Grow, Gift, Repair

A prior marijuana conviction could be a good thing for owners of Michigan pot businesses

A previous marijuana-related conviction could help entrepreneurs hoping to open a recreational marijuana business in Michigan.

Michigan officials are trying to attract a wider variety of businesses to the booming recreational marijuana industry, not just those with deep pockets.

The Marijuana Regulatory Agency, a subdivision of the state Licensing and Regulatory Affairs Administration that regulates marijuana business, on Tuesday announced expansion of a program beginning June 1 to draw more residents from poorer communities and those with prior marijuana convictions.

If you have a marijuana-related felony conviction — so long as it wasn’t for distribution to a minor — the state is offering a 40% discount on the $6,000 application fee and licensing fees that initially cost $25,000 for a retail license and up to $40,000 for processing businesses or growers of up to 2,000 plants, based on proposed rules that have yet to be finalized. Annual renewal fees are similar, but fluctuate according on the size of the business.

Anyone with a marijuana-related misdemeanor conviction receives a 25% discount, as well as anyone who’s lived in a designated social equity community for five of the last 10 years. Another 10% exemption applies to applicants who’ve registered as a medical marijuana caregiver for at least two years between 2008 and 2017.

So far, the program hasn’t had a lot of full participants.

Marijuana Regulatory Agency Andrew Brisbo said only two companies, an event organizer and a retailer, have obtained recreational marijuana licenses under through the Social Equity Program. The program was created “to encourage participation in the marijuana industry by people from communities that have been disproportionately impacted by marijuana prohibition and enforcement.”

“We do have a lot of individuals who are interested in the program” Brisbo said.

He said 172 applicants have been approved as qualified for the program.

Many would-be benefactors, such as residents in major cities like Detroit, Saginaw and Pontiac, were previously out of luck, since their communities, along with nearly 1,400 other cities, townships and villages in the state, don’t allow recreational marijuana businesses.

“It’s clear that Detroit’s medical marijuana industry is overwhelmingly owned and operated by individuals who don’t live in the city and take their dollars back to their communities,” Detroit City Councilman James Tate said when he urged the city not to pass a recreational marijuana ordinance in January. “It’s critical that we take the necessary time now to ensure that Detroit’s impending recreational marijuana industry will properly reflect the demographic of the city’s it’s located in.

“It’s not enough for Detroit residents to simply hold security jobs or floor sweeping in this industry within our city.”

In order to receive a social-equity designation, communities were required to have more than 630 marijuana-related convictions in between 2008 and 2018, which was the median based on state police data, and a 30% poverty rate, based on federal income guidelines. The poverty threshold has now been reduced to 20%, increasing the number of qualifying communities from 41 to 184, including newly added Lansing and Grand Rapids.

There were 19 qualifying communities when the program first began.

“The other big change is, if you are an individual who had residency in one of these communities, but were seeking to open a facility in another community, you could still have the benefit of some of the fee reductions for a shorter period of time,” Brisbo said.

Anyone who qualifies for a discount and opens a business outside of a designated social equity community may receive the reductions for up to two years.

Someone, for instance, from Detroit may open a recreational business in a suburb that allows marijuana businesses and receive the discount.

Another barrier that’s limited access to the program: until Dec. 6, 2021, any recreational marijuana business must already have a medical marijuana business license, and there’s no discount for medical license application, which also costs $6,000.

This is the second time the Marijuana Regulatory Agency has amplified the Social Equity Program, created as a requirement of the 2018 voter-passed law that legalized recreational marijuana and created a framework for the licensed industry.

“We’re really expanding the program overall, (the) number of communities, but also casting a wider net for those individuals who might have had some individual impacts,” Brisbo said.

The program has been conducting training sessions in communities to share details of the program with potential business owners but the focus has shifted some.

“We had actually retooled, even before the (coronavirus) pandemic, to offer more targeted assistance to individuals who has applied and engaging with them,” Brisbo said. “That was something that was more needed than … large-scale presentations to big groups. They needed more one-on-one attention.”

Anyone who qualifies may receive personal help with the sometimes cumbersome and complicated application process, as well as training and staffing assistance.

Whether or not a business applicant qualifies for the program, they’re encouraged to include a social equity component in their business plan.

“The social equity team has been analyzing the plans submitted by licensees and helping to coordinate for those who wanted to offer jobs to individuals from these communities,” Brisbo said. “Certainly the benefits of the program aren’t just in issuing licenses to social equity participants but there are a lot of individuals (and) communities that would be benefited by job creation as well, so we want to play a role in facilitating that.”

As of early May, the recreational marijuana industry had generated over $91 million in sales since the first licensed shops opened on Dec. 1.