Local municipal approval of your proposed marijuana business may be one of the most difficult hurdles you face in launching your cannabis based business. Simply because your state has approved the cultivation and sale of either medical or recreational marijuana does not guarantee you can locate close to home.
Most states require local approvals in addition to any state licensing required for your marijuana based business. For instance, in Michigan the statutory scheme provides that those municipalities who do not adopt a local ordinance and opt in are considered to have opted out of allowing cannabis based businesses within their boundaries. If a municipality in Michigan opts in but does not expressly provide for local zoning of cannabis based businesses then it is limited to industrial or agricultural zones.
If you are interested in locating in a municipality that has not yet opted in you may be in a position where you must engage in some aggressive lobbying in order to obtain your approvals. Since marihuana remains illegal under federal law and retains a historical stigma among many, you can count on the fact that you will have opposition to your proposal. One of your keys to success is to gauge the political climate in advance and determine a strategy for how hard you may need to lobby to achieve your objectives. There is a significant body of literature available to educate these local officials and to dispel the many myths you are likely to encounter from your opposition and so use these up front to your advantage. Create a professional business plan to provide the municipality up front and consider recruiting a local resident who is well respected to become associated with your enterprise to improve your chances of convincing the municipality to opt in and participate in the Michigan Medical Marihuana Facilities Licensing Act (MMFLA). Finally, we’ve all heard the saying “money talks” and so you should be prepared to educate your local community on the potential tax revenue and fees it stands to generate from accepting a marijuana based enterprise within their borders which in Michigan and in most states can be substantial.
Once you have convinced the local municipality to opt in under the MMFLA you will likely still need approval under whatever version of a local marijuana ordinance is adopted and in addition zoning and planning approvals. It may be that a municipality will not require additional approvals under a land use or zoning ordinance but typically there will be an additional process to locate your marijuana enterprise to comply with local land use requirements which may be a special land use approval or other review by a local zoning or planning board or commission. Just because you have convinced the municipal governing body to cooperate does not mean you will have the same sentiments with members of zoning or planning boards who may need their own education and lobbying to get you by this next hurdle in finding an approved location in town for your business.
When it comes to obtaining permission to operate your marijuana based enterprise obtaining local approval may be your more challenging than any required state approval, and so preparation and planning along with education and diplomacy are keys to your success in winning local approval for your cannabis-based business.
Marijuana Businesses have found it troubling to file for trademark due to its federally illegal status. The answer to whether you can achieve federal trademark protection for your cannabis-based brand depends on how close you are tied to the marijuana product itself under federal trademark law and whether it is legal to use in commerce under federal law.
The Controlled Substances Act (CSA) currently prohibits manufacturing, distributing, dispensing, or possessing certain controlled substances, including marijuana and marijuana-based preparations as well “any equipment, product, or material of any kind which is primarily intended or designed for use in manufacturing, compounding, converting, concealing, producing, processing, preparing, injecting, ingesting, inhaling, or otherwise introducing into the human body a controlled substance, possession of which is unlawful…” which includes drug paraphernalia in interstate commerce so in addition to the cannabis product itself no pipes, bongs or vaporizers.
There have been federal trademarks granted for some ancillary products related to the manufacture or dispensing of marijuana. For example, federal trademarks have been granted for a marijuana clothing company, a web journal related to health and wellness issues surrounding marijuana and even a medical marijuana referral service because none violate the CSA standards discussed above.
The United States Patent and Trademark Office (USPTO) has rejected trademark applications for marijuana strains and related marijuana paraphernalia. As a “boots and suspenders” approach to brand protection some marijuana companies that also offer goods or services that do not violate the CSA are registering their marks in eligible classes for goods and services or achieving some protection for their brands and in anticipation of the day when federal trademark registration may be permitted.
Some states allow for the registration of state trademarks and which do not carry the restrictions of the CSA and are often good options for achieving a measure of protection for your marijuana brands and if federal law changes would potentially have a leg up in achieving a federal registration in the future.
63% of voters approved a medical marijuana measure that legalized marijuana in Michigan. Michigan’s original law established regulations for patients and caregivers but did not establish regulations for the businesses that made medical marijuana available to them.
In an effort to fill in the gaps in the initial law, lawmakers in Michigan passed three bills that will reform the state’s medical marijuana program and provide for the licensing and regulation of medical marijuana businesses.
The state offers applications for five licenses:
The Michigan Medical Marijuana Licensing Board began awarding licenses within the first quarter of 2018.
Under the new statutory scheme, local municipalities will be allowed to opt in and adopt a local ordinance or opt out and determine not to allow medical marijuana to be grown or sold in their municipality. Aside from receipt of local approval and the applicant will need to engage in a two-step process for approval:
- The first is a pre-qualification application, that will allow the state to do a background check on the individual and business, that will include among other items submittal of state-approved identification and percentage of interest for all other persons or businesses with an interest in the license; documentation on type of business organization, financial information, regulatory compliances, criminal history check with fingerprinting, litigation history and tax history company business registration documents including operating agreement or by-laws, prior or existing regulatory licenses, income information bankruptcy history, and tax compliance certificates.
- The documentation that must be included in the second step of the process pertains to the actual license and includes the type of license, proof of the municipal approval and copy of its medical marijuana ordinance; plans for technology, staffing, inventory, security and record keeping plans; the medical marijuana facility’s floor plans and layout; and proof of insurance, bond or securities for the actual facility.
Recommended capitalization requirements range from $150,000 for a dispensary to $500,000 for medical marijuana grow operation for up to 1,500 plants which means you will need to demonstrate up front the necessary financial backing to obtain licensure which may have the effect of excluding smaller players from the marketplace.
The Coalition to Regulate Marijuana Like Alcohol (CRMLA) is well on their way to having enough signatures to get their initiative on the 2018 ballot for Michigan. As of September 10th, the group accumulated 200,000 signatures on their Board of State Canvassers petition of the 255,000 signatures required to do just what their name suggests, legalize recreational use of marijuana for those over the age of 21.
This initiative would allow individuals 21 years of age or older to purchase, possess, transport, or consume 2.5 ounces or less marijuana, or 15 grams of marijuana concentrate. It also would allow for individuals over 21 to grow/cultivate up to 10 ounces, or 12 marijuana plants in one’s own residence for personal use, while also allowing individuals to give away up to 2.5 ounces of marijuana to another person over the age of 21 so long as there is no public advertisement. There are, however, limitations to what the initiative allows for. A local municipality may completely prohibit, or limit the number of Marijuana establishments within its boundaries, and employers may still deny or terminate employment upon positive tests for Marijuana in Michigan.
Under the ballot initiative, the Michigan state would be responsible for promulgating rules to implement and administer the act, including providing licensing for business to operate. The license types will include marijuana retailer, marijuana safety compliance facility, marijuana secure transporter, marijuana processor, and 3 types of grower licenses ranging from 100 plants allowed to 2,000 plants.
An excise tax of 10% in addition to the 6% sales tax would be levied on all marijuana sales at retailers, with 15% to go to counties with approved retailers, 15% to go to municipalities with approved marijuana retailers, 35% to go to state education funds, and 35% to go towards repair and maintenance of Michigan’s roads and bridges.
Minors under the age of 18 possessing marijuana will be subject to a $100 fine or community service, and a 4-hour mandatory drug education class for the first offense, with second-time offenders subject to a $500 fine or community service and an 8-hour drug education class. 18-21 year olds in possession of marijuana will be subject to the same punishment without the drug education class in Michigan.
Those who possess over the legal limit of marijuana would be subject to a fine of $500 for the first offense, $1,000 fine, and a civil infraction for a second offense, and a misdemeanor offense with a fine of $2,000 for third or subsequent offenses.
Recent polls suggest that almost 60% of Michigan voters approve the legalization of marijuana for recreational purposes and if passed in 2018 Michigan would follow Alaska, Oregon, Washington, California, Nevada, Maine, and Massachusetts to legalize recreational use of marijuana. If you find yourself having questions on implications of the legalization of recreational marijuana in any aspect, talk to a Traverse Legal attorney to get a head start on understanding future Marijuana law.
For more information please about the Marijuana Ballot Petition in Michigan visit our site.
Advice related to the licensing and regulation of your cannabis business