Short answer, yes. However, there are plenty of things you can do to help make the process easier. That’s where Hunter Green Consulting Group comes into play. Rather than talking about making things easier, though, this article focuses on some of the hurdles that investors and cannabis business owners face in almost every market where commercial licenses in the marijuana industry are available. Whether you are interested in a cultivation license, a processing and manufacturing license, or a retail sector license, there are some hurdles common to all of these license types that are important to understand.
State Application Fees
The first major hurdle are application fees and regulatory assessments. Most States that are permitting applications for commercial licenses, have substantial fees associated with those applications. A couple of examples are illustrative. In Michigan, no matter what license type you are seeking, or how many licenses you are interested in obtaining, you must pay a six-thousand dollar ($6,000.00) fee for EACH application that you are submitting. If you apply for two licenses in Michigan, or ten, each application must be submitted with the application fee attached. In Colorado, the application fee varies depending on which license you are applying for, but each license application has a fee that must be submitted.
With regard to regulatory assessments, some States have fees for industries that are engaged in what are known as heavily regulated industries. In Michigan, for example, medical marijuana facilities are considered to be a heavily regulated industry, and as such, the State imposes substantial fees. The fee chart, which is published yearly by the State of Michigan, applies the following regulatory assessments for each license type. The regulatory assessment must be paid within fourteen (14) days of the license being approved, or the license will not be issued.
Class A Grower: $10,000.00
Class B Grower: $66,000.00
Class C Grower: $66,000.00
Provisioning Center: $66,000.00
Secured Transporter: $66,000.00
Safety Compliance: $0.00
Municipal Application Fees
In some States, you will not only have to apply with the State for a license, you may also have to obtain a municipal approval to operate such a facility. In some instances, municipal approval will be required by the State before your State application can even be considered. Confused? Well, it gets worse. Most municipalities that require approval for operation of a facility will, at minimum have a municipal application fee. In Michigan, where this system of dual approval is a reality, most municipalities are charging five-thousand dollars ($5,000.00) per municipal application. Some communities are charging less, but for the most part, cities are getting the maximum they can under the applicable statutes. Some of the cities (Flint, MI for example) have a zoning compliance fee. An applicant must submit the address of the proposed facility location, and, for a mandatory fee, the City determines whether the location is appropriate.
Most States permit cities within their borders to limit the locations for cannabis facilities inside a municipality’s boundaries. In some cases, cities limit commercial marijuana facilities to industrially zoned land. Once that happens, of course, owners of property in those zones immediately increase their prices, and the costs of obtaining a properly zoned parcel of land increase exponentially in many cases. Other cities limit the number of licenses that they will issue. In most cases, these limitations are placed on dispensaries or provisioning centers where medical marijuana is retailed to customers. Usually, cities will set out a scoring system, and the applications that have the highest score, based on the city’s asserted criteria, are granted licenses.
Another zoning issue that often arises are what commonly get referred to as “buffer” or “boundary” zoning issues. Many municipalities will permit commercial cannabis facilities, but they must be located more than a certain distance from different types of designated zones. Common examples are buffers from schools, churches, parks, residentially zoned property, liquor establishments, adult entertainment facilities, other marijuana facilities, daycares and hospitals. What does that mean? Well, you might have a perfectly good building sitting on a piece of industrial land, that would otherwise fit the zoning requirements. However, there is a city park half a block away. You could apply for a variance, but that process can be lengthy and difficult; not to mention, most cities are very much opposed to granting variances for this type of operation. Of course, should you choose to pursue a variance, there can be substantial costs associated with that endeavor as well. Nothing is cheap or easy in this space.
Minimum Financial Requirements
Most States that permit licensure for commercial marijuana facilities have minimum financial requirements that applicants must meet before they will be approved. In some instances, the minimum requirements are that the applicant must have several hundred thousand dollars of net worth. Even worse, some States require that you have a percentage of that net worth as liquid and available cash. Many potential entrepreneurs in the industry are immediately disqualified by these minimum financial requirements. All the better, from the State’s perspective: they shrink the number of potential applicants, and they ensure, at least from a viability standpoint, that the marijuana licenses that they do grant will be more likely to succeed.
If you are not prepared, in advance, for just the application costs (not including cost of consultants, attorneys, lobbyists, architects, accountants, etc.), which can approach $100,000.00, you are not ready to try and get into the industry. While you may have the State mandated minimum financial requirements, you may not have the capital necessary to jump in. What can you do? Finding more investors never hurts. However, your best bet would be to hire Hunter Green Consulting. We can sit down, put together a real plan, with attainable goals, including finding investors, and help prepare you to begin the licensing process. Don’t try and go this alone. Too many applicants who do are denied, and once your denied on a Step One, odds are good, you won’t be able to apply again. Planning with the right people is the key, and Hunter Green should be your first stop.