Michigan Marijuana Designated Consumption Establishment License

What Is a Marijuana Designated Consumption Establishment in Michigan?

A marijuana designated consumption establishment is a commercial place that permits adults 21 years and older to consume cannabis products legally at that location. Such commercial spaces help marijuana users consume cannabis in places other than their private residences without the fear of arrest by state authorities. However, Michigan prohibits designated consumption establishments from retail sales of cannabis products, as would dispensaries. Popular names for marijuana-designated consumption establishments are marijuana lounges and cafes. The Michigan Marijuana Regulatory Agency (MRA) recognizes that marijuana arrests often increase once marijuana is legalized in any state. Consequently, the Agency created a regulatory structure known as the designated consumption establishment to avoid a spike in arrests associated with marijuana possession charges.

Does Michigan License Marijuana Designated Consumption Establishment?

Yes. A person or entity that permits the consumption of cannabis products on the premises of a nonresidential location and charges an entry fee or requires membership for entry must obtain a designated consumption license under the Michigan Regulation and Taxation of Marijuana Act (MRTMA). This is stipulated in Rule 21 (3) of the Marijuana Licenses Rule Set (R 240.21(3)). Such persons or entities sell goods or provide services at a price while people consume marijuana on the premises. In Michigan, anyone who is willing to pursue a business in this area can obtain a marijuana-designated consumption establishment license.

Marijuana designated consumption establishment license does not approve sales of marijuana products by licensees. However, marijuana microbusinesses, retailers, or anyone intending to run a "bring-your-own-marijuana" kind of business structure can still hold a designated consumption establishment license. Entrepreneurs who want to obtain marijuana designated consumption establishment licenses in Michigan must ensure the following:

• Get a location approved and supported by the local municipality where they intend to operate the establishment.
• An identified area suitable for cannabis consumption and smoke-free areas.
• A smoke-free space for the establishment's employees to enable them to monitor the entire marijuana consumption area
• A facility with adequate barriers and walls to ensure that marijuana smoke does not infiltrate into nonsmoking space
• A facility with a ventilation system in such a way that air from the marijuana consumption areas escapes outside of the building through a filtration system that removes visual smoke and odor

How to Apply for a Marijuana Designated Consumption Establishment License in Michigan

In Michigan, an interested person or entity can apply to the Marijuana Regulatory Agency (MRA) of the Michigan Department of Licensing and Regulatory Affairs (LARA) online or using paper forms for a marijuana designated establishment license. The required documentation for applying for this license include:

• Copy of applicants government-issued IDs
• Entity information documents - These include a copy of governing documents (such as bylaws and operating agreement), certificate of good standing, approval to conduct business transactions in Michigan (if applicable), and authorizing resolution). Others are a copy of the organizational structure and certificate of an assumed name (obtained from LARA Corporations Division).
• Litigation documents - These consist of a copy of a judgment or a copy of a complaint if applicable
• Debt, insolvency, or bankrupt documents
• Tax liability and delinquency documents

There are two steps involved in getting a marijuana-designated consumption establishment license in Michigan. These are:

Step 1 - Pre-Qualification Stage

Any applicant entity intending to apply for a marijuana-designated consumption establishment license must complete the Entity Prequalification Application Form and provide the required supporting documentation. A sole proprietor must fill out the Sole Proprietor Prequalification Application Form and supply all needed documentation. Applicant entities and sole proprietors must pay a non-refundable fee (as determined by the MRA) at the prequalification application stage. Similarly, any supplemental individual (an individual with an ownership interest in an applicant entity) must complete the Supplemental Individual Prequalification Form and provide required supporting documentation.

Generally, the prequalification stage of a marijuana license application in Michigan involves carrying out a thorough background check on the primary applicant and supplemental applicants (individuals and businesses with an ownership interest in the primary applicant). Background checks are done to ensure that applicants do not have any disqualifying criminal convictions on their records. During the background check, the MRA will search the criminal histories of all the applicants on various state and federal databases. Any applicant found with any of the following disqualifying convictions or conditions will not qualify to obtain a marijuana license in Michigan:

1. The applicant has been charged with a misdemeanor involving a controlled substance, theft, dishonesty, or fraud in any part of the U.S. or been found responsible for violating a local ordinance in any state involving a controlled substance that substantially corresponds to a misdemeanor in that state within the past five years.
2. The license applicant holds an elective office of a governmental unit in Michigan, another state in the U.S, or the federal government. A member of or employee of a regulatory body of a governmental unit in Michigan, another state, or the federal government is also not eligible. Likewise, an employee of a governmental unit in Michigan cannot apply for a marijuana license. This condition does not apply to an individual who holds an elected office or an elected precinct delegate or an employee of a federally recognized Indian tribe.
3. The applicant has been charged with or released from jail for a felony under Michigan laws, other state laws, or the United States laws within the past ten years. A person convicted of a controlled substance-related felony within the past ten years is also not qualified.
4. The applicant has knowingly applied for a license under this act that contains false information.

At the prequalification stage, the primary license applicants must pay a certain non-refundable application fee as determined by the MRA. However, supplemental applicants are not required to pay any application fees. After completing the applicable prequalifications forms, applicants may submit them and all required documentation either by mail, in person, or online through the LARA's application portal. First-time users of the online application portal must register before they can proceed with their applications. To apply for a marijuana designated consumption establishment license in Michigan, interested persons or entities can send their completed prequalification forms and all required documentation to the MRA via mail to:

Department of Licencing and Regulatory Affairs

Marijuana Regulatory Agency

Licencing Division

P.O.Box 30205

Lansing, MI 48909

Phone: (517) 284-8599

Alternatively, they can submit in person at:

Department of Licencing and Regulatory Affairs

Marijuana Regulatory Agency

Licencing Division

2407 N. Grand River Avenue

Lasing, MI 48906

Step 2 - License Qualification Stage

At the qualification stage of a marijuana-designated consumption establishment license application, applicant entities and sole proprietors must complete a Designated Consumption Establishment License Application Form and provide the required documentation listed in the application form. A prospective licensee must provide information on the location with details regarding the municipality of the proposed designated consumption establishment.

At this stage, the MRA vets the proposed facility and reviews the business specifications, municipality information, general employee information, and proof of financial responsibility. A physical marijuana designated consumption facility must pass an inspection by the MRA within 60 days of submitting a complete qualification application. The MRA may deny a license application if a prospective licensee fails to pass the agency's inspection within 60 days of the license qualification application submission. Applicants must ensure that the proposed property for the marijuana establishment is qualified for a marijuana facility under the chosen municipality's ordinances and zoning regulations.

Also, prospective licensees must pass a Bureau of Fire Services (BFS) inspection within 60 days of submitting their license qualification applications to the MRA. Failure to pass a BFS inspection under 60 days of qualification application submission may prompt the MRA to deny an application. Once the application at this stage is approved, and the applicant passes the BFS and MRA inspections, they pay the required licensing assessment fee for a designated consumption establishment. The MRA will issue an applicant a marijuana designated consumption establishment license once they provide accurate information and the required documents at this stage.

When applying for this license, applicants must provide the MRA with the following information and documents concerning their facilities:

1. Designated Consumption Establishment Plan

   A diagram of the facility that shows its layout, locations within the facility and indicates distinct areas or structures that might separate the Designated Consumption Establishment from other licensed facilities the applicant may be operating in that location. The MRA uses these plans to understand the floor plans and layouts of marijuana facilities.

2. Business Plan

   The MRA uses a business plan to understand the applicant’s intended goals for the proposed facility operations, including proposed hours of operation and the methods for consumers to acquire marijuana at the facility. The Agency wants an applicant to specify if the proposed establishment will operate as a co-located facility with a microbusiness or if it intends for patrons to come to the facility with their marijuana.

3. A plan For Responsible Operations

   This should explain how the applicant will monitor marijuana consumption at the establishment, prevent over-intoxication, minors access, and the illegal sale of marijuana. While preparing this plan, an applicant should create an employee training program to ensure its implementation within the establishment.

4. Building, Construction, and Zoning Details

   The MRA uses these details to review the structural information for the facility to enable them to verify a safe operation and allow for building and fire safety review. They also help the Agency to ensure the establishment will not create a harmful impact on the environment.

5. Waste Management and Disposal Plan

   Creating a plan to handle and dispose of any waste (unconsumed marijuana products left by customers) at the proposed designated consumption establishment is essential.

For further guides on applying for a Michigan marijuana designated consumption establishment license online, interested persons can use the Designated Consumption Establishment Application Instructions provided by the Department of Licensing and Regulatory Affairs (LARA).

How Much Does a Marijuana Designated Consumption Establishment License Cost in Michigan?

In Michigan, a marijuana-designated consumption establishment license applicant must pay a non-refundable $6,000 application fee for prequalification. Once the Marijuana Regulatory Agency (MRA) approves their prequalification application, they will pay a $1,000 licensure fee. The cost of renewing this license is also $1,000. All payments for marijuana microbusiness licenses in Michigan must be made payable to the State of Michigan. The MRA accepts payment by cash, check (cashier's check or e-check), money order, and debit card or credit card (Discover, MasterCard, Visa).

Can Marijuana Designated Consumption Establishment Licensees Hold Other Cannabis Licenses in Michigan?

Yes. A marijuana designated consumption establishment license holder can also hold a microbusiness or dispensary license. However, since Michigan prohibits retail sales of marijuana by designated consumption establishment licensees, they must separate the establishment from other facilities. They can situate the designated consumption establishment as a lounge in an adjoining suite to the microbusiness or dispensary and configure it in a manner that patrons can buy marijuana from one part of the facility and consume it in a separate area.