The cannabis industry continues to grow. As more and more states consider legalization and products like CBD and Delta-8 THC seem to fly off the shelves, the industry holds an understandable appeal. However, unlike most businesses, cannabusiness brands need to follow a few steps to get their businesses off the ground, especially in Michigan.
Between working with regulators to open a dispensary to developing your own strain of recreational marijuana, you must consider municipality and state laws surrounding legalization and understand what it means to hold a license. In addition, if you’re considering opening up a medical marijuana, CBD, or THC business in Michigan, here’s what you need to know.
Register your business.
Before you get started, you might be wondering, “is marijuana legal in Michigan?” As the 10th state to legalize marijuana plants for personal use, it’s now possible to open a cannabis brand within the state. In addition, the recreational market continues to expand, and marijuana legalization can even empower local communities.
With that in mind, the first thing you need to do is register your business. The Department of Licensing and Regulatory Affairs (LARA) is accepting applications for new cannabis businesses. You can apply for different licenses with this marijuana regulatory agency, including recreational sales businesses, medical marijuana businesses, and cannabis producers.
On top of this, you’ll need to obtain a few more documents before you can open up your business to Michigan voters and buyers. These include appropriate state licenses, city or municipality land use permits, and applicable building permits for your specific business. During this step, you can consider other municipality forms and documentation that will help you open your business. Once you’ve obtained all of the correct state licenses, city or municipality licenses, and building permits, you’re ready to learn more about taxes.
Learn about your tax obligations.
Due to the Taxation of Marijuana Act, your brand is responsible for various cannabis taxes. When you’re preparing to open up a business, you can consider Michigan regulation provisions surrounding cannabis taxation and how this could impact your business. It’s also important that you understand how Michigan’s excise tax affects you financially. When you’re applying for an IRS employer identification number (EIN), you’ll need to disclose this tax on the appropriate forms. Depending on the type of business you operate, you’ll be responsible for different taxes. For instance, some cannabis provisioning brands and distribution companies are taxed differently than industrial hemp growers or medical cannabis retailers. The same applies to recreational marijuana businesses’ taxes compared to a machinery company’s tax obligations.
Forecast your ongoing obligations and requirements.
Once they’re open, marijuana businesses need to maintain compliance at the state and federal level and handle any yearly renewals. When working with your local government or municipality, you must understand how your license renewal process works. This might look different, depending on your state license or specific municipality. Again, state licenses for growers look different than state licenses for retailers and so on.
Even though your municipality and the state will both send reminders when it’s time to handle any renewals, it’s still a good idea to set internal reminders. You should also consider hiring professionals to assist you when you need to pursue certification or renew any applicable licenses. You also need to pay any required application fees, so keep that in mind as well.
Opening a cannabusiness in Michigan is a great idea. Michigan residents are ready to embrace medical and recreational marijuana. However, with the state’s legalization of marijuana, you must understand how to start your own business and research your local and state requirements. By understanding tax revenue implications, state legislature, and legal limit amounts, it’s easier to start and maintain a safe, compliant business.
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