industry insiders and Marijuana Regulatory Agency spokesman David Harns say it won’t likely be until about March 2020, at the earliest. That’s because the state is requiring all recreational marijuana and byproducts come from licensed recreational growers. It’s expected to be late November before any of those exist. It will then take several months to grow, harvest, test, process and package the first crop for end users.

What will I be able to buy?

The retail stores are expected to include many of the same products currently available at medically licensed dispensaries, including: harvested marijuana, known as flower, joints, edible food products, extracts and oils.

Edible products must come in resealable, child-proof packaging with use-by or expiration dates and cannot use packaging or marketing that could be construed as enticing to children.

Can I sell marijuana from my house?

Not legally. The law allows the “giving away or otherwise transferring" of marijuana to someone who is at least 21, so long as there is no advertising or payment received.

What’s the difference between medical and recreational marijuana?

Hardly anything, physically or chemically. Medical marijuana may be cheaper, since medical marijuana isn’t subject to the 10% recreational marijuana excise tax. Customers must also have a state-issued patient or caretaker medical marijuana card to buy it.

The distinction lies with the license under which the marijuana is grown and sold, not strain or potency. The Michigan Regulatory Agency requires businesses separate medical from recreational product. A medical marijuana dispensary may not sell marijuana grown under a recreational license. A recreational only retailer, likewise, may not sell products grown under a medical license. It is possible -- and likely early on -- for a business to be licensed to grow or sell both, however they must remain separate on store shelves.

“There’s seed-to-sale tracking, so you put the (medical) tag on it, it’s going to be sold as medical,” said Robin Schneider, the executive director for the Michigan Cannabis Industry Association. “I think that that we will see some product lines branded and geared towards medicinal use, and then we may have product lines geared more toward recreational users.”

What is seed-to-sale tracking?

Any businesses that handles marijuana is required to use the state’s Metrc tracking system.

Metrc is uses serialized tags with bar codes and Radio Frequency Identification (RFID) that are attached to each plant plant and packages of processed wholesale marijuana products. It allows tracking of a plant from its origin to the retail market.

MRA spokesman Harns described it as equivalent to a “chain of custody” used by police departments to track the handling of evidence and documents. If there is any problem with a product, such as contamination, it can be quickly tracked to all possible sources.

How do I get a recreational business license?

The state’s Marijuana Regulatory Agency, a division of the Department of Licensing and Regulatory Affairs (LARA), issues all licenses. Gov. Gretchen Whitmer created the agency, which has about 125 employees, after dissolving the licensing board created by her predecessor, Gov. Rick Snyder, in March. The rules, applications forms and other information are available on the regulatory agency’s website.

The application process involves multiple steps. First, prospective business owners must pay a $6,000 application fee and complete the “pre-qualification" phase. This entails a thorough background check. The second part of the process focuses on the business type and involves involves supplying information about the operational plan, facilities, projected sales and employee info.

The business must be inspected within 60 days of submitting the completed step 2 application. If approved, the business owner must pay a licensing fee that may cost up to $40,000 for the first year.

Other than marijuana event, class A grower and micro-business licenses, all applicants must already be licensed under the medical marijuana laws. This requirement expires on Dec. 6, 2021.

Where does the money go?

There is a 10% excise tax on all recreational sales that are to be deposited in a marijuana regulation fund. The fund pays for the cost of the Marijuana Regulatory Agency activities, which has approximately 125 employees and operates out a building at 2407 N. Grand River in Lansing.

After those expenses, the law requires $20 million per year until 2022 be spent on medical trials testing marijuana health applications.

The breakdown of the remainder is: 15% to communities that allow recreational business, proportioned based on the number of micro-businesses and retailers; 15% to counties, proportioned based on the number of micro-businesses and retailers; 35% to the School Aid Fund for K-12 education and 35% to the Michigan Transportation Fund for road and bridge repair.

Why do most recreation licenses require a prior medical license?

While there is no single reason, Marijuana Regulatory Agency spokesman David Harns said it allows for a smoother licensing process, since much of the information required to obtain the recreational license is already on file.

Michigan Cannabis Industry Association Director Robin Schneider indicated there is also a political motivation.

Creators of the ballot initiative wanted support from the medical marijuana industry, whose business owners were already heavily invested in marijuana activity. The prerequisite ensured those businesses had a “head start” on competitors who might just be entering the market.

There are currently about 350 businesses that hold medical marijuana licenses. The majority are expected to also apply for recreational licenses, Schneider said.

How many recreational licenses can be issued?

There is no limit to how many may recreational licenses may be issued by the state; however, individual communities are allowed to independently ban any or all recreational business activity within their borders. So far, 1,200 communities have notified the Marijuana Regulatory Agency they have bans in place.

Despite banning commercial activity, communities can’t stop residents older than 21 from possessing, using, buying or transporting up to 2.5 ounces of marijuana, or from growing up to 12 plants and possessing up to 10 ounces in their homes.

What is a micro-business?

While there are recreational licenses for various size growers, retailers, transporters, processors, testers and event organizers, the micro-business license encompasses multiple activities.

It’s been described the microbrewery of marijuana. It’s a small business license that allows the owner to grow, process and sell up to 150 plants from a single business. It must be self contained and can’t sell or transfer product to other retailers. If you own a micro-business, you’re excluded from holding other growing, processing, testing, transporting or retailing licenses.

Any further questions about the licensing program or marijuana laws may be directed to reporter Gus Burns.

-- Gus Burns is the marijuana beat reporter for MLive. Contact him with questions, tips or comments at fburns@mlive.com or follow him on Twitter, @GusBurns. Read more from MLive about medical and recreational marijuana.

More from MLive:

Michigan to begin accepting recreational business applications

Michigan grower hopes for 30,000 pounds of marijuana per year

Legalization causes large grower to ramp up

11 things to know about recreational marijuana law