CALIFORNIA CANNABIS CPA

  • Home
  • About Us
  • Services
  • Blog
  • Get Started
  • Home
  • About Us
  • Services
  • Blog
  • Get Started

Michigan Cannabis Licensing Requirements: Approval of Funds Required by CPA

2/20/2018

 
Picture
Over the past few months, the state of Michigan has been rolling out some of the most comprehensive state licensing requirements for cannabis companies. Though cannabis isn’t fully legalized in Michigan, the stringent policies the state has enacted on medical licensees suggest the state is on the way to full legalization.

Michigan is ranked second in the country for states with medical cannabis programs, and beginning December 2017, a new regulatory framework was enacted to create a licensing framework for the growing number of medical marijuana businesses. LARA is Michigan’s Department of Licensing and Regulatory Affairs, the group in charge of issuing licenses (much like the CDTFA in California). LARA is in charge of reviewing applications, issuing licenses, and providing oversight to groups with active licenses.

Cannabis Licenses in Michigan
At this time, there are five different types of medical cannabis licenses a business can obtain in Michigan:
  • A Class A, B, or C grower license. Growers will be permitted to cultivate, dry, or cure marijuana for sale to a processor or provisioning center.
    • A Class A license allows for 500 plants.
    • Class B allows for 1000 plants.
    • Class C allows for 1500 plants.
  • Processor license: this license allows a business the right to extract resin to create cannabis-infused products that can be transferred to a provisioning center.
  • Provisioning Center license: to allow businesses to operate a dispensary in Michigan. Provisioning centers can purchase cannabis from a grower or processor to sell to qualifying patients.
  • Secure Transporter license: allows for a business to transport cannabis and cannabis products between growers, processors, testers, and dispensaries.
  • Safety Compliance Facility license: allows a business to test cannabis for inappropriate levels of fungicides or insecticides.

What are the application requirements?
Michigan has one of the most involved application processes yet. Of course, the application requirements will vary based on what class license or type of license you’re seeking: Class A licenses are less involved than Class C licenses, for example. However, Michigan officials warn that the application process is going to be very intrusive.

Capital Requirements
Michigan will likely ask applicants to meet a capital requirement, that is, to show they have adequate financial resources to cover their expenses. According to one news source, “applicants must show that at least 25% of the assets used to meet these capital requirements are liquid and can be easily converted into cash.” LARA will likely ask for an accountant attestation (and this is where things may feel intrusive). The attestation verifies your financial history, almost like an audit. An accountant will look at your financial records and ask questions concerning:
  • Account balances over the last three years
  • Big swings in balances: why did your balance go up or down?
  • What assets do you have?
  • What liabilities do you have?
  • What is your total net worth?

Then, an accountant can provide a letter of attestation proving you are able to sustain a medical cannabis business if permitted.

Annual License Fee
The next requirement, after the capital requirement, is that businesses must pay an annual license fee to the state to be allowed to operate. Though the fee will be determined by the number of license applicants, experts estimate this fee could range from $10,000 - $57,000. Some municipalities may also include their own administrative fees.

Additional Requirements
As of December 2017, the licensing process was mapped out into two phases: pre-qualification and full license qualification. Pre-qualification will involve a criminal background check and $6,000 licensing fee. If you make it to the next phase, full license qualification, LARA experts will verify your business location, local government approval, and more.

In brief: Michigan’s licensing process for medical cannabis companies is involved. But, we believe in the long run, it’s worthwhile to start the application process sooner, rather than later. Your business will be ahead of the game should full-legalization happen in the coming months (or year).

For more questions on Michigan’s application process, check out LARA’s FAQs or contact one of our experts!

    Categories

    All
    Accounting
    Banking
    Business
    Cannabidiol
    CBD
    Compliance
    Cultivation
    Distribution
    Hemp
    Insurance
    Investing
    IRS
    Licenses
    Manufacturing
    Marketing
    Taxes
    Testing

California Cannabis CPA is owned and operated by GreenGrowth CPAs.
The information contained in this website is meant only for guidance purposes and not as professional legal or tax advice.  Further, it does not give personalized legal, tax, investment or any business advice in general.  For professional consultation, please sign-up for our services. California Cannabis CPA disclaims any and all liability and responsibility for any and all errors or omissions for the content contained on this site. 
*California Cannabis CPA does not provide Audit and Assurance related services directly to its clients - all professional services are provided by GreenGrowth CPAs. 
Please review our privacy policy here. California Cannabis CPA is owned and operated through GreenGrowth CPAs.