A Tier-based Fee System Introduced for Marijuana Businesses in Michigan

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Marijuana businesses operating legally in Michigan have some relief in store for them beginning October this year. Marijuana Regulatory Agency (MRA) which regulates the sales of medical and recreational marijuana announced the transition to a multi-tier, fee-based system.

The new system proposes a fee based on the company size. This step is expected to bring much-needed relief to many medium-size companies in the Cannabis business.

Andrew Brisbo, executive director of the Marijuana Regulatory Agency announced the reform. “We want to make the fees reasonably related to the size of the operation, so businesses are paying an equitable share,” said Brisbo

Marijuana Regulatory Agency, operating under the Department of Licensing and Regulatory Affairs, aims to establish Michigan as a national model for a regulatory program that stimulates business growth while preserving safe consumer access to marijuana.

Cannabis growers in the state are segregated into classes based on capitalization amount required to operate and maintain the marijuana facility. The schedule is:

Grower Class A: $150,000

Grower Class B: $300,000

Grower Class C: $500,000

Marijuana Regulations Under the Present System in Michigan

Current regulations state that small-scale cultivators, after approval from the state, are expected to shell out $10,000 as Class A license fee. Other businesses pay a significantly higher amount. Originally at $48,000, the fee for other businesses was revised to a whopping $66,000 after a revision in July 2018. Marijuana testing labs are exempt from paying any license fee.

Marijuana Regulations Under the New System Effective October

Courtesy: https://www.mlive.com

While it is status quo for Class A growers, other businesses would be required to pay fee as per a three-tier system. Tier B growers and processors will pay $24,000, $30,000 or $36,000 based on their business size. Tier C is required to pay $45,000, $56,000 or $67,000. Secure transporters and provisioning centers, also known as dispensaries, would pay $36,000, $44,000 or $52,000.

While Class B pays an additional $6,000 for moving up a tier, Class C pays an incremental $11,000. The dispensaries pay an added $12,000 for each step they climb.

The license fees have been revised to cover the costs of regulating the marijuana industry in Michigan.

“We try to set the fees simply to offset the fees of our agency and the other costs built in from the MMFLA (Medical Marijuana Facilities Licensing Act),” Brisbo said.

Recreational Pot License to Cost Lower

Michigan’s recreational pot marketplace, which launches later this year, will see licenses being allotted starting December. This recreational license, which costs $20,000 to $30,000, is cheaper than a dispensary license which costs $36,000 to $52,000.

Money from marijuana licensing would be, in part, diverted to external programs which Brisbo said was the reason for differential pricing. A part of these funds would be used to fund substance abuse programs through the state health department.

Michigan Regulation and Taxation of Marijuana Act, which regulates recreational cannabis use came into effect in July this year making Michigan the first state to legalize recreational marijuana in the mid-western United States.

Recreational marijuana license applicants will have to wait until November to submit their applications to the Marijuana Regulatory Agency.

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