You need a state license to do business. Opening a bank account for your business is crucial because it allows you to separate company assets from your personal assets, and makes filing taxes a lot easier. 1. Here are some key steps in the process: The nations top business mentorship network has many local chapters in the Great Lakes State: Access to information regarding the creation of a small business can help people plan wisely and avoid common pitfalls. To help support our reporting work, and to continue our ability to provide this content for free to our readers, we receive compensation from the companies that advertise on the Forbes Advisor site. It will help you stay organized and on task, while also serving as a "resume" of sorts when seeking additional investors. Starting a Cannabis-Related Business. The edibles market alone is responsible for nearly $10 billion of the profits earned in the marijuana industry for 2017. A graduate of Ball State University, Samantha was a newspaper reporter in southwest Michigan and Indiana before entering the cannabis industry. There is a lot of competition, so youll need to be prepared on all fronts in order to success. . Prior to joining the team at Forbes Advisor, Cassie was a Content Operations Manager and Copywriting Manager at Fit Small Business. https://everythingbuttheplant.com/blogs/blog/how-to-start-a-cannabis-bakery, Weisz, B., & Rosenblum, M. (2021, August). In this article, we will walk you through the steps you need to take in order to start a legal Michigan marijuana business. Thus, even if you find a property in a municipality that allows cannabis and is properly zoned, you also need to make sure the municipality is actually accepting applications for your license type. Visit this page for more information on the Michigan Business Tax (MBT) and head to the Michigan Department of Treasury to register your business online for taxes. Regulations for licensing any type of cannabis business may vary, but here were going to focus on obtaining a processing license. Hopefully this will change, and loan programs like the SBA will start allowing loans to cannabis businesses, but until that time, obtaining financing for your business is no easy task. Its a good idea to write a business plan to have a blueprint of what you want to do and how you will do it. I interviewed a single mother in Washington State who was making cupcakes from her tiny kitchen and making a great living. Forbes.Com. This should include your plans for recordkeeping, security, advertising, staffing, and others. Its a common misconception that the cannabis industry is an all cash business. An official summary of the CRC rules notes that "edible products resembling food are prohibited" from sale in any retail cannabis business in the state, with cookies and brownies specifically . After 30 days, you will not be allowed to buy any more. Dont be afraid of this sort of competition, just be prepared. Sources: Tax Foundation, Kauffman, U.S. Census Bureau: Statistics of U.S. The State of Illinois controls the licensure process for cannabis businesses. Each state has its own laws and taxes regarding businesses. We'd love to hear from you, please enter your comments. Business boomed that first year for recreational edibles. Every business needs money to get off the ground. The cannabis industry is unlike any industry you have ever worked in, and the regulatory, supply chain . 870,301 small businesses operate in Michigan, accounting for 99.6% of Michigan businesses. You will need to register for a variety of state and federal taxes before you can open for business. An Employer Identification Number (EIN) is a federal tax identification number that contains nine digits to uniquely identify a company. But generally, all states require what is listed below: *Again, this can differ state by state. Do existing businesses in Michigan offer a similar product/service? Here are the typical requirements for cannabis product packaging: Additionally, all of the following must be printed clearly on all edible packaging: When making your business plan, youll also need to address how youll advertise your product. The application fees are around $6,000. Figure out how to market your expertise: if your business idea is not something you totally believe in and can sell effectively, it will be much harder to succeed. If you enjoy baking and want to get creative in the kitchen, this could be a fun business opportunity for you. It costs $100 or less to file business formation documents with the state of Michigan. Then you can move on to filing the necessary documents to register your business with the Michigan state government. Legally, you and your business are one and the same, with no separate legal entity for your business. Step 4: Decide How Your Mushroom Farm will be Designed. When drafting an operating agreement or setting up a corporations bylaws, you will need to decide how the business will actually be run. If that is the case in your area, youll need to look into alternate channels to get the word out about your business. A great business plan should chart the path of your company from infancy to success while being able to attract investors to provide financing. Prequalification status is valid for two years. While forming LLCs and corporations is incredibly easy in Michigan, selecting your team and properly structuring your company are not quite as easy. Oftentimes, the most successful companies are defined by their ability to overcome the inevitable obstacles that operating in the cannabis space can present. The Great Lakes state ranks 12th overall in Tax Foundations 2020 State Business Tax Climate Index based on its low corporate and individual income tax rates, while US News named it the 5th most affordable state in the nation on the strength of its cost of living and housing affordability, both of which are top ten in the nation. Arizona. Cannabis Regulation. How to Start an Edible Bakery (Ultimate Step-by-Step Guide). We do not offer financial advice, advisory or brokerage services, nor do we recommend or advise individuals or to buy or sell particular stocks or securities. A statewide organization dedicated to assisting Michigan small business owners through free consultation and other educational services. Step 5: Identify and Municipally License Your Cannabis Property. The applicant has within two years to complete the Step 2 application. Get the Necessary Permits & Licenses for your Mushroom Farm. Under the MMFLA and MRTMA, whether and where you can locate your cannabis business is up to each individual municipality. This compensation comes from two main sources. The state no longer requires financial statements, real estate deeds, or three years of taxes. A certain percentage of an advertising platforms target audience must be under the age of 21. Establishing a sole proprietorship in Michigan requires no special filings if your business includes your own name, although if you plan to use an assumed name separate from your given name, with the Michigan Department of Licensing and Regulatory Affairs to confirm that your chosen name is available for use in the state. Supplemental applicants vary depending on the business structure. https://www.thompsoncoburn.com/docs/default-source/blog-documents/ranking-of-state-cannabis-regulations.pdf, California Department of Public Health. Edibles Outperform Cannabis Industry Growth in 2020 on COVID-Spurred Sales Surge. Think about what you will do, who you will serve and how the company will work. Many people dislike the idea of smoking marijuana and would prefer to eat the plant in baked goods or consume it as tea. Be patient: youll only want to proceed with the next steps after determining that a niche exists in the Michigan market for your business idea. Your business plan should outline how much capital is needed to start and run the business until it is profitable. Those forming an LLC are required to file Articles of Organization through the mail, online, or in person. AKA Limited Liability Company, this is a hybrid entity between a sole proprietorship and a corporation that possesses advantages of both. Choose a Business Location. Mjbizdaily.Com. Lansing, Michigan 48909, Michigan Department of Licensing and Regulatory Affairs How does your business idea refine an existing product or service? Applying for a final state operating license requires you to put together a number of plans to submit to the MRA, from recordkeeping plans, security plans, staffing plans, advertising plants, and more. A retail dispensary with little to no foot or car traffic is likely to struggle, and a building not well-suited for cultivation can increase your build out and equipment costs and dampen your yields well into the future. Nearly a year after Michigan voters approved the ballot proposal that legalized the use, possession, and sale of marijuana to adults 21 and older in November 2018. This is almost never the case. In Washington, this must be structured as a not for . Raising capital from investors is not an easy task, even with the outsized returns some opportunities in the industry can offer. Starting a business in Michigan is exciting but requires establishing the right entity, getting your financials in order and securing the perfect location. Between January 2020 and January 2022, Michigan saw a 24% small business revenue increase compared to 6.9% for the rest of the country. Once you file, youre free to run your business, but you must renew the assumed name certificate every five years. Registering your company means registering the business entity with the Corporations Division. Source: michigan-edibles. Because of the fact Cannabis remains federally illegal, almost no banks will lend to cannabis businesses, with the exception of a few that bank cannabis and lend only up to a few hundred thousand dollars in property-backed loans. Open a Business Bank Account & Credit Card. 3ccannabisconsulting.Com. If you have a high volume business, you may be better off with a bank that charges a higher monthly maintenance fee but no deposit fees, or vice versa. Register your business with the California Secretary of State. After settling on an entity, you can register your business with the state of Michigan. Finally, the MRTMA, or adult-use licensing law, allows for the licensing of recreational marijuana businesses and the sale of marijuana to anyone 21 years and older. Here, we will divide up industry opportunities into three different tracksbranding and licensing, ancillary businesses, and plant-touching. As a Michigan cannabis business attorney, we work with both licensed plant touching companies as well as cannabis companies that do not require an MMFLA or MRTMA license. A(n) Marijuana Edibles business doing business under an assumed business name in San Diego County i.e. Its not been an easy path, nor is it an easy way to get rich quick. Cannabis Market Taxation and Regulatory Compliance Analysis Grant Program. Smaller startups usually opt to pursue funding from angel investors. It is important that you put sufficient time and energy into this step since incorrectly structuring your company can lead to headaches, lost profits, and potential litigation down the road. For plant-touching companies, you will at a minimum need a cannabis business attorney and accountant who specializes in cannabis. After starting your prequalification process, it's time to search for cannabis real estate in Michigan. In order to register for taxes you will need to apply for an EIN. Are you planning on starting your own edibles business? Michigan became the first Midwest state to legalize recreational marijuana. Thompsoncoburn.Com. Covers property damage to business owned properties and possessions as a result of fire, theft, or storm. In states where advertising is legal, here are some of the typical regulations: It's clear to see that starting any kind of cannabis business is easier said than done, but its important to note that the edible business is particularly difficult because it is so saturated. No matter what type of business you form, buying insurance coverage to protect yourself in the case of property damage or legal action is a good idea. These include, a loan from the U.S. Small Business Administration. to see that your businesss name is available for use in the state. Focus on what you're passionate about. Identify your brand positioning and create a list of your ideal consumers. Thats how we help: we research products, write reviews, and create in-depth guides and how-tos on topics like ideation, marketing, financing, accounting, and human resources. This can be done online, through the mail, or in person. Luckily for cannabis business owners, the state has been loosening up on the qualifications for owning a Michigan cannabis business. To aid you in your journey towards entrepreneurial success, weve produced this guide to all the key steps of starting a business in Michigan, from drafting a business plan to securing funding from investors. Michigan finally opened applications for recreational marijuana businesses on November 1 st, 2019. https://www.cdph.ca.gov/Programs/CEH/DFDCS/MCSB/CDPH%20Document%20Library/AnnualApp_Checklist.pdf, Michigan Department of Licensing and Regulatory Affairs. For example, will you need to bring on investors? The process varies depending on whether you plan to run a sole proprietorship, LLC, or corporation. The Hidden Costs of Cannabis. Once you have an idea, its time to put it through the wringer and decide if its viable in the market. Updated 2020 Reg. There are thousands of opportunities to break into the Michigan cannabis industry via ancillary services and products. 4. The first step to starting your Michigan startup is finding the right business idea. In fact, businesses with employees are required by the federal government to have two types of insurance, while others are strongly encouraged or required at the state level, depending on your business type. I had worked in business, real estate and healthcare law prior to 2017, and saw the opportunity to pivot my law firm to servicing cannabis companies. 1. ; Health care and social assistance is the leading small business employer industry, followed by manufacturing, and accommodation, and food services. 4. is a wealthy individual who invests their personal finances in a startup, typically in the beginning stages, whereas a. is a group of investors that will fund a business throughout its existence. Many states have heavily restrictive advertising laws, some of which do not allow advertising whatsoever. This is also the time to decide how to structure your cannabis business. This will ensure your company is properly structured and protected from the beginning. Northwest can help. When a business is in its infancy, a low tax burden and manageable expenses can be major factors in its survival. The rules are effective immediately and will remain in effect for six months. What you do need is good branding concept, and most importantly, the work ethic and marketing budget to build that brand into a household name. https://www.michigan.gov/mra/0,9306,7-386-83994-454561--,00.html, 475B.090. There are many different routes you can take to acquire a municipally licensed cannabis property. The cost for start-up inventory (fresh and dried marijuana, cannabis-infused drink and food and alcoholic drinks and non-alcoholic drinks) - $20,027. What makes your business unique compared to the competition? Please try again later. This also has the advantage of making it easier to raise capital, since growing companies with a good operational history are much more attractive to investors than pie-in-the-sky start-ups. It is important to note that not all municipalities are the same. In phase two, the compost is kept in the right condition for growing. 2407 N. Grand River Ave. Now that you are prequalified and have a municipal license, the next step is to build out your facility and apply for a state operating license. Now that youve chosen your niche and have a plan, the next step is to form your company and choose your team. One of the biggest obstacles in starting a licensed cannabis business is obtaining enough money to get off the ground. Depending on the countries or regions where you do business, you may be subject to a set of rules that govern how you manufacture, market, and ship your products. There are a lot of steps involved in starting your business. 2. Step 4. What you will need is an lawyer with experience in negotiating cannabis licensing and white label deals, some start-up capital, and a very persuasive business plan or pitch deck. Something went wrong. The vote was 56% in favor and 44% opposed. An angel investor is a wealthy individual who invests their personal finances in a startup, typically in the beginning stages, whereas a VC is a group of investors that will fund a business throughout its existence. Set up Accounting for your Mushroom Farm. A business plan There are many considerations to take into account when selecting your business structure. The MMFLA, on the other hand, allow for the licensing of medical marijuana businesses and allows dispensaries to sell to any registered patient, including out-of-state patients in some cases. You can also purchase property with a municipal cannabis license or existing cannabis business, or obtain your own license. Now its time to write the blueprint of your business. But when you think of Michigan, you might think of beans. STEP 3: Register for taxes. Suppose you sell each cookie or brownie at roughly $5; this means you'll make a total sale of $2800 and $2600 (2800-200) in profits excluding any other ingredients and external expenditures. Licensing fees start at $4,000 and top out at $40,000, depending on . You can use the business plan when you talk to small business lenders at a local bank or Small Business Administration (SBA) office. Michigan Department of Licensing and Regulatory Affairs Michigan cannabis voters swarmed the booths and approved Ballot Proposal 18-1. Instead, you will need an attorney with corporate formation, structuring, real estate and contracting experience who also has experience representing cannabis businesses. Like any business, a formal business plan should be made, and in the cannabis industry, most municipalities require it before you can apply for a license. The more detailed the plan can be, the better it is for your overall strategic planning.