Although recreational cannabis is legal in 10 states, cannabis businesses face an uphill battle against outdated, conflicting, or constrictive laws. Whether it concerns banking or background checks, cannabis operators have to comply with many, many regulations to stay compliant.
However, one of the trickiest components of running a business in this industry is the complexities of cannabis real estate. The end of prohibition gave consumers and businesses a lot of freedom, but regulations on real estate make it a challenge to set up a storefront to serve consumers.
Cannabis real estate is a tricky area for dispensaries, growers, and manufacturers. Local licensing matters a lot here: one mistake in the paperwork means paying hefty fines, losing your business, or even jail time.
How do cannabis operators find real estate to connect with customers? They clearly can’t set up shop in a traditional retail space without acknowledging licensing, zoning, and more.
After legalizing recreational cannabis on December 1, 2019, Michigan is experiencing fallout from cannabis real estate restrictions. As a provision of legalization, each municipality can choose whether it will allow dispensaries in its area. Even if the municipality agrees to allow dispensaries, it can control the number of dispensaries and where they’re located.
Depending on the type of cannabis business, operators will have to obtain different types of permits. In Michigan, this takes the form of:
Micro-business: This license approves growing 150 plants and the right to sell the harvest in a retail shop, although you can’t sell the product to other dispensaries.
Designated consumption establishment: Also known as cannabis cafes, business owners have to comply with a gambit of rules, licensing requirements, and insurance red tape to open their doors.
Event license: This is a temporary license that allows operators to hold events selling cannabis.
Delivery: Businesses can deliver cannabis to individual consumers. Many Michigan dispensaries offer this option as a way to service customers in municipalities that don’t allow dispensaries.
Operators need to be very familiar with cannabis real estate guidelines in their state as well as their local jurisdiction. For example, Michigan permits cannabis use, but that doesn’t mean every city in Michigan will grant retail space to dispensaries.
Hopefully, as the American public accepts cannabis, regulations surrounding cannabis real estate will change. But for now, operators need to stay on top of the latest laws in their area to find appropriate retail space.
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