Note: This article was originally published on LinkedIn and can be accessed via this link. The information included may be outdated.
Since the first REC sale in 2019, Michigan's adult-use market has flourished throughout the state. Headset reported a 16.9% increase in sales in January 2024 compared to January 2023.
With the Michigan cannabis industry booming, you’ll want to protect your license by staying compliant. We’ve got the steps to running a compliant provisioning center (dispensary) in The Great Lakes State.
Strategize your expansion opportunities from the start. In Michigan, where medical cannabis has been legal since 2008, and recreational cannabis sales have been legal since 2018, you can scale your business to meet the demand. Consider preparing for the following:
You can save money by creating your own supply and distribution chain with the option to vertically integrate or open multiple locations. Instead of buying from third parties, you can develop your own product line and promote your brand on your shelves.
Vertical integration also reduces compliance tracking discrepancies because it eliminates the need for transfers, particularly if you have a grow operation and can track plant materials from seed to sale.
Take it from Cannabis Legal Group; vertical integration offers many opportunities for efficiency:“It allows businesses to maximize profit margins, take advantage of more favorable tax deductions, lower overhead costs, and control inventory.
Additionally, vertical integration for cannabis businesses can tailor more to customers while also offering products at a lower price point. This model also results in fewer facilities for state and local authorities to regulate and oversee.”
Controlling pricing is vital as Michigan dispensaries face highly competitive product pricing. This approach can also help you increase your brand awareness and build customer loyalty. If you already own a dispensary, you have an advantage! You can buy multiple properties in the same or different cities and get various license types for each location.
Another option is to incorporate delivery operations from your current location. Michigan also allows licensed consumption lounges, but they have to be approved by local ordinances. Existing cannabis license holders can own them, but they need to be in a separate location with proper filtration systems.
Most states grant MED patients a higher daily purchase limit than REC customers. In the Mitten, MED and REC consumers have the same daily limit:
While important to note, this might be due to “looping”—the concept where adult-use customers have broken daily limits by going to multiple provisioning centers in one day. MED purchases get tracked by the patient’s card number to stay compliant. Regardless, ensure your staff knows that 2.5 ounces or 70.87 grams is the magic number.
With the right environment, you can sell clones and seeds! Michigan residents can grow up to 12 cannabis plants at home.
Feel free to go above and beyond by offering grow tips, referencing your favorite grow lights and supplies, and sending those folks off with hand-outs from your favorite cultivators (or your own)!
Michigan has no age limit for medical patients, but MED caregivers must be 18 or older to enter a provisioning center. Adult-use customers must be 21 years old and show valid IDs.
Go over manual ID verification with your staff because provisioning centers in MI aren’t required to scan IDs. Teach your staff how to look for fakes because regulators are known to run sting operations. For liability, you may consider using a POS system with scan-in capabilities, although it’s not legally required.
REC consumers come from far and wide, and there’s no compliance issue with tourists enjoying the greener things Michigan has to offer. Your staff can accept ID from any US state, including Puerto Rico and DC. We encourage you to market your store with that in mind!
In Michigan, the Cannabis Regulatory Agency (CRA) mandates that all cannabusinesses use Metrc software. Metrc is seed-to-sale tracking software that enables the state to monitor the sale of products between growers, processors, and end-users.
Cannabusinesses in Michigan must all undergo official Metrc training for inventory reasons like:
When cannabis is moved between facilities or delivered conveniently to a consumer, you must document the address, route, and product information.
Flowhub reports a breakdown of the transportation limits: “Marijuana growers, retailers, processors, microbusinesses, and testing facilities can’t transport more than 15 ounces of marijuana or 60 grams of concentrate at a time. Marijuana secure transporters can’t hold title to marijuana.”
Michigan dispensaries must also track and provide state regulators with KPIs (key performance indicators), including total daily sales and total inventory adjustments. Quickly sign your team up, click Training Signup, and follow the prompts to enter your license number. Instead of entrusting a manager with all the inventory responsibility, everyone should work together to ensure compliance standards.
This one is unusual compared to other cannabis-friendly US states. Usually, budtenders can only accept returns for defective or recalled products. For instance, if your store sold a disposable vape with a dead battery, the customer could return that product with the receipt.
However, the CRA allows consumers who report experiencing an adverse reaction to return the product and get their money back.
Cannabis isn’t one-size-fits-all, and a person’s individual body chemistry determines how they react. While most indica strains produce relaxing characteristics because of their terpene content, some users can experience the opposite effect.
Create a Return SOP (standard operating procedure) so your staff knows how to handle returns consistently.
Dispensaries in Michigan are subject to a 10% excise tax on top of the state’s 6% sales tax. The IRS imposes excise taxes on certain goods and services. However, MED patients are exempt from this additional tax.
Instruct your budtenders to share this information with customers or include the taxes in the prices of your REC products so there’s no confusion.
To reverse the harm from the War on Drugs, the CRA created a program to make state cannabis licensing more attainable for minorities. Michigan’s government website explains:
“According to the CRA, areas with high marijuana-related offenders and high poverty rates (over 20% living below federal poverty level) qualify as disproportionately impacted communities. Individuals living in these regions can participate in the growing Marijuana industry through discounts set up by the Cannabis Regulatory Agency. Note that persons applying under the social equity program will not be disqualified if they don’t reside in the communities.”
This program aims to remove barriers for BIPOC individuals historically targeted in cannabis-related arrests so they can benefit from the cannabis industry. If you identify as BIPOC or a minority, consider applying for the Social Equity Program! This program makes compliant requirements like licensing more affordable.
Eligible applicants receive:
As we mentioned in “How to Run Your Dispensary Compliantly in Ohio: What You Need To Know,” almost every state has the same rule that cannabis packaging can’t appeal to minors. Michigan goes beyond that to specify that brands can’t even put a fruit image on a fruit-flavored edible. So, get creative with your packaging while remaining compliant.
As an incentive, Michigan budtenders are allowed to receive product samples, so make sure you impress them with your edible so they can advertise your product by word-of-mouth.
When you advertise cannabis, you can’t use health benefits due to FDA regulations. You can only run ads on platforms where under 30% of the audience is expected to be under 21, so demographics are crucial.
In Michigan, you also can’t show cannabis imagery on paid media, but brands often do in their organic social posts. Finally, like the rest of America—you can’t advertise pricing, promos, or potency. What types of communications can you use to get your name out there?
At Spendr, we want to keep you up-to-date on regulations by offering compliant, cashless payments, consumer rewards, and customer retention campaigns. Reach us at hello@spendr.com or click here to learn how we can help you grow.
Disclaimer: This article is intended for informational purposes only and should not be considered legal advice. Consult your state's up-to-date regulations for more.
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