Benham R. Wrigley, Jr.
CannaLex Law/Wrigley Hoffman P.C.
Michigan, get ready! The commercialization of adult use marijuana nears. Last November, when the voters approved the marijuana adult use ballot initiative known as Michigan Regulatory and Taxation Marijuana Act (MRTMA), commercialization seemed a long ways away. Not true anymore. Less than 100 days.
The Marijuana Regulatory Agency (MRA) of the Department of Licensing and Regulation (LARA) recently issued Emergency Rules for regulating and controlling aspects of the adult use business. They then indicated that, if all went well, MRA would begin accepting applications for MRTMA licenses on November 1, 2019. Not long now. Current MMFLA licensees are chomping at the bit to get applications submitted and licenses issued within a short period of time after the application window opens at MRA. Adult use products could be available for the holidays this year.
Why is all this important for members of CAR? There is tremendous demand for locations for operations to serve the adult use business. Prospective licensees need to find industrial and agricultural properties for growers and processors under both MMFLA and MRTMA. Both laws mandate that they locate facilities in zones allowing industrial and agricultural uses. Then there’s the retail outlets: the “Provisioning Center” under MMFLA and the “Marijuana Retailer” under MRTMA. Commercial districts are targets. As we’ve seen in Grand Rapids, the main business thoroughfares have had multiple properties placed under contract as possible sites for the medical marijuana operations at this time. Keep in mind, MRTMA future uses. Eight locations in Traverse City alone in a two block area on Front Street.
The prices potential licensees are paying for these locations is enormous compared to current assessed values. Just saw that a fully licensed, non-operating Provisioning Center of 4,000 square feet in the River Rouge area has an asking price of 18 million dollars.
There are currently 251 MMFLA licensees (99 Growers and 125 Provisioning Centers). Keep in mind that in the former category, several of the licensees are extremely large entities and hold numerous Class C licenses (up to 1,500 plants per license). Those licenses right now are $66,000 per year. If you stack 10 of those licenses in one location for up to 15,000 plants, that’s a big operation. This is what you may come to see in the future as this marijuana business develops in Michigan.
The trick for prospective licensees and realtors is to find a municipality which allows some form of marijuana business enterprise to be located within its boundaries. Under the MMFLA, the key is “opt-in”. That means that we started with the 1,773 municipalities in the State not allowing any operations. That law gives to each municipality the right to carve out its own law if it wanted to allow operations for medical marijuana businesses within the municipal boundaries. Until recently, less than 120 municipalities had opted in. That’s expanding as community leaders realize the benefits.
Under MRTMA, it’s the opposite. Every municipality is in, unless it chooses to “opt-out”. For the most part, every municipality which has been faced with the decision has opted out or will do so by November 1. If they miss the deadline and MRA starts receiving applications, they’re in and they did not get to carve out their own ordinance provisions. Many of the municipalities have stated they want to carve their own ordinance and so opt out first, giving time to see what the Emergency Rules provide as well as what they want in their community. As your clients look for places in every municipality in the State, remember that every ordinance is different. Every municipality carves its own provisions as to types of licensed establishments it will allow and numbers. In the case of the City of Grand Rapids, it developed a system for scoring and a draw for locations. There’s the 2,000 foot radius buffer zone and another 1,000 foot radius buffer from “sensitive areas”. You have to know what every municipality wants. Nowadays, most are holding drawings so applications for municipal preliminary licenses have due dates.
Then with MRTMA there are new types of additional licenses which business people will be looking at using. There’s the licensed designated consumption establishment (ie: smoking lounges). Will a convenience store want to add it? What about a bar owner with an additional location for the smoking lounge? Then there’s the temporary marijuana event license. Instead of Celebration on the Grand, how about a Cannabis Celebration on Calder Plaza or in the parking lot of a mall, or in an open field? Then there’s the new Microbusiness for up to 150 plants for state residents who are not now MMFLA licensed.
Lots of opportunities ahead for CAR realtors in all areas of Michigan in this burgeoning field. Stay up to date on municipal requirements and find those primo locations for your clients.