Starting a Cannabis Business in Michigan

by | Jan 5, 2024

Starting a Cannabis Business in Michigan

​Do you dream about owning a dispensary, lab, or other cannabis-related business in Michigan? You’re not alone. The cannabis industry is thriving thanks to eager consumers and bright entrepreneurs. Before you can join the ranks, there’s a lot to learn, especially about Michigan’s marijuana market and regulatory requirements. Below, discover the basics of starting a cannabis business in Michigan.

Cannabis Legalization in Michigan

First, let’s take a quick look at the history of cannabis in Michigan to see how the state’s market got to where it is now.

Even while cannabis was still illegal at the state level, the college town of Ann Arbor passed several municipal laws that lessened the punishment for possession. A 1971 rally in the city gathered support from notables like John Lennon and Stevie Wonder, leading the Michigan Supreme Court to find the state’s marijuana laws unconstitutional.

Michigan legalized medical use, possession, and cultivation in 2008. The initiative didn’t explicitly allow dispensaries; nevertheless, 75–100 establishments sprang up while it was a legal gray area. Regulated medical dispensaries got the green light in 2016.

Then, in 2018, Michigan voters approved recreational use, making it the first state in the Midwest to do so. The measure also made retail sales possible. Now, adults ages 21 and over can purchase, possess, grow, and use cannabis products in limited quantities.

A quirk to note about Michigan: you’ll sometimes see “marihuana” (spelled with an H) in official documents like state regulations.

Michigan’s Cannabis Market

That brings us to today. What is the market landscape like for starting a cannabis business in Michigan? Will you have a customer base?

Nearly 26% of Michigan adults reported using cannabis within the past year, the 8th highest usage rate in the country. Given the size of the adult population, that’s nearly 2 million potential customers statewide. And “statewide” is a reasonable market scope since Michigan permits weed delivery. That doesn’t include tourists and consumers who visit from nearby states without legalized recreational use (Wisconsin, Indiana, and Ohio, to name a few).

How does that translate into dollars and cents? In 2022, the Cannabis Regulatory Agency reported $2.3 billion in annual sales, 28% higher than the prior year. That landmark puts Michigan as the second-largest retail market for cannabis (after California). What’s more, Michigan’s recreational cannabis sales continue to grow, even as other markets are stabilizing, stagnating, and even shrinking.

However, the wide availability and falling prices within the recreational sector have caused a significant decline in the medical sector. If you’re considering starting a dispensary in Michigan (or a “provisioning center,” as it’s sometimes called), the window of opportunity may already be closing.

In short, Michigan has a big and booming recreational cannabis market that seems to be on a heartening growth trajectory. The time is ripe to claim your share of the pot, so to speak.

How to Start a Cannabis Business in Michigan

Starting a cannabis business follows roughly the same process anywhere. We’ve outlined the basic steps here, but for full details, see our guide: How to Start a Cannabis Business.

  • Identify what kind of business you will open, such as a retailer, lab, cultivator, manufacturer, or distributor.
  • Use resources like the Michigan Small Business Development Center to create a business plan with your revenue model, structure, financial needs, marketing strategy, and anything else you (or funders) find beneficial.
  • If you’ll be operating a brick-and-mortar location, mind zoning rules while scouting a spot.
  • For all official matters, look to Michigan’s Cannabis Regulatory Agency. If your business touches cannabis directly, you’ll need to apply for a license and renew it annually.
  • Register your business and obtain an EIN.
  • Get insurance coverage for your assets, customers, and personnel before opening.
  • Secure funding and financial accounts, which is easier said than done because of the federal-level cannabis ban. Instead of major FDIC-affiliated banks, try local options like Bank Michigan, private lenders, or specialized industry institutions like FundCanna.

As you grow, you’ll face decisions about staffing, suppliers, and more. These foundational steps for starting a cannabis business in Michigan are just the beginning of your journey.

Michigan Cannabis Security Regulations

Cannabis businesses are attractive targets for crime due to the high-value inventory and cash onsite. For this reason, the state requires a detailed security plan as part of your license application. (Of course, strong business security is also just a good idea.)

Here’s what security measures the state of Michigan requires for cannabis businesses:

  • Escorts for all visitors in restricted access areas
  • Commercial-grade locks
  • An alarm system
  • A business surveillance system that records anywhere products are handled or sold, limited access areas, entrances, exits, point of sales areas, and wherever surveillance equipment is stored—and stores this footage for 30 days
  • Sufficient lighting
  • A process for destroying products safely
  • A secure storage location for products
  • Secure hiring practices, including background checks
  • Employee security training

While this may seem like a lot, weak security can put your business at risk. Break-ins, theft, vandalism, and other crimes are an expensive headache at the very least and possibly devastating to a new business. Strong, proactive security is your best plan.

Deep Sentinel’s Cannabis Security Solutions

Starting a cannabis business in Michigan may be lucrative, but it undeniably requires a lot of work. Why not take one worry off your mind?

Deep Sentinel’s unique dispensary security solutions combine the power of AI with state-of-the-art surveillance cameras and live security monitoring. You’ll never have to worry about who’s watching your business after hours. Trained professional security guards stand ready to intervene the instant trouble arises—before a criminal reaches your front door.

The surveillance systems exceed the state’s security regulations, and you’ll never get annoying notifications about false alarms. The Deep Sentinel guards can even contact the police on your behalf. How’s that for hands-off?

With a Deep Sentinel system, your new cannabis business is off to a great start.

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