Real Estate Considerations When Starting an Adult-Use Marijuana Business

One of the biggest hurdles for those looking to break into Michigan’s emerging adult-use (recreational) marijuana market is finding a location for the marijuana business.  There are several factors that inform this decision both within and without the control of an entrepreneur seeking to enter the recreational marijuana market.  In additional, it is advisable to consider the location of your recreational marijuana business before, or at the very beginning of, the application process for a marijuana license.

First, there are the practical considerations when selecting the location of a marijuana business.  For example, those seeking to start a growing facility will require a large structure to accommodate the cannabis plants that will be grown, a secure transporter will likely need a small structure but a large parking lot, and a retailer may require a structure and parking lot that is somewhere in the middle.  Even the class of grower from the example above will inform the applicant as to the type of space that will be suitable for their business.  The applicant will also have to determine whether he or she desires to purchase or lease the property where the marijuana business will be conducted.

An applicant for one of the several adult-use marijuana licenses must also take into consideration the requirements imposed by the Michigan Regulation and Taxation of Marihuana Act (MRTMA) when looking for a location to run their business.  Property where a proposed marijuana business will be located cannot be in an area that is zoned exclusively for residential use and cannot be located within 1,000 of a pre-existing public or private K – 12 school unless a local ordinance shortens this distance, among other things.

Finally, the applicant must ensure that he or she is in compliance with the ordinances of the municipality where the property is located.  It is imperative that the applicant first knows whether the municipality at issue has not opted out of the MRTMA.  Assuming that the municipality has not opted out of MRTMA, an applicant must comply with the approval ordinances of the municipality.  Some municipality’s ordinances are more burdensome than others; as such, it is very important to work with a professional that is familiar with municipal law.  In addition, it is imperative to be aware of the number and type of marijuana businesses that a municipality will allow within its limits.  This is important for two reasons: 1) a municipality’s cap on the number of retailers, for example, that may conduct business within its borders and how many of those municipal licenses have already been issued will dictate whether an applicant can even set up shop at the desired property; and 2) it will give the applicant an idea of how much market share the applicant will have the area.  A municipality will also likely have ordinances that require marijuana businesses to be a certain distance away for churches, alcohol retailers, or another marijuana facility.

The application process for the emerging adult-use marijuana is still in its infancy and is being streamlined to make it more efficient every day.  However, choosing a location for a marijuana business is intimately tied to the licensure process at both the state and municipal levels.  For this reason, it is highly recommended that an applicant seek the assistance of a professional who is familiar with the MRTMA, the application processes at the state and municipal levels, and municipal law that dictates the number and permissible zones at which a marijuana business may be located.

Steven J. Enwright is an attorney and partner at Lippitt O’Keefe, PLLC in Birmingham, MI.  Steve advises clients in a wide variety of industries on business matters including general corporate counseling, mergers and acquisitions, start-up counseling, venture capital, corporate finance, technology licensing, and a variety of contract law matters. 

Contact Steve at senwright@lippittokeefe.com 

Jared M. Groth is an associate attorney at Lippitt O’Keefe, PLLC in Birmingham, MI.  Jared assists his partners in advising clients in a wide variety of industries on business matters including general corporate counseling, mergers and acquisitions, start-up counseling, venture capital, corporate finance, technology licensing, and a variety of contract law matters.

Contact Jared at jgroth@lippittokeefe.com