The Future of Michigan’s Marijuana Industry

More than 272,000 people hold a medical marijuana card in Michigan. That number is the second highest in the country, only passed by California. With that size of a client base, many are looking to Michigan as an exciting new market for cannabis, especially now that the question of legalization is on the table. 

In November 2017, the Coalition to Regulate Marijuana Like Alcohol began a petition to ensure a spot for a legalization question on the impending general election ballot in November 2018, requiring a minimum of 252,523 signatures. They flew past that goal and submitted an estimated 363,000 signatures—a positive sign for the fate of legalizing marijuana. 

However, the fight this year won’t be easy. Many groups have already come out against the idea, some of which include the Committee to Keep Pot Out of Neighborhoods and Schools, and Healthy and Productive Michigan. The pro-marijuana campaign will also need heavy funding and strong backing from local organizations. 

As of now, the supporting campaign is supported by several national and local advocacy organizations, including the ACLU of Michigan, the Drug Policy Alliance, the Marijuana Policy Project, the National Cannabis Industry Association, the National Patients’ Rights Association, Michigan NORML (National Organization for the Reform of Marijuana Laws) and MI Legalize.

If the initiative is passed this November, it would:

  • Legalize personal possession, cultivation and use of limited amounts of cannabis for adults 21 and older.
  • License marijuana businesses that cultivate, process, test, transport and sell marijuana.
  • Legalize the cultivation of industrial hemp.
  • Create proper testing and safety regulations for retail marijuana.

According to a recent poll of Michigan voters conducted by the Glengariff Group and commissioned by WDIV-TV and The Detroit News, 56.6 percent of voters say marijuana should be legalized in Michigan (36.7 percent oppose, and 6.7 percent are undecided). The poll also shows that voter party affiliation plays an influential part:

Party

Support

Oppose

Strong Democrat

71.5%

24.3%

Lean Democrat

67.0%

24.9%

Independent

51.1%

41.3%

Lean Republican

44.7%

48.4%

Strong Republican

43.5%

53.4%

The other major influencing factor for voters is whether they’ve tried marijuana before. The vote was fairly split down the middle, with 47.5 percent having tried it previously and 48.8 percent saying that have not tried it at all. 

Regulations signed into law by Gov. Rick Snyder back in December of 2016 will require a 3 percent excise tax on dispensaries’ gross sales receipts. According to the Senate Fiscal Agency, this could mean a yield of $21.3 million dollars annually in revenue for the state*. If the Michigan market is like the Colorado market (including customer buying habits and prices), the agency also estimates that the Michigan marijuana market could be worth more than $700 million dollars.

There could be even more money to be made if marijuana retail sales are subject to Michigan’s sales tax (6 percent) — totaling out to $42.7 million, plus any state and local licensing fees. Another report from ArcView Market Research** suggests that Michigan has the potential to become the third-largest state medical marijuana market by 2020. The agency also estimates $556 million in projected sales for the year 2020, which would rank Michigan behind Colorado and California.

As legislation has started to be passed and come into effect in the state, the state Department of Licensing and Regulatory Affairs (LARA) has been setting up the necessary infrastructure for additional licensing and regulation. The department will be responsible for investigating all license applicants, helping to regulate the business and implement the seed to sale tracking system.

As of today, more than 240,000 patients with medical marijuana cards are served by some 40,000 state approved caregivers, who can legally grow no more than 12 plants per patient and can serve no more than five patients each. New proposed legislation will keep these regulations in place and will then create five categories of medical marijuana licenses for growers of up to 1,500 plants, transporters, seed-to-sale tracking, testing facilities and dispensaries.

However, to officially and legally open for business, license applicants must receive approval from their local communities. Applications for licenses were made available on LARA’s website in December 2017. A $6,000 application fee must be paid to apply, and the application may be submitted through the mail, in-person at the department or online. Applicants may file for Pre-Qualification or License Qualification. 

A Pre-Qualification application means that the person applying hasn’t received approval from their local community on the location of their business, or that they have yet to secure a location. This allows LARA to keep things moving and to perform a background check while the applicant waits on approval of their location. A License Qualification application is for applicants who have already secured a location and approval from their local community for their business.

While the potential economic boon for marijuana legalization is hard to ignore, legalization is still very much up in the air. The next seven months before the general election in November later this year will be crucial in deciding Michigan’s future.

*Based on the number of patients (204,000) registered in the 2016 fiscal year

**ArcView Market Research analyzes cannabis industry trends and statistics through San Francisco-based The ArcView Group

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Kalynne McIntyre

Kalynne McIntyre

Kalynne McIntyre is a Michigan State University alum, working at M3 Group as the Digital Marketing Specialist in Downtown Lansing. Essentially, she takes client ideas and words and makes them sound great on paper (or the internet, whatever you prefer). For more writing, follow her on Twitter: @Kalynne_28

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