NILES — There’s no doubt that Michigan’s burgeoning marijuana industry has drawn a considerable number of deep-pocket investors to the state.
Even a few million dollars might not be enough to open a dispensary, and it’s considerably more than that to develop facilities where marijuana is grown and processed. Costs can quickly add up because of the permitting process, required security and prices for sophisticated grow and processing equipment.
Though those costs haven’t stopped would-be entrepreneurs from opening facilities throughout the state, consumers looking for a more boutique marijuana experience have had a harder time finding outlets, as micro-businesses have been slower to take off.
There are only two marijuana micro-businesses in the state — Sticky Bush Farms in Onaway and Sun Provisions in Decatur. But two more are headed for Niles and Buchanan this year.
Matt Rosinko and Michael Felder hope to open a marijuana micro-business called Regional Roots in Niles, at 919 Michigan St., before the end of summer. Meanwhile, Michael Walpole and his brother R.J. aim to open a small dispensary called Lifted in Buchanan, at 303 Carroll St., toward the end of the year.
Both businesses are being driven by experienced growers who honed their skills as medical marijuana providers in the region.
Rosinko, who lives in Niles, initially was drawn to marijuana because of injuries he sustained in an automobile accident and eventually became a grower and a provider about seven years ago. Walpole moved from Indiana to Colorado to learn about the business 14 years ago, but relocated to Buchanan several years ago to become a medical provider.
What’s a micro-business?
Unlike larger operators, Regional Roots and Lifted will be contained within one building where the plants will be grown, harvested, processed into a variety of products and sold in a storefront. Such businesses are limited by being able to have only 150 mature plants — defined as taller or wider than 8 inches — at any given time.
“The micro-business is more of a mom-and-pop shop,” said Rosinko. “It’s a far less expensive way of getting into the business.”
Both operators estimate they’ll have put at least $500,000 into the business before they can open and that they eventually could have 10 to 12 employees. Similar to other marijuana businesses that have sprung up in the region, they’ll also be filling up vacant building space and ultimately generating tax revenue.
In a report issued Thursday, the Michigan Department of Treasury said it distributed nearly $10 million in taxes collected on recreational marijuana to more than 100 municipalities and counties across the state, including more than $280,000 that was sent to Niles, Buchanan and other communities in Berrien County.
Unlike large marijuana growers that might be growing 1,000 plants or more at any given time, Rosinko and Walpole said they will be able to tend to their plants by hand and might focus on more exotic strains to carve out a niche in the market.
Though all marijuana sold in dispensaries is independently tested to ensure safety, both said they also will use solvent-free methods in the distillation process.
“We’re going to focus on quality over quantity — craft, quality cannabis,” said Rosinko.
Similarly, Walpole said he wants to include the words “Craft Cannabis Market” in the name of the Buchanan store to separate it from the competition.
Sanya Vitale, director of community development for Niles, likened such businesses to a microbrewery that focuses on distinct types of beer rather than trying to satisfy the tastes of a wide range of consumers.
“They take aim at a more distinct market,” she said.
Risks and drawbacks
Though micro-businesses were designed to be more financially feasible, they also come with risks and drawbacks, helping explain why more haven’t popped up across Michigan.
Chief among those problems are the limits on the number of plants that can be grown.
“We can only sell what we grow in the building,” Rosinko said. “We can’t just place an order if we run out.”
That potential shortage of inventory could make it difficult for a micro-business to maintain regular hours. It would also be precluded from selling its product to another dispensary should the business fail to draw enough customers.
Those are the types of things that can keep the owners of a micro-business up at night.
“My biggest concern is if something goes wrong with the crop,” said Felder, who is partnering with his long-time friend Rosinko to open Regional Roots in Niles. “It could cripple the operation if there was nothing to sell and bills to pay.”
Those involved in boutique operations say there’s a push to fix some of the issues facing would-be micro-business owners, such as allowing small shops to grow up to 300 plants or modifying the definition of a mature plant to provide more flexibility.
Even with the lower cost of entry into the cannabis industry, starting a micro-business isn’t for the inexperienced or those who aren’t confident in their skills growing and producing products from the plants.
“I know what I can get from a plant,” said Walpole, who also has worked as a consultant in the industry and is building much of the new Buchanan business with his brother. “If you had to pay for know-how, it would be downright scary.”