The Wolverine State is an increasingly hot recreational market. Check out this step-by-step rundown of how to win a Michigan grower’s license.
Now is a great time to get a Michigan grower’s license. Michigan is a hot market for several reasons. (And yes, all cannabis growers will need a license.)
Recreational sales doubled in 2021, and Michigan regulators do not limit the number of marijuana grower licenses they will issue in the coming years.
Even better, as of last December, marijuana law in Michigan dictates there’s no residency requirement — practically anyone can apply for a Michigan cultivation license for cannabis.
To help you understand how to get a Michigan grower license, this post provides a simplified breakdown of the process, rules, and license types. However, make sure to cross your T’s and dot your I’s if you choose to apply: read the Michigan Marijuana Licenses Rule Set (R 420) in full here.
Recent Amendments to the Michigan Cannabis Laws
- No requirement for a medical facility license: Unlike in the past, applicants for an adult-use license do not need a pre-existing medical cultivation license
- Application fees reduced: The pre-qualification application fee was reduced from $6,000 to $3,000.
- Residency requirement waived: Applicants do not need to be Michigan residents to qualify for a license.
- Renaming: In early 2022, Michigan renamed its cannabis enforcement division. Now, the Michigan Marijuana Regulatory Agency (MRA) is called the Cannabis Regulatory Agency (CRA) and it also regulates hemp distribution and sales.
How to Apply for a Growers License in Michigan
As defined by the Michigan Marijuana Facility Licensing Act (MMFLA), applying for a marijuana license is a two-step process.
First, the applicant must be pre-qualified based on their clean criminal background check, proper company structure, and strong finances. This step happens before a physical location needs to be established for the facility.
In the second step, after a successful qualification, the state approves the business plan and facility, and the applicant pays the full license fee.
Step One: Pre-Qualification
To qualify, all applicants need a clean criminal record. A felony in the last 10 years or a misdemeanor in the last 5 years (related to controlled substance, theft, or fraud) is an immediate disqualification. The state will require a background check and fingerprinting.
Every managerial employee and every individual or entity with >10% ownership stake must submit an application for pre-qualification. Elected officials may not apply for licensure — nor can employees of the CRA.
You’ll need to pay a $3,000 application fee for pre-qualification. Payments can be made by cash, check, or credit card.
The Michigan Cannabis Grower’s License Pre-Qualification Must Include
- Capitalization documents: The state wants to know if you have enough funding to execute your business plan. The minimum capitalization varies by license type and starts at $150,000.
- CPA Attestation: A certified public accountant (CPA) will need to review your assets. At least 25% of the equity needs to be liquid and easily accessible as cash, bonds, CDs, or money market accounts. The remainder can be invested in real estate, equipment, etc.
- Business documents: The state wants to see you have properly formed your business, so they will request copies of your corporate Operating Agreement, bylaws, and a description of your organization’s structure.
- Permissions and verifications: You’ll also need to authorize, acknowledge, and consent to a long list of agreements as listed in the pre-qualification checklist.
Step 3: Double-Check Your Public Persona
Before making an outreach, check to see if you “look the part.” The first thing the buyer will do is Google search your business.
Even if you sell in bulk and have no direct-to-consumer sales, you still need a website. If nothing else, your social media profiles should put your best foot forward because if your social media posts are unprofessional, too political, or too personal, that’s a red flag.
Instead, populate your page with images that show your process, your people, and your product. Close-ups of big colas are great, but make sure to tell your story in your feed and showcase your cultivation facility, knowledge, and the care you take with your harvest.
Step 4: Craft Your Story
It’s true: cannabis and hemp are commodity products.
Of course, there are differences in the quality and characteristics of cannabis (as is the case for soybeans and apples). And while cultivation is an artform, cannabis still meets the commodity definition: Purchasers are very cost-sensitive, and end consumers don’t buy products based on the wholesale supplier.
To get in the door, you need to overcome that commodity status with a great story. You need a “hook” to make your cannabis business and product stand out in the mind of the buyer.
Ask what’s interesting about your product. Do you have a medical backstory that brought you to cannabis? Are you preserving rare landrace cultivars? Are you a third-generation cannabis grower?
Crafting a story takes time, and this process starts months or years before you pick up the phone to call any given dispensary — so start soon! Weave your origin story into your social posts, website, and proposals from the start.
Step 5: Write a Proposal for Selling Cannabis to Dispensaries
You’ll adjust your proposal for every cannabis purchaser who requests one, but now is the time to get the details in order.
A proposal to sell cannabis to a dispensary should summarize your story and provide basic details like your company name, location, and license number. It’s also a place to showcase your advanced cultivation practices, so include details about your facility, cultivation techniques, and equipment systems.
Click the link above to discover more ways that Triminator can help you lower your costs, boost your quality, and sell more to dispensaries at a higher price point.
Your product description should express your expertise and love of cannabis. Display your potency and terpene numbers with charts and graphics. Then explain the medicinal outcomes those terpene profiles achieve for users.
Your proposal should also include the crucial details of how much, how often, and at what price. If a purchaser has requested a proposal, you’ll have this info. If you’re drafting a general proposal as a template, make note of how much product you could provide, and at what frequency.
Don’t worry about composing an actual contract; most dispensaries will have you use theirs.
A Note about State-to-State Differences
Every state and province has its own regulations, so the logistics of how you sell to a California dispensary are very different from how you sell to a Michigan dispensary.
You’ll want to check your state website for details on the licenses you’ll need to sell wholesale and the rules you should follow to stay compliant. But, if you take only those two states as examples, you’ll see a wide variance in their regulatory structures:
In California, cultivators usually need multiple specific licenses. They need a cultivation license that’s specific to the size of their canopy and their lighting system. And to transport their product, they’ll need to apply for an additional, Type 13 Transport-Only Distributor license. Otherwise, they’re reliant on third-party firms to deliver to retailers.
In Michigan, a third-party “secure transporter” must move cannabis products between locations, and the transportation firm cannot have an ownership stake or share employees with the cultivators it serves.
Always contact your regulatory cannabis office to clarify confusion and make sure you have the certifications, licenses, and permits you need.
Step 6: Make the Call . . . or the Email
Calling a dispensary’s corporate office is an acceptable way to get the contact details of the purchaser once you have their name. But you may encounter a gatekeeper, such as a secretary or an office manager, who offers to take a message rather than forwarding your call.
While it’s alright to leave a message, it’s far better to make direct contact. Try an alternative contact within the company and see if they can forward you to the purchaser.
Ultimately, you’ll schedule a call with the purchaser at a time that works for them. They typically arrange buying conversations once per month or once per week.
Emailing your prospect can be a good alternative to calling if you’re having trouble getting through. Online email-finder services are easy to use and often free. If you do email the purchaser, the goal is to introduce yourself and schedule a call — not to submit a full proposal. Caution: No, you cannot sell across state lines. Don’t inquire at out-of-state retailers. And yes, you need a cultivation license to sell to a dispensary.
Step 7: Ask the Cannabis Buyer the Right Questions
When you get the purchaser on the phone, you only have a few seconds to make an authentic connection and express the benefits of working together.
Rather than starting off by hyping your product, try offering a mutually beneficial opportunity. If you have a large following, you could feature their dispensary on your social media. Or if you’re promoting your private brand, you could offer to do in-store educational events — that’s a win-win for deepening relationships with consumers.
Most of your questions will be profiling the sale — that is, asking questions to find out more about their product needs. While there’s no script, these questions may help guide your conversation:
- Do you ever have a shortage of any particular type of flower?
- What kind of cultivars are most popular with your customers?
- What type of cannabis flower are you looking to feature? (CBD-dominant, sativa/indica, high-THC, etc.)
Depending on their responses, you can pair your offerings to their requirements and explain why working together might be a good fit. (Based on what you learn, you may also want to grow different cultivars to meet common demands.)
Pricing may be a deal-breaker. It is hard to anticipate the price a dispensary is willing to pay because, even if they sell to consumers at a premium, they may have high operating costs or debt payments that lower their margins. The best practice is to know the price per pound locally. A variety of websites track the wholesale price of cannabis on a state-by-state level, but talking to colleagues who are doing business with dispensaries in your area is best.
How Much Can you make Selling Cannabis to Dispensaries?
This common question is hard to answer; it’s based on how much you sell, at what price, and your cost-per-gram during cultivation and processing.
If you are a brand with retail packaging and good marketing, you’ll fetch a higher price but incur additional costs, such as advertising, packaging, and extra labor.
If you’re a small cultivator with limited funding and brand presence, profitably selling to dispensaries will be difficult because larger players can grow cannabis more inexpensively and access better distribution.
Step 8: Provide Free Samples when Selling to a Dispensary
Some experts recommend giving away generous samples — but not always. Samples help establish credibility with good reason: most dispensaries won’t put products on their shelves without personally trying them first.
At small dispensaries, it can make sense to provide an ounce or two (regulations permitting, of course). A small business will pass the product around to budtenders, and your sample will get more mileage. At larger dispensaries, your sample is likely to get lost in the shuffle.
The brand story you created will help your samples circulate through the staff more productively. An interesting persona behind the product will prevent it from falling into the category of “some new grower’s product we might try.”
Step 9: Follow Up with the Cannabis Purchaser
Stay in occasional contact with the buyer — even if they didn’t have an urgent need. You can email them with updates on your selections and company news.
Most retailers who are actively purchasing from you like a weekly update of your product selection. But, if you email more frequently, you risk straining the relationship.
For prospects who politely declined, you can stay in touch every month with updates about your company, selection, or whatever might add value to their business. Put your follow-up dates in your CRM.
Step 10: Or… Find a Distribution Partner Who Sells to Dispensaries
An easier option — albeit one that will cost you a fee — is to outsource the distribution to a dedicated salesperson or distribution agent.
An outside agent may already have relationships with dispensary purchasers. For purchasers, buying from a trusted representative makes decision-making easy; they don’t need to worry as much about quality control or your ability to fulfill orders because the agent has effectively vetted you.
The alternative to a specialized, local agent is a salesperson. A skilled salesperson will have the people and organizational skills you need to approach dispensaries and follow up on schedule — for a fee.
Improve Your Product Quality and Win
We hope this information on how to sell to dispensaries helps you score some new contracts with dispensaries. Our trimmers are designed to do the same — by increasing your product’s quality the easy way and keeping valuable trichomes intact and flavorful. When you’re ready to upgrade your trimmers or add a rosin line to your product offerings, don’t hesitate to contact a Triminator representative.