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14 things to know if you want to start a marijuana business in Michigan

Cultivation Specialist Sara Levin trims plants at Yerba Buena farm, located about an outside of Portland, Oregon Sept. 18, 2018. (Tanya Moutzalias | MLive.com)

Michigan is four months away from licensing recreational marijuana businesses and opening a new chapter in the state’s cannabis industry.

Emergency rules were released this month by state officials to ensure that they meet a December deadline to launch the industry — or risk losing control.

The 64-page document includes details for how the recreational marijuana industry will function, and gives a good indication of what interested entrepreneurs should expect in terms of state scrutiny.

If you’re interested in starting a medical marijuana business, stop reading and click here to learn more about its regulations.

Here are 14 things to know if you’re interested in getting into the recreational marijuana market in Michigan:

Inside of one of Chalice Farms’ shops near the airport in Portland, Oregon Sept. 18 2018. (Tanya Moutzalias | MLive.com)

1. You need a state license to do business

A state license is necessary to operate any kind of marijuana business in Michigan.

Licensing fees start at $4,000 and top out at $40,000, depending on the type of business.

The Marijuana Regulatory Agency controls the entire state licensing process, and oversees both the upcoming recreational and existing medical marijuana markets. It’s housed in the Department of Licensing and Regulatory Affairs.

Depending on where your business is located, there may be a local license or permit from the municipality that is necessary as well.

Stoney Girl bud tender Gavin Vanaken breaks up a marijuana flower for a costumer at the Stoney Only shop just outside of Portland, Oregon Sept. 17, 2018. (Tanya Moutzalias | MLive.com)

2. There are multiple license types — and they can be combined

Each function of the industry has a different state license type. They can be combined to make one large vertically integrated company.

Here are the license types and a short description of the function of each one:

-Retailer: brick and mortar storefront sales

-Class A Grower: up to 100 plants

-Class B Grower: up to 500 plants

-Class C Grower: up to 2,000 plants

-Excess Grower: for companies with at least two medical marijuana grow licenses and up to five Class C recreational licenses that want to operate on a large scale in the recreational market.

-Microbusiness: individuals can grow up to 150 plants, process the material and sell it all at the same location

-Processor: extracting and manufacturing products from marijuana flower like oils, edibles, vape cartridges and more

-Secure Transporter: transportation company that moves products from growers to the lab, to processors and then to retail stores

-Safety Compliance Facility: testing lab to make sure products meet state standards

-Designated Consumption Establishment: a social use lounge or club

There are also additional license types for people who want to host festivals.

Marijuana flower at Yerba Buena farm, located about an outside of Portland, Oregon, Sept. 18, 2018. (Tanya Moutzalias | MLive.com)

3. License applications can be turned in starting Nov. 1

Officials with the Marijuana Regulatory Agency will begin accepting license applications Nov. 1.

Once a business turns their license in, the agency has 90 days to turn it around. If applicants don’t respond to officials’ questions or requests for more documentation within five days, their application could be denied.

Rose City Wellness, a marijuana shop in downtown Portland, Oregon Sept.18, 2018. (Tanya Moutzalias | MLive.com)

4. Retail stores will have to be owned by a medical marijuana company at first

Under state law, for the first two years of the recreational marijuana program, only business owners that hold a medical marijuana provisioning center license will be allowed to apply for a retailer license in the adult-use market.

That requirement will stay in place until November 2021.

However, officials have the option to remove that requirement in November 2020 if they deem it necessary.

Employees work to harvest marijuana plants at Green Peak Industries Research and Development Facility, located at 1669 Jolly Road in Lansing. (Jake May | MLive.com)

5. Large-scale growers will have to be owned by a medical marijuana company at first

The same prerequisite licensing requirement is in place for large-scale growers who want a Class B, Class C or an Excess Grow license.

Under state law, for the first two years of the recreational marijuana program, only business owners that hold a medical marijuana grow license will be allowed to apply for a large-scale grow license in the adult-use market.

That requirement will stay in place until November 2021.

However, officials have the option to remove that requirement in November 2020 if they deem it necessary.

A first look on a tour of the Green Peak Industries Headquarters at Harvest Park in Windsor Township. (Jake May | MLive.com)

6. Processors will have to be owned by a medical marijuana company at first

The same prerequisite licensing requirement is in place for processors.

Under state law, for the first two years of the recreational marijuana program, only business owners that hold a medical marijuana processing license will be allowed to apply for a processing license in the adult-use market.

That requirement will stay in place until November 2021.

However, officials have the option to remove that requirement in November 2020 if they deem it necessary.

Marijuana plants fill the Flower Room at the Research and Development Facility for Green Peak Innovations on Jolly Road on Tuesday, Dec. 11, 2018 in Lansing. (Kaiti Sullivan | MLive.com)

7. Transporters will have to be owned by a medical marijuana company at first

The same prerequisite licensing requirement is in place for secure transporting companies.

Under state law, for the first two years of the recreational marijuana program, only business owners that hold a medical marijuana secure transporter license will be allowed to apply for a secure transporter license in the adult-use market.

That requirement will stay in place until November 2021.

However, officials have the option to remove that requirement in November 2020 if they deem it necessary.

Green Oasis owner Tony Butler shows a form to Chris Kniffen, of North Branch, he has patients fill out to keep track of their medication at his medical marijuana dispensary Green Oasis in Forest Township. (Ryan Garza | The Flint Journal)

8. Only Michigan residents can start a small business at first

Prospective small business owners who want to grow on a small scale with a Class A grow license or start a microbusiness don’t have to hold any medical marijuana license.

But they do have to be Michigan residents, for the first two years of the program.

That requirement will stay in place until November 2021.

However, officials have the option to remove that requirement in November 2020 if they deem it necessary.

14 things to know if you want to start a marijuana business in Michigan Cultivation Specialist Sara Levin trims plants at Yerba Buena farm, located about an outside of Portland, Oregon Sept. 18,

Guide to Starting a Commercial Cannabis Grow Operation

With total sales in Washington State reaching $1 billion since recreational cannabis was legalized in 2014, entrepreneurs from all around the world are considering an investment in American recreational cannabis production. From first-time business owners looking to capitalize on a new market to larger institutions and established organizations establishing a foothold pre-federal legalization, there’s plenty of opportunity for intrepid business ventures within the recreational cannabis market going forward. This is your guide to starting a commercial cannabis grow operation.

Frequently Asked Questions

We have compiled a list of frequently asked questions to better help guide inquiries for starting a commercial cannabis grow operation. We recommend reading the answers to our FAQs before proceeding to read the guide below.

What service does WeatherPort Shelter Systems provide?
Do you provide consulting services if I want to start a commercial cannabis business?
Can you help me with drafting a cultivation operations plan?
Where do I obtain a cannabis cultivation or growers license?
Do you sell cannabis seeds or cannabis plants?
What is the price for a WeatherPort GrowPort?
Can I add my own grow lights and horizontal air flow fans (HAF fans), wet wall system, etc?
Can I invest in WeatherPort Shelter Systems?

Basic Information

As with any new venture, getting started in the cannabis industry requires one thing among all other aspects: ambition. If you’re prepared to commit the majority of your time to the cannabis industry, you’ll need to be well-versed in its history as well as current events, data, and the ever-changing political climate in order to be successful.

Cannabis Industry Education and Background

The cannabis industry is changing fast, meaning information relevant to today’s sales data, legal restrictions, and best practices may become quickly irrelevant tomorrow. Full-time research and development efforts are important to any industry, but the extent to which changes in the cannabis world are occurring requires a closer eye to current news and industry reports.

Creating a Cannabis Business Plan

Creating a cannabis business plan is slightly different from that of a traditional business or initiative. Aside from typical hurdles like financing, competitive research, marketing, operations, and structure of ownership, you’ll need to closely study the state-specific cannabis regulations and ensure your business won’t run afoul of limitations placed on growers by these new laws. We recommend you research cannabis consulting firms in your area, or contact your state’s cannabis governing agency to discuss governing laws. Furthermore, cannabis producers should consider the following:

  • Security and traceability
  • Employee training and compliance standards
  • Removal of waste products
  • Transportation and logistics for retail, packaging, and processing
  • Testing capabilities and protocols
  • Accurate description of grow facility, operations planning, and production process (including equipment, soil, and fertilizers to be used)

Choosing Grow Site and Setting Up a Grow Operation

Choosing to invest in a cannabis production facility over a retail storefront makes getting things off the ground a bit easier – prospective producers are able to utilize more remote, out-of-the-way locations with greater benefits to security, logistics, and future expansions. There are restrictions under current state laws that keep producers from opening grow facilities away from public schools, parks, transit centers, libraries, or arcades that cater to minors.

Outdoor Growing Facilities

In Washington State, outdoor cannabis production facilities must be established in an open expanse enclosed by a physical barrier or a sight obscure wall at least eight feet high. In Colorado, producers are prohibited from growing cannabis outside of a secured, enclosed location – including high fences and semi-permeable roofing.

Fortunately, the climate of the Pacific Northwest lends itself very well to outdoor cannabis production. In fact, some rural areas of Washington and Oregon with agricultural backgrounds have found cannabis to be an easy to maintain, financially lucrative cash crop. Because cannabis roots can expand exponentially, outdoor growers can reap a far greater harvest by allowing their plants to grow to 10 feet tall or higher, uninhibited by artificial lighting or ceilings. Cannabis makes an excellent cover crop, allowing ample space on the surface for smaller crops like tomatoes, carrots, and lettuce to grow with an extra layer of protection above.

If your local climate and state restrictions allow for outdoor cannabis production, you’ll be rewarded with a product that can only be achieved through Mother Nature’s guidance, but as any farmer will tell you, their livelihood lives and dies by her hand. Just as susceptible to pests, inclement weather, and drought as any other cash crop, cannabis is a fickle plant as well as a lucrative one. In such an unpredictable and burgeoning market, it’s crucial that early entrants into the cannabis industry choose caution when determining whether they want to invest in a controlled indoor production facility or a riskier endeavor outdoors.

Indoor Growing Facilities

Indoor cannabis grow facilities must be in an enclosed and secured facility with functional windows, doors, rigid or semi-rigid walls and a roof.

Running a successful commercial cannabis grow operation is an expensive challenge. While growers can maintain a higher level of control over humidity, available light, and pests in an indoor environment, maintaining proper light levels and staying as energy-efficient as possible are top priorities for commercial cannabis production operations.

Space, Basic Infrastructure, and Soil for Cannabis Production

Whether you’re a first-time grower or experienced in the art of growing cannabis, you’ll need one thing above all else: space. You can grow a handful of plants in a 5′ by 10′ grow tent, but those looking to make a splash in the cannabis industry should consider a professional cannabis grow facility to ensure top-quality product and consistency in production.

The most important consideration in evaluating a potential grow space is ensuring proper ventilation for your crops. Cannabis plants require a lot of light, which typically emit a tremendous amount of heat. Without proper ventilation and air exchange, producers risk cooking their crop or limiting yields due to excess humidity, heat, or oxygen. Greenhouse-specific HVAC systems exist for closed greenhouse schemes and help producers program hyper-accurate climate control systems to ensure the facility maintains ideal growth conditions.

As far as potting each individual plant goes, allow for at least a 5 gallon pot for each cannabis plant. Cannabis roots expand very quickly and require a lot of room, therefore, smaller receptacles will result in smaller yields. Grow bags are also widely used in the cannabis production industry, placing them on a permeable table with trays or tarps to collect water runoff.

If you choose any aspect of your cannabis grow operation more carefully than others, let it be the soil. The grow medium is an essential aspect of growing any crop, but the quality of soil can make a tremendous difference in the outcome of the final flower. You’ll also want to carefully monitor the pH levels of your soil, as cannabis plants prefer pH environments of 5.5-6.5.

While some high-end growers are switching to permeable concrete to facilitate natural water recycling, it’s not a bad idea to use wooden pallets or plastic, grated platforms as the floor of your grow tent to help with runoff or collect for recycling.

Lighting and Electrical

Costs of electricity is the number one expense facing producers and often matches or exceeds total lease costs per month during production.

Artificial lighting, dehumidification, ventilation, air conditioning, and irrigation control systems all require immense amounts of electricity, leading some growers to investigate energy-efficiency options like the following:

HPS Grow Lights vs. LED Grow Lights

There’s much debate in the world of artificial lighting for cannabis greenhouses, but studies have shown HPS – or High Pressure Sodium – lights provide a more consistent form of lighting for indoor grow facilities.

According to the Northwest Power and Conservation Council, 20-year projections on electrical use in both Washington and Colorado throughout the indoor cannabis production industry suggest an average annual usage of 185-300 megawatts. That’s equivalent to the annual electrical use of more than 200,000 homes in the United States.

That said, no forward-thinking cannabis entrepreneur should overlook energy-efficiency standards in initial constructions. An estimated 2% of Denver’s annual energy usage went toward cannabis production facilities in 2014; projections for energy usage among states nearing legalization (including California, Nevada, and Maine) are unquestionably unsustainable. An estimated 1% of the energy usage in the United States, equating to $6 billion in annual operating costs, goes toward cannabis grow facilities – legal and otherwise.

We recommend three future-proofed upgrades for cannabis production facilities of any size:

Invest in Solar

Solar energy is becoming increasingly affordable – especially at larger and more significant scales. Colorado, presumably spurred by the initial successes and yet substantial energy costs of its early recreational cannabis industry, has pledged to generate more than 30 percent of its electricity from reusable and renewable sources by 2020.

In cannabis-laden Boulder, Colorado, the city has implemented a licensing solution that requires growers to use energy monitoring devices as well as paying a fee for carbon emissions, adopting renewable energy sources, or purchasing energy credits. And it’s been predicted that the cannabis legalization movement will help spur innovation and more widespread adoption of energy-efficiency solutions in general.

Recycle Water and Collect Rainwater

Already considered a success in achieving water-saving status in the UK brewing industry, some cannabis producers are investing in closed-circuit desalination (CCD), reverse osmosis water systems. At the same time as purifying incoming municipal water sources, these CCD systems can recover as much as 97% of wastewater, therefore reducing water demand and saving in disposal fees.

Smaller producers in rainy climates such as Oregon and Washington are investing in rainwater collection and storage capabilities to save on irrigation costs. Because a single cannabis plant can use as much as 22.7 liters of water per day and many cannabis outdoor growing seasons conflict with periods of low-precipitation, outdoor growers and those who rely on rainwater capture without long-term storage solutions won’t find much benefit in a recyclable water investment.

While it remains an industry on the verge of wider adoption, commercial and large-scale rainwater collection and storage efforts are already in effect around the world. More than 750 buildings in Tokyo, Japan are outfitted for long-term rainwater collection and storage for landscaping uses. Thrifty cannabis producers would do kindly to invest in early rainwater adoption solutions in order to negate irrigation costs and avoid shortages due to droughts or supply demands into the future.

Consider an Energy-Efficient Greenhouse Designed for Cannabis Production

According to Confluence Denver, producers who opt for an energy efficient greenhouse facility pay about half the costs of those who grow in a warehouse. The importance in selecting a functional, sustainable grow facility early in the life of your recreational or medical cannabis business is monumental. Recent investigations show a direct correlation between sustainable building and operations standard and profit margins on large-scale facilities, meaning larger producers and distributors may be in a more strategically beneficial market position should federal legalization occur.

There are already private projects invested in researching the most affordable methods of growing and distributing recreational cannabis in the U.S. An effort to evaluate the cannabis industry’s LED lighting requirements and help improve efficiency estimates the best and most valuable techniques for optimization are not yet public – thanks largely to the “behind closed doors” nature of the industry from a historical perspective. But early reports from first-generation growers in Colorado and Washington suggest that those invested in sustainable energy solutions benefited most from sales in the first fiscal year of legalization, whereas those growing in indoor warehouses made up about one-third of the industry’s first year of legal energy consumption.

Especially due to Colorado’s restrictions on outdoor cannabis cultivation, it’s hard to argue for any indoor grow solution outside of a covered, controlled greenhouse facility.

Security and Compliance for Cannabis Production

In a market estimated to reach between $20-35 billion by 2020, security and compliance with state regulations is critical to success in the recreational cannabis world. Producers need to account for a highly-prized cash crop, but also the cash-only nature of the current, state-level restricted recreational cannabis industry. Because employees are also at risk, investigating comprehensive and sophisticated cannabis security solutions is highly recommended for growers of every size. Some security and compliance firms boast growth rates between 300-400% since legalization in Colorado and Washington.

In Washington, state laws require the following minimum security solutions for all cannabis licensees:

  • Comprehensive identification system that includes the authorized person’s’ full legal name and photograph.
  • Non-Employee, non-customer visitors must hold and display an identification badge and log their time of arrival, departure, and purpose of visit in a record that’s preserved for a period of three years.
  • A security alarm system that covers all points of entry and perimeter windows. While not required, the state advises utilization of motion detectors, pressure switches, duress and panic buttons, and hold-up alarms.
  • A complete surveillance system that includes a storage device and internet protocol (IP) compatible. Technical requirements include a minimum resolution of 640 x 470 pixels, 10 frames a second recording rate, and 24-hour continuous operation. Furthermore, the storage device must be secured on-premises using a strong box or locked cabinet to prevent against tampering or theft. All video surveillance footage must be stored for a period of 45 days and accessible to law enforcement or state licensing officials upon request.
  • Video surveillance cameras should be positioned to achieve easy and uninhibited view of any person approaching or leaving the premises as well as within view of all POS areas, perimeter entrances/exits, grow facilities, processing rooms, and distribution areas. Furthermore, all cannabis products must be placed in a quarantined storage area for 24 hours prior to transportation to another licensed facility.
  • Cannabis producers and licensees must adhere to a strict product tracking system that ranges from seed to sale. State requirements vary between jurisdictions, but it is expected that most recreational markets to expand into the future will follow a similar example as Washington and Colorado.

Comprehensive guide & resource for starting a commercial cannabis grow operation. Learn about costs, energy use, local cannabis laws & more.