People who want to get into the medical marijuana business in Michigan could face some serious sticker shock when they submit applications for a license.
In addition to licensing and regulatory fees they’ll face from local governments and the state, which will range from $5,000 to $57,000, they may also have to prove they have liquid assets ranging from $150,000 to $500,000 that will support that business.
The capitalization requirements are designed to make sure that the business is successful, said Andrew Brisbo, director of the state’s Bureau of Medical Marijuana Regulation.
“There are significant costs in setting up a business,” he said during a meeting of the Medical Marijuana Licensing Board in East Lansing on Tuesday. “We wanted to ensure that the businesses can thrive, but also ensure that they can stay in business and be successful.”
But some board members and many in the audience at the meeting said they feel the capitalization requirements are meant to shut out small and minority business owners from the lucrative medical marijuana business.
“It seems to me we’re placing barriers to the marketplace,” said board member David LaMontaine. “These numbers will bar minority business owners and mom and pop operations. These kinds of discussions lead to significant outside forces coming in and monopolizing this marketplace and I think that’s a mistake.”
Under the recommendation from LARA, applicants would have to show the following proof of assets when the apply for a license:
- $300,000 for a dispensary
- $150,000 for a grower of up to 500 medical marijuana plants
- $300,000 for a grower of up to 1,000 plants
- $500,000 for a grower of up to 1,500 plants
- $300,000 for a processing facility
- $200,000 for a secure transporter
- $200,000 for testing facility
In addition, a municipality can charge up to $5,000 to get approval to operate in the city. The application fee for the state is going to run between $4,000 and $8,000 depending on the license and the state regulatory assessment will cost between $10,000 and $57,000. And the license applicants would also have to prove that they were able to get insurance policies that provide at least $100,000 of coverage.
Don Bailey, a board member and retired officer with the Michigan State Police, said there’s plenty of money in the medical marijuana business to justify such steep financial requirements from the state.
“There is a jury trial going on right now where a dispensary grossed $647,000 in a 10-week period of time,” he said. “So a lot of money is being made in these dispensaries right now.”
But Christina Montague, an Ann Arbor resident who wants to apply for a license to open a dispensary, said that cost is prohibitive for someone who wants to get into the business.
“These requirements are going to cut out small-business people, which I thought this law was all about, people in rural communities and especially minorities,” she said. “I would ask you to be more realistic and more fair for the small-business people and not let millionaires take over this business.”
And Chad Morrow of Gaylord, wondered why the capitalization requirements for other businesses were either much lower or non-existent. Applicants for licenses through the Liquor Control Commission have to show $50,000 in assets, while pharmacies don’t have to show any assets.
“This is really asinine. It’s not just the high cost, but we’re talking about medical product here,” he said. “And there’s no capitalization requirement for pharmacies.”
Brisbo said the department came up with the figures when looking at the asset requirements in other states, including Arizona, which requires $150,000 in assets for dispensary; Connecticut, which requires $2 million each in assets for a growing or processing operation, and Nevada, which requires $250,000 in liquid assets for growers, processors and dispensaries.
But he also said the department is willing to be flexible before a final number is approved.
“We looked at other state requirements and known costs of acquiring a license,” he said. “We looked at the data we had and put it out there as a starting point for discussion. We want to have input and understand the concerns of interested parties and the board’s perspective on things before a final decision is made.”
Board chairman Rick Johnson said after the three hours of comments from a frustrated audience that “there appears to be a lot of work to do on this. I understand what people are saying and I’m open to looking at what works best to make sure that patients get the product.”
The licensing board could take up the issue of asset requirements for a license when it meets again in November.
Applications for medical marijuana licenses will be available from the state on Dec. 15 and the licensing board is expected to begin awarding licenses in the first quarter of 2018.
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