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How Much Money Will I Need to Obtain a Commercial Michigan Medical Marijuana License?

Nov 9th, 2017 Marijuana Laws How Much Money Will I Need to Obtain a Commercial Michigan Medical Marijuana License?

You will need a minimum of $150,000.00 and as much as $500,000.00 of both liquid and non-liquid assets combined.  Many observers believe that these numbers are way too low, and this is because after obtaining a license, the licensee must then run a successful business.  As a licensee, this means that in addition to obtaining a license, you subsequently will have all the associated business costs, such as rent, insurance and labor, not to mention security, legal and accounting costs, just to name a few.

Also, if you are hiring one or more professionals to assist you preparing for and/or applying for your commercial medical marijuana license, these fees would also need to be added to LARA’s projected capital requirements.

The $150,000 – $500,000 number is based on a recent LARA advisory bulletin.  When the bulletin was first released there was an open question as to whether these assets had to be liquid, or if investments, including retirement accounts, would count toward this assessment?  A subsequent clarification from LARA indicated that:

  • Of the $150-$500, a minimum of 25% must be in liquid assets. Liquid assets are defined as assets that can be readily converted to cash.  This would include cash and bank accounts, but LARA also indicated that other types of financial instruments, such as certificates of deposit, non-retirement stocks and bonds, and even some retirement accounts like 401Ks.
  • The remaining 75% of the necessary assets may come from non-liquid assets, such as real property (provided there is lien or encumbrance), and “chattels” such as office equipment, supplies, fixtures and the like.
  • Perhaps most interesting, LARA will allow existing marijuana inventory to be considered as part of the 75% non-liquid qualifying assets.

When applying for a license and individual or business must have all their “capitalization amounts” certified independently by a CPA.

The capital requirements from LARA are as follows:

Applicants will be required to demonstrate capitalization amounts to operate and maintain the proposed marihuana facility as follows: (a) Grower: Class A – $150,000 (b) Grower: Class B – $300,000 (c) Grower: Class C – $500,000 (d) Processor: $300,000 (e) Provisioning Center: $300,000 (f) Secure Transporter: $200,000 (g) Safety Compliance Facility: $200,000