A Guide To Michigan’s Medical Marijuana Business Licensing

Photo Credit: Ted S. Warren

The Village of Alanson is one of the only communities in Northern Michigan that have considered the possibility of allowing any kind of medical marijuana business licensing within its boundaries.

Recently the village council decided to hold off on a final decision, giving citizens time to read the proposed licensing rules on the village website (a copy of the ordinance language is also available at petoskeynews.com). The council decided to wait until spring to revisit the potential ordinance.

Here are some details on how Michigan’s new medical marijuana licensing laws work for the state and communities.

Locals have control, state vets the applicant

The Michigan Medical Marijuana Facilities Licensing act that allows for local communities to decide if they want to allow a medical marijuana facility also puts a lot of control in the municipality’s hands, according to David Harns, a spokesperson with the Michigan Department of Licensing and Regulatory Affairs.

Without an ordinance and supporting zoning language, a medical marijuana facility can’t open its doors within a municipality.

However, a company or person can receive a pre-qualification with the state, even before any community decides to let operators do business within their jurisdiction.

“There are some strict standards in place on who qualifies. They go through a background check, capitalization requirements, and make sure that the person or the group can fulfill the strict requirements of the license. But you can do all that before you have a location,” said Jamie Lowell, a cannabis activist in Ann Arbor who assists organizations and governments understand the licensing law.

But before opening, any facility also has to match the requirements set locally within a municipality’s ordinance.

Five possible facilities allowed

Under the state law, there are five possible type of businesses that are allowed. Those include growing facility, processing facility, provisioning center, security transport and testing laboratory.

Any municipality considering the program can set the number of licenses they want to allow, and can set rules on where they can be located.

Within the growing facility category, three different size classifications can be established. Class A facilities can grow up to 500 plants, class B up to 1,000, and Class C up to 1,500 plants. Only a facility with a class C license can apply for multiple class C licenses, for a larger operation.

“You can’t stack an ‘A’ license and a ‘C’, you’re only allowed to stack a ‘C,'” Harns said.

A processing center can create and produce products from the plant. That can either consist of extracting cannabis oils or using cannabis oils in various products, said Lowell.

“If you’re making oil, or taking oil and putting it into a brownie or anything, it has to be at a licensed processing facility,” Lowell said.

A provisioning center is often understood as a dispensary. This is where a patient with a medical marijuana card would have to go to purchase the products, said Lowell. There is also a daily limit to what a patient can purchase at a provisioning center.

A testing lab is a fourth license option. It’s largely a business that would test the product for any contaminants, according to Lowell.

The final option is a transportation license. If any plant or product is moved from one business to another, the third-party transportation company is required to move it from one location to another.

The village of Alanson’s current draft ordinance would allow only three licenses in total: one for transportation, one for a processing center and one for a provisioning center.

Some kinds of licenses are allowed to co-locate, or operate at the same location. A grower, a processor and a provisioning center license are allowed to co-locate, but there are some requirements.

If a local ordinance or zoning regulation prevents it, then different licenses can’t co-locate. And each license has to have a distinct and identifiable area with designated structures, contiguous and used for the specific operating license. Each licensed operation also has to have its own exits and entrances, inventory, record keeping and if applicable, point of sale system. And if one of the licenses co-locating is a provisioning center, the entrance and exit has to be clear for any retail customer, according to the Michigan Department of Licensing and Regulatory Affairs website.


If a municipality approves a licensed provisioning center, a new 3 percent excise tax will be applied to the gross retail income on each provisioning center. The excise tax is designated to go back to the local communities that have opted in to medical marijuana sales.

Products sold are also subject to the state’s 6 percent sales tax. In a recently published bulletin from the Department of Treasury, it was determined that while food and beverages are normally exempt from sales tax, the exemption does not apply to an “edible” being sold for a medicinal purpose.

The Michigan Department of Licensing and Regulatory Affairs has a website available with answers to frequently-asked questions regarding the Medical Marijuana Facility Licensing Act.