MiCIA members make their voices heard on Lobby Day
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14 COVER
PLANTING SEEDS IN LANSING
MiCIA members make their voices heard on Lobby Day By
Wensdy Von Buskirk
24 SMALL SCALE, BIG SUCCESS
Microbusiness licensees face unique challenges. Here’s how two in Michigan are making it work. By Kathy
Gibbons
DEPARTMENTS
10
20 GOVERNMENT
MiCIA reps share industry concerns with Michigan’s Senate Regulatory Affairs Committee By Mike
Lerchenfeldt
Steadfast Labs looks to the future as it celebrates a major milestone By
Becky Kalajian
28 PERSPECTIVE
State Sen. Jeff Irwin says proposed cannabis wholesale tax is a ‘bad idea’ By
Patrick Dunn
Concerns about state taxes are front and center after Gov. Gretchen Whitmer proposes a big hike By
34 OPINION
It’s time for a cannabis real estate reality check: The market for property has changed By Harry Barash, cannabis real estate pro
40 ICYMI
Michigan cannabis industry networkers flock to the Lansing area this past May for two events
Lobbying in Lansing
Ois advocating for our members in Lan-
sing. That’s something we’re constantly doing behind the scenes, and we continue to encourage our members to join us in making their voices heard directly as well. We’ve published many a column by our lead lobbyist, Kevin A. McKinney, about the importance of engaging with your lawmakers; the potential impact of developing a relationship with your state representative and senator — of putting a friendly face to this oft-misunderstood industry — is huge. In this issue of MiCIA Magazine, we wanted to share how we are fulfilling our mission of being “the leading voice for Michigan’s legal cannabis businesses” and to showcase how you, our members, have been joining us and actively pushing for fixes to the issues plaguing our industry. We are grateful for your efforts; there is, as the saying goes, strength in numbers.
the CRA’s public meeting in June, the agency’s enforcement abilities are limited. Laws would need to change for some of the concerns operators have to be addressed sufficiently.
MICHIGAN CANNABIS INDUSTRY ASSOCIATION
Our cover story this issue is about our Lobby Day this past March — our first in-person iteration of this annual event since the pandemic. About 100 MiCIA members showed up to meet with their legislators and share with them ongoing concerns about intoxicating hemp-derived products infiltrating the market, regulatory enforcement, and the governor’s proposed cannabis wholesale tax. We hosted a follow-up Lobby Day in May as well to connect members of Black Elevation, a coalition of Detroit-based cannabis operators, with legislators to discuss community investments from cannabis tax dollars, expungement reform for Detroiters, and the financial barriers to joining the industry. Turn to page 14 to read more about these two events.
I cannot overstate just how important it is that we discuss such issues at the legislative level. As Brian Hanna, executive director of the state’s Cannabis Regulatory Agency, stressed at
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The CRA presented similar messaging at a hearing before Michigan’s Senate Regulatory Affairs Committee in April. I was pleased to speak before the committee as part of this hearing as well. I was joined by attorney Douglas E. Mains, a frequent contributor to this magazine, who has unparalleled insight into the complicated legal framework of our industry. Rounding out our group was Alex Adams from testing lab Cambium Analytica, who discussed the potential dangers of intoxicating hemp-derived products that are readily accessible and not beholden to the same testing requirements as regulated cannabis products. You can read more about what we shared at this hearing on page 20.
As for the proposed wholesale tax, we dive into its potential implications — and how Michigan’s cannabis tax structure compares with other states’ — on page 31. Our state’s relatively low cannabis taxes are arguably one of the reasons the legal industry has exploded since adultuse sales started at the end of 2019. I would have to concur with state Sen. Jeff Irwin that the proposed wholesale tax is “bad idea.” As always, Sen. Irwin offers an astute, levelheaded analysis of the issue, which you can read on page 28.
All this to say, we know licensed operators are hurting right now and are struggling to make ends meet as bad actors continue to infiltrate the market and eat into their margins. We are working every day to advocate for change in Lansing, and we thank you for doing the same.
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KEVIN A. MCKINNEY Lobbyist kevin@mckinneyandassociates.net
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ON THE PRECIPICE
Multiple bills in the works could change the Michigan cannabis industry dramatically
By Kevin A. McKinney
Michigan’s divided government has been and continues to be as challenging as most political pundits expected. The House Republican majority under Speaker Matt Hall was aggressive in pushing forward with key initiatives this past spring. The $3.2 billion local road funding package and the rare bipartisan-supported Public Safety and Violence Prevention Fund with a targeted annual budget of $115 million are two primary examples of big policy and fiscal issues where there has been little to no alignment with the upper chamber. Additionally, the sharp partisanship between the two chambers has made it extra difficult to get both chambers in support, even when there is bipartisan sponsorship on the bill package. On top of that, the House Oversight Committee and its subcommittees have held several public hearings seeking information from the gubernatorial administration. It is fully anticipated that the level and number of these hearings will only intensify as we move into 2026.
Completion of the state budget for fiscal year 2025–2026, which statutorily is to be completed by the Legislature July 1, will go well past the deadline. Constitutionally, the state’s fiscal year starts Oct. 1, so even that could be pushed right up until the end with the threat of a government shutdown if the Legislature and governor fail to complete the budget. Not only are there far fewer surplus funds to cushion spending priorities, but the House also passed a road funding proposal that is revenue neutral and calls on the Legislature to find approximately $2 billion in general funds. Additionally, the proposed spending cuts at the federal level will severely impact critical services to Michigan’s Medicaid program and Healthy Michigan Plan as well as other social services safety nets and will blow huge holes in the state’s budget. So, these reductions, along with the highly politicized local road funding package, will be entangled with the budget negotiations over
the next several weeks and into the fall.
Of great concern and surprise with Gov. Gretchen Whitmer’s road funding proposal was the inclusion of a suggested 32% wholesale tax on recreational cannabis. This proposed tax would raise close to $500 million annually and is a significant component of the governor’s initial funding plan. The MiCIA has expressed strong opposition to the proposal and its very untimely impact on the cannabis industry. To date, there has been only a lukewarm reception from a few legislative offices that would consider this tax, and it would require a supermajority vote in both chambers to pass.
But as of this moment, all the governor’s proposed new revenue options remain on the table, and reports of closed-door sessions between legislative leadership and the governor do not bring much comfort to the current situation.
As a result of the MiCIA’s ongoing discussion with Sen. Jeremy Moss, D-Southfield, chair of the Senate Regulatory Affairs Committee, about challenges facing Michigan licensees and the cannabis industry, Chair Moss held a public hearing in April on the “state of the industry.” This hearing provided an excellent opportunity for both the MiCIA and the Cannabis Regulatory Agency to share with policymakers a more realistic analysis of the current cannabis market in Michigan. The information provided by the MiCIA has sparked action to address some of the most pressing MiCIA priorities: the introduction of a moratorium on all licenses in Michigan until the industry can stabilize and the booming illicit market can be effectively addressed by law enforcement and regulators. Work on these proposals will continue and form a bipartisan package; its introduction is slated for this fall.
Another key legislative initiative is dealing with the current unregulated and untested intoxicating hemp products that are getting into the hands of consumers, particularly
our youth. A significant bipartisan, bicameral package is targeted for introduction later this summer or early fall. Recently, we have been contacted by a few lawmakers expressing strong concern from their own communities about the large unlicensed grows that are exporting or illegally going into the regulated market.
House Bills 4390 and 4391that would allow for roadside testing of oral fluids are moving through the House. While the rise of impaired driving in Michigan is alarming, the bills remain controversial because of concerns with profiling and no standardization of impaired driving after the use of cannabis. The bills have an uncertain path still in the Senate.
Other legislation that the MiCIA will be closely monitoring will be the merger bill between the Michigan Regulation and Taxation of Marihuana Act and the Medical Marihuana Facilities Licensing Act, as well as the bill creating the authority for the state reference lab.
Finally, the MiCIA will continue to support efforts to secure funding in the state budget for the state’s social equity program even though this will be a much tougher funding request to negotiate with the House majority this budget cycle.
The proposed legislative packages that will be introduced this fall are a heavy lift in this political environment. Your ability to engage effectively with both the MiCIA and your own policymaker is critical to achieving success. No more standing on the sidelines if you expect to see favorable policy both in statute and administrative rules. I look forward to collaborating with you and assisting with amplifying your strong local voice for good and fair public policy.
KevinA.McKinney istheleadlobbyist for the MiCIA.
Kevin A. McKinney
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Planting Seeds in Lansing
MiCIA members make their voices heard on Lobby Day
BY WENSDY VON BUSKIRK // PHOTOS BY KENZIE TERPSTRA
Because of constant changes and external pressures facing the state’s cannabis industry, it’s more important than ever that Michigan Cannabis Industry Association members stay in touch with their legislators. To that end, the MiCIA hosts an annual Lobby Day — a tradition that brings members together in Lansing for networking and one-on-one meetings with representatives and senators from across the state. The goal: to educate lawmakers about cannabis policy and ways they can support a responsible and successful industry.
“The whole day is about the members and the issues that are important to them,” said MiCIA Executive Director Robin Schneider. “It’s so much more impactful when lawmakers are able to hear directly from members and form relationships with them. That’s why we host Lobby Day.”
Lobby Day launched in 2019 but moved online after two years because of COVID-19. This past spring’s event, held March 18, was the first in-person Lobby Day since the pandemic. About 100 MiCIA members participated, along with 89 legislators. Lawmakers who couldn’t attend because of scheduling conflicts sent aides in their place. Others arranged follow-up meetings or facility tours.
“It’s so much more impactful when lawmakers are able to hear directly from members and form relationships with them. That’s why we host Lobby Day.”
—Robin Schneider, MiCIA
Below, left to right: LaToyia Rucker, Shantonya Scott, Mark Snipes, Jay Snipes, and Rodney Wilson.
Rep. Donavan McKinney
During Lobby Day, key topics up for discussion included a steep proposed wholesale tax, the influx of illicit and intoxicating hemp-derived products in the market, and seemingly inconsistent regulatory enforcement.
“Members discussed a wide variety of regulatory complaints,” Schneider said. “It’s a great opportunity to meet legislators in their offices and share their concerns.”
THE AGENDA
Lobby Day began with a continental breakfast at MiCIA headquarters, located on the eighth floor of a corner building in downtown Lansing’s Washington Square. Members stopped by to greet staff and review discussion points before heading off to individual meetings with lawmakers. Many took advantage of the beautiful spring weather and walked the short distance to the Capitol.
After morning sessions, members regrouped at the MiCIA office for lunch and networking in the first-floor conference room. Following a quick group photo with the Capitol dome rising up in the background, the afternoon resumed with more one-on-one meetings.
Lobby Day 2.0
On May 14, the MiCIA hosted a Lobby Day for Black Elevation, a pioneering coalition of Black-owned cannabis operations based in Detroit that is dedicated to empowering and elevating the community through unity and collaborative action. The organization’s mission is to advocate for equity, share knowledge, and foster opportunities within the cannabis industry, ensuring that Black entrepreneurs have a powerful voice and necessary tools for sustained success.
Members of Black Elevation met with various lawmakers from the Michigan Legislative Black Caucus and Detroit Caucus throughout the day. Their discussions included key topics such as tax reinvestment in Black communities through education, job training, and business support; expungement reform for thousands of Detroit residents with cannabis convictions that still limit their opportunities; and efforts to reduce financial barriers to entering the cannabis industry.
—Kenzie Terpstra
Issue: Wholesale Tax
A top concern for many MiCIA members in attendance was Gov. Gretchen Whitmer’s proposed wholesale cannabis tax — which Bridge Michigan reports would be 32% — intended to raise $470 million for road repairs. Gregory Andrick, a partner in Detroit’s Utopia Extracts, was among those strongly opposed to the idea.
Growers simply can’t absorb the tax, Andrick said, because of high regulatory expenses, low margins, and plummeting wholesale prices; the cost would inevitably be passed on to consumers. As seen in states such as California, high taxes seem to go hand in hand with a vibrant illicit market, where customers can find cheaper, unregulated products.
“My initial read on it is that all this is going to do is drive business back to the black market and take legitimate people out of the industry,” Andrick said.
Legal operators already pay licensing fees and shoulder other costs as part of working in a heavily regulated industry. Factor in market saturation and price compression, and many are barely breaking even. An additional 32% wholesale tax, licensees fear, would be devastating.
“We spend a fair amount meeting the regulatory burden that anybody in the black market doesn’t have,” Andrick said. “It’s a matter of making sure legislators understand that this isn’t a font of money they can grab from. We don’t have it. It’s not in the industry.”
During Lobby Day, Andrick was slated to meet with Sen. Rosemary Bayer, Rep. Jason Morgan, and Sen. Mary Cavanagh.
“I think legislators pay much better, closer attention to their constituents who take the time to come meet with them,” he said. “It’s always helpful to make these connections. When something comes up, they’ll remember us and reach out.”
Issue: Illicit Products
Tom and Joey Cobau of Grosse Pointe Woods–based Cobau Engineering used their first Lobby Day to raise concerns about illicit and intoxicating products flooding the market. The father-son duo provide engineering support to cultivation facilities and extraction labs.
“We work with cultivators and processors,” Tom Cobau said. “A lot of them are struggling. We’re here to advocate on their behalf.”
The pair had meetings scheduled with Rep. Reggie Miller, Rep. Veronica Paiz, and Sen. Darrin Camilleri. They used this face time to urge action against unregulated products and bad actors. Of particular concern were intoxicating hemp-derived products being sold in gas stations, party stores, and tobacco shops — often without age restrictions or proper labeling.
“These products are being sold to kids and aren’t manufactured using tested, quality-controlled processes,” Tom Cobau said. “I get really worried about kids getting ahold of these products — and then the cannabis industry gets blamed.”
“These guys aren’t following the rules,” Joey Cobau added. “The legal way to do it is the best way to do it.”
Issue: Inconsistent Fines
Shantonya Scott, the communications manager for the city of Detroit’s Office of Cannabis Affairs, attended Lobby Day in part to advocate for more equitable enforcement. Representing Detroit’s social equity licensees, Scott voiced concern about excessive, inconsistent fines from the Michigan Cannabis Regulatory Agency.
“Research shows Detroit operators, especially social equity licensees, face disproportionate enforcement,” Scott said. “We’ve seen fines in the thousands — even $10,000 — for issues that shouldn’t carry that level of penalty, including self-reported violations.”
Scott’s team proposed several solutions, including a graduated penalty system starting with warnings, an independent appeals board to reduce reliance on costly legal help, and a safe harbor rule for voluntary disclosures of noncritical issues.
“We’re not asking to excuse wrongdoing,” Scott emphasized. “We’re asking for fair, consistent processes that don’t cripple new businesses trying to succeed.”
Issue: Unlimited Licenses
George and Denise Lynch, owners of the Green Stem dispensary, came to advocate for licensing caps, among other pressing
concerns. Based in Niles, Michigan, they also own Simplicity Farms and the Sticky Mitten brand. They say unchecked competition is driving operators like them out of business.
“When we got our license, we were told there would be a max of four dispensaries in Niles,” George Lynch said. “Now, there are seven.” Beyond Niles, in the sparsely populated area in Southwest Michigan near the border of Indiana, he has counted more than 40 dispensaries. “Unlimited retail is killing the market.”
This marked the Lynches’ third in-person Lobby Day. In prior years, they expressed gratitude for legalization and the opportunities it brought. This time, at their slated meetings with Sen. Jonathan Lindsey, Rep. Bradley Slagh, and Rep. Brad Paquette, their tone was more urgent.
“We’re not here to say thank you,” Denise Lynch said. “We’re here because we’re worried. There’s no clear path forward.”
LOOKING AHEAD
For MiCIA members John Wegener and
Top headshot: State Rep. Timmy Beson. Bottom headshot: State Rep. Matthew Bierlein. Above, left to right: Rick Gibbs, Cassie Foco, John Wegener, Joseph DiPiero, and Tyler Smith from Wojo Co.
Cassie Foco of Wojo Co., a grow and processor, Lobby Day was more than a one-off event. It was about building lasting relationships with lawmakers. The pair met with Rep. Timmy Beson that day, and Rep. Matthew Bierlein accepted an invitation to visit their Pinconning facility in April.
“I feel that they were actually interested in how these issues are going to affect our business and our industry in the state of Michigan,” Wegener said. “They have a genuine concern for the climate we’re in and the challenges this industry already faces.”
Lobby Day also led to follow-up for Detroit’s Office of Cannabis Affairs, as the legislative director for Rep. Donavan McKinney reached out to schedule an in-person meeting.
“It’s a valuable connection,” Scott said. “I don’t think many legislators fully understand what’s happening in our industry
or how it’s impacting our licensees, so we believe it’s truly helpful.”
Wegener agrees.
“It’s really easy to write laws based on a hypothetical, made-up version of what the cannabis industry is,” he said. “But when you leave all of the hardworking people and their families out of it, you miss the mark. That’s why we’re here.”
STAYING ENGAGED
While Lobby Day offers a powerful platform for cannabis operators to connect directly with lawmakers, the work doesn’t end there. If you missed this year’s event, there are still many ways to stay involved. Continue building relationships through your MiCIA membership, support the MiCIA State PAC as it endorses candidates who understand and champion the cannabis industry, and stay tuned for future events that create
opportunities to engage with legislators. The future of Michigan’s cannabis industry depends on informed, consistent advocacy — and your voice matters.
How to Contact Your Legislators
Want to connect with your state lawmakers? Visit legislature.mi.gov and use the “Find Your Representative” and “Find Your Senator” tools. You can call, email, or request a meeting to share your concerns and support for Michigan’s cannabis industry. Personal stories and respectful dialogue go a long way!
‘Not Just a Loophole’
MiCIA reps share concerns about intoxicating hemp-derived products and enforcement gaps with Michigan’s Senate Regulatory Affairs Committee
By Mike Lerchenfeldt
The Michigan cannabis industry’s evolving landscape took center stage at a hearing before the Senate Regulatory Affairs Committee in Lansing on April 23. Representatives of the Michigan Cannabis Industry Association took the hearing as an opportunity to educate lawmakers on the realities facing the state’s
licensed operators and the potential dangers consumers unknowingly meet. Dominating the discussion were concerns about unregulated conversion-oil products and the pressing need for more robust enforcement mechanisms.
“As expected with any new industry, there are unexpected regulatory issues and
loopholes that do need to be addressed now,” said Robin Schneider, executive director of the MiCIA. “We’ve had an ongoing problem with bad actors and criminals infiltrating our industry. They’re operating licensed facilities, sometimes through straw man deals.”
The MiCIA’s presentation detailed the potential consumer safety risks associated with
unregulated products that may bypass the rigorous testing in laboratories and other quality control measures mandated for licensed cannabis.
“There are a lot of issues with enforcement,” said Alex Adams, an MiCIA board member and the CEO and co-founder of Cambium Analytica, a testing lab. “It is this thin gate of compliance that ends up letting a lot of this illicit and unsafe product into the market. … I am here today to urge the committee to take action against the sale of hemp-derived THC and synthetic cannabinoids such as converted delta-9-THC, delta-8-THC, HHC, and many others.”
The proliferation of intoxicating hempderived products has added another layer of complexity to the regulatory landscape. While legalizing hemp, the 2018 federal farm bill inadvertently created a loophole that has allowed for the production and sale of psychoactive compounds derived from hemp.
“These products are being sold outside of the legal cannabis framework and are not just a loophole — they’re a direct threat to public health, youth safety, and the integrity of Michigan’s regulated cannabis market,” Adams said. In smoke shops and convenience stores, he added, such “chemically synthesized, psychoactive compounds with no regulatory oversight are being sold alongside energy drinks and vape pens, often in packaging that targets youth.”
The proliferation of such products — and the easy access kids have to them — is a “national issue,” said Brian Hanna, executive director of Michigan’s Cannabis Regulatory Agency. “There is an opportunity to make some policy decisions in the state of Michigan that other states are doing to deal with this until Washington, D.C., closes that loophole.”
During the CRA’s presentation, Hanna also outlined the enforcement challenges and limitations facing the agency. “We lack the authority right now to summarily suspend a license for egregious conduct,” Hanna said.
Additionally, he said, “we do not have authority over a non-licensed business, not with the current laws that we have.”
Illicit activity is hurting legal operators, Schneider said. “Our members are very frustrated knowing that illicit product has been imported from out of state and put into our market. It’s been going on for years.” Even though the CRA “is doing everything they can to try to stop it,” she added, they “can’t even shut people down when they catch them doing this.”
A moratorium on the issuance of licenses might help, Schneider said. “We are at a crossroads where if the CRA has to continue issuing new licenses indefinitely, by the time they get one business shut down, that operator is able to go pull another license and put it in a relative’s name and continue operating the same scheme in the next location.”
There is much work to be done, but the team at the MiCIA is encouraged that the Senate Regulatory Affairs Committee dedicated this time to understanding the challenges facing licensees and consumers. The hope is that this conversation will serve as a catalyst for meaningful reforms that will protect consumers and ensure a fair and safe marketplace for licensed operators.
This landmark hearing was live on Senate TV and is now available online for viewing at cloud.castus.tv/vod/ misenate?page=HOME
Representatives of the Cannabis Regulatory Agency (top) and the MiCIA (bottom) gave presentations about the challenges facing the industry before Michigan's Senate Regulatory Affairs Committee in Lansing on April 23.
“These products are being sold outside of the legal cannabis framework and are not just a loophole — they’re a direct threat to public health, youth safety, and the integrity of Michigan’s regulated cannabis market.”
—Alex Adams, Cambium Analytica
10 Years and Counting
Steadfast Labs looks to the future as it celebrates major milestone
By Becky Kalajian
Though Avi Zallen describes himself as a “cannabis nerd,” his involvement in Michigan’s cannabis testing industry has been anything but meek and mild.
In its decade of operation in Hazel Park, Zallen’s company, Steadfast Labs, has honed its reputation as a testing facility. Today, the lab has more than 30 workers, who fulfill 14,883 orders for 1,606 clients.
The company fuses the founder and CEO’s twin passions: cannabis and chemistry.
“I, like so many others, have been a cannabis consumer for many years,” Zallen says, adding that he “had close personal friends that relied on medicinal cannabis to relieve debilitating illnesses.” As a result, he “became a strong proponent for medicinal cannabis.”
Zallen — who also worked for 30 years as a scientist — says he saw an unmet demand for reliable cannabis testing as Michigan’s medical marijuana industry gained traction after legalization in 2008. “There was no safety testing and no confidence that these new products in the market were safe for consumption,” he says.
As the market grew, he kept his eyes on what was happening in Lansing. In 2013, House Bill 4271 to regulate medical marijuana provisioning centers was introduced; Zallen took note and “began preparing Steadfast to be ready for the new and soon-to-be required testing.” That bill wasn’t successful, ultimately, but Steadfast was ready by the time the Medical Marihuana Facilities Licensing Act went into effect a few years later.
“Steadfast was ahead of the game by 2016,” Zallen says, “and later became one of the first licensed labs in the regulated system for both medical and adult-use in Michigan.”
Avi Zallen (top and above right) is the founder and CEO of Steadfast Labs in Hazel Park. His background is in science, and his current role in the testing industry combines two of his passions: cannabis and chemistry.
The cannabis market has changed a lot since then, but Steadfast’s goals remain the same, Zallen says. “Steadfast was founded to develop and provide reliable and trustworthy scientific testing methods to assure access to safe cannabis. That is still our passion and our company’s mission to this day.”
Early on, Steadfast offered comprehensive testing services, including for cannabinoid and terpene potency, microbiology, residual solvents, and pesticides. “We [had] the first USP-validated microbiology lab in the cannabis industry,” Zallen says, and Steadfast was “the first to offer pesticide testing in Michigan.”
The lab continues to innovate, and Zallen highlights two things in particular that he believes set Steadfast apart: “Our in-house methods are the most advanced, and we are not stuck with a single instrument provider. We use the most capable instrument for every specific test.”
Zallen and his team aren’t just hard at work in the lab itself. They’re also facing an external challenge head-on: educating consumers.
“Steadfast has had several initiatives to help educate cannabis consumers over the years, such as presentations and lab tours,” Zallen explains. “We even had a concert series, but it has been a heavy lift. I will admit, cannabis consumers still are often not aware of the safety risk associated with inaccurate lab testing data on labels. Knowledgeable cannabis consumers know that THC percentage is not the determining factor for potency, but many consumers continue to make purchasing decisions based only on a THC label number that is all too often inflated. Unfortunately, progress in this area has been slow.”
When asked what advice he would give to new cannabis testing companies entering the market today, Zallen is blunt:
“Please use a calculator first. It’s far too overcrowded already; margins are razor thin. … Look to other states.”
Following his own advice — with an eye on the next decade — Zallen is exploring opportunities in other states and has launched two new ventures: Steadfast Capital Advisors, which is focused on cannabis business acquisition advisory services, and Steadfast Intellectual Property, which provides licensing for IP in lab methodologies and sampling software.
Meanwhile, at the lab, Zallen maintains that Steadfast’s longevity and reputation are a huge advantage in a testing market he views as oversaturated.
“We have stayed true to our core values of protecting consumers and scientific integrity,” he says. “We plan to be here 10 years from now and still be the best in the game.”
“We have stayed true to our core values of protecting consumers and scientific integrity. We plan to be here 10 years from now and still be the best in the game.”
—Avi Zallen, Steadfast Labs
Steadfast Labs team members, from left: Avi Zallen, founder and CEO; Bryan Pina, director of business development; Romi Warra, lab director; Dana Colling, director of operations; Meghann Murray, lab director; and David Sherman, COO.
Eric Parkhurst (left) is the founder of Winewood Organics, a microbusiness in Ann Arbor that grows, processes, and sells cannabis. Winewood Organics operates under Michigan’s original microbusiness license, but as the CRA proposes updates, Parkhurst is all for a change that would enable him to increase his grow.
“We’re not chasing the trends; we’re doing what we think is cool and what our customers want us to do.”
—Eric Parkhurst, Winewood Organics
Small Scale, Big Success
Microbusiness licensees face unique challenges. Here’s how two in Michigan are making it work.
BY KATHY GIBBONS
When Eric Parkhurst wanted to make the jump from being a medical marijuana caregiver to going into business as state laws changed to allow adult-use cannabis, he opted to get licensed as a microbusiness. It was a no-brainer, he says.
“It allowed us to do everything I wanted to do, but the cost was only $8,300 a year,” says Parkhurst, owner of Winewood Organics in Ann Arbor. “The costs have come down since, but then it was the decision of $168,000 a year versus $8,300 now.”
The original license type for microbusinesses — which David Harns, public relations manager for Michigan’s Cannabis Regulatory Agency, describes as “essentially small-scale vertically integrated businesses operating under one license” — was established in 2018 as part of the Michigan Regulation and Taxation of Marihuana Act. Initially, microbusinesses were allowed to cultivate a maximum of 150 plants, process and package cannabis, and sell cannabis in their own retail outlet.
“This was the only license type that could do a combination of growing, processing, and selling,” Harns says, noting that the model is similar to that of a Michigan microbrewery. “All other license
types — grower, processor, retailer — can only do one [of those functions]. But [microbusinesses] can only grow 150 plants, can only operate one location, can only sell at their location, and can’t sell their flower or infused products to other businesses to sell at retail.”
Early feedback indicated that the model’s limitations made success hard to achieve, Harns say. That led the CRA to create the class A marijuana microbusiness license that permits licensees to grow up to 300 plants, package cannabis, purchase cannabis concentrate and cannabis-infused products from a processor, and sell cannabis to customers at retail.
“The tradeoff compared to a regular microbusiness is they can grow more plants and purchase marijuana from other licensees to sell, but they cannot process their own infused products,” Harns says. “Buying from other licensees allows them to sell a greater variety of products, but they cannot make their own.”
As of April, six microbusinesses and 11 class A microbusinesses were licensed and active in Michigan.
The CRA is hearing that both license types still pose challenges for these small-business owners. As a result, Harns says, the agency has proposed changes to the rules governing class A
microbusinesses.
“Under the proposed rules, class A microbusinesses would also be allowed to process and package marijuana and sell flower to growers, processors, or retailers,” Harns says. If the rule changes are adopted, he notes, most microbusinesses likely will get licensed as class A instead because of the additional operations allowed under that license.
FARM TO TABLE
While functioning as a microbusiness has worked for Winewood Organics, Parkhurst is all for a change that would enable him to increase his grow. Since opening a few years ago, he’s been operating under the original microbusiness license that caps the number of plants at 150 while allowing processing as well as retail sales. At 5,000 square feet, his building is full with three grow spaces, a processing lab, a small kitchen, and a retail area.
“We’re pretty built out, but we could do two tier if we were allowed 300 plants,” he says.
Parkhurst describes his operation as “farm-to-table style” with everything done on-site. Winewood Organics grows, packages, and sells flower in glass jars to preserve freshness and avoid crush. “We grow it all in living, organic soil as opposed to hydroponically fed fertilizer … to get a little better flavor and smell,” Parkhurst says.
Winewood’s gummies include vegan and gluten-free options, and at press time, a sugar-free version was in the works. Other products include pre-rolls, live resin cartridges, live rosin, chocolates, THC drops, and bubble hash.
All in all, it’s proved a good model for his business so far.
“Especially given the space that we have, it works out good,” Parkhurst says. “We kind of just do it our own way, and we work with
our customers. We’re not chasing the trends; we’re doing what we think is cool and what our customers want us to do.”
ABUZZ IN HAZEL PARK
Curtis Goure says the lower fees also drove his family’s decision to seek microbusiness licensing for The Hive at B.D.T., which opened in Hazel Park in 2023. His daughter, Dana Elgie, owns the business that is currently operating under the class A license that allows up to 300 plants and retail sales of its own cannabis along with processed products from other sources. Under the license, The Hive can’t do any processing of its own.
The Hive is adjacent to B.D.T.’s smoke shop, owned by Goure and his wife, Traci. During his years operating the head shop, Goure had been a longtime proponent of legalizing adult-use cannabis. Elgie, meanwhile, was a caregiver for 13 years prior to giving up that license to open The
Far right: Dana Elgie (right) is the owner of the Hazel Park microbusiness The Hive, and Carly Gilewski (left) is the director of operations. Right: Elgie's parents, Traci Goure (left) and Curtis Goure (right), who own the adjacent smoke shop, pose with the one and only Tommy Chong (center).
Hive. (She recently had a baby and was on maternity leave as this article was being developed.)
Although Goure, as a fellow business owner, is always there to give advice, “all of the nuances of operating a cannabis operation and picking strains and creating the image that it’s women owned and operated — that’s Dana’s genius,” he says.
Working with Dana is Carly Gilewski, The Hive’s director of operations, who has been with the business since a year before it opened. “I had been recruited due to my knowledge of the Metrc system and launching another retail store,” she says. She’s been involved with just about everything, “from choosing our financial institution, equipment and supplies, a
point-of-sale system, merchandising, product purchasing, as well as cannabis compliance.”
Depending on the strain and type of lighting, which The Hive continues to experiment with as it tries to expand yield, Gilewski says the grow operation sees two to three harvests a month. All of it goes directly to the sales floor, where Gilewski says it’s offered “deli-style” in large jars for customers to see and smell.
“We apply the same deli-style service with live rosin and live resin,” she explains, highlighting the freshness of the concentrates carried at The Hive. “There is no sitting on the shelf prepackaged for long periods of time.”
Other products The Hive sources
include gummies, infused beverages, vape cartridges, infused flower, and more. Gilewski says The Hive likes to support other women-owned brands, such as Triple Phoenix. “They carry some unique lowdose products like chocolate chips,” she says.
The Hive focuses on educating and working one-on-one with customers, Gilewski notes. One of them is Adasia Pope, who was a longtime patron of B.D.T. before The Hive came along. Now her loyalty has grown to include The Hive.
“I enjoy that it’s a smaller dispensary, so that adds to the customer service and also to the flower quality,” she says. “You just get that personalized feel.”
“I enjoy that [The Hive is] a smaller dispensary, so that adds to the customer service and also to the flower quality. You just get that personalized feel.”
—Adasia Pope, customer at The Hive
STATE SEN. JEFF IRWIN:
Proposed Cannabis Tax Is a ‘Bad Idea’
The longtime industry advocate weighs in on Gov. Gretchen Whitmer’s plan to fund road repairs
By Patrick Dunn
In February, Gov. Gretchen Whitmer proposed a new tax on cannabis as part of her “Mi Road Ahead” plan to fund road repairs in Michigan. The governor’s office has estimated that the tax, which would come on top of the existing 10% excise tax and 6% sales tax on cannabis, would raise $470 million toward a proposed $3 billion for transportation infrastructure improvements. The proposal was presented as closing a “loophole” that exempts cannabis products — in contrast with tobacco products — from wholesale tax. The governor’s press release about the proposal did not specify what the new tax percentage would be, but Bridge Michigan, looking to the tobacco industry, reported a few days later that such a wholesale tax would be 32%.
WHAT KIND OF DAMAGE DO YOU FORESEE THIS DOING TO THE INDUSTRY IF IT DID TAKE EFFECT?
The plan has raised grave concerns in Michigan’s cannabis industry. We connected with state Sen. Jeff Irwin, a longtime industry advocate, to get his take on the proposal, its viability going forward, and the effect of such a tax on the cannabis industry.
This interview has been edited for length and clarity.
WHAT IS YOUR STANCE ON THE
PROPOSED CANNABIS TAX?
It’s a bad idea. I think it overestimates the revenue potential and underestimates the damage that big tax increases would do to the legal industry.
Different states have attempted different approaches at legalizing, regulating, and taxing cannabis. Michigan has the best law in the country. When many of us set out to create this law, one of my goals was that at the end of the day, it should be the rational choice for consumers and producers to operate in the legal market. That’s how we win long-term.
In states like California or Colorado, who have much higher taxes on cannabis, you see a much lower percentage of the trade in cannabis in their states happening in legal environments and a much higher percentage happening in illicit environments. And so if Michigan goes the way of California by boosting our cannabis tax, that’s going to push a whole lot of buyers, a whole lot of producers, out of the legal market and back into the illicit market.
HOW DO YOU THINK THE REVENUE POTENTIAL OF THE PROPOSED TAX IS BEING OVERESTIMATED?
Close Marijuana Loophole
The Mi Road Ahead Plan will close a loophole that exempted the marijuana industry from wholesale tax, which is applied to similar smoking products, like cigarettes, and other tobacco items. A er voters legalized marijuana, the industry has grown exponentially thanks in part to Michigan’s industry-friendly taxes, the fourth lowest in the nation. The industry, which recorded billions in sales in 2024, uses Michigan roads to transport marijuana multiple times throughout the process, including to grow operations, testing labs, distribution hubs, and finally retail stores. This will add an additional $470 million to help fix roads across the state.
As a result of economic activity going back to illicit markets, the assumptions upon which those revenue estimates are based would cease to be true. I would just encourage legislators to go out there and ask some of the consumers in their area, if they had to pay an extra $10 or $20 or $50 to buy their product, would that push them to go back to the illegal market? And I think you’ll find that for many consumers, that inflection point is not too far off from where we set the tax, at 10% plus 6%.
DO YOU THINK WE WOULD SEE A LOT OF OPERATORS CLOSING UP SHOP IF THE PROPOSED TAX TOOK EFFECT? You’re already seeing some people shake out of the industry due to competition and due to low prices. I think this will accelerate that dramatically. There are a number of operators who are on the edge and trying to hold on. This is the last time we should be stomping on their fingers as they try to hold onto this cliff and survive this difficult time in the industry.
THIS PROPOSAL HAS BEEN PRESENTED AS CLOSING A LOOPHOLE THAT EXEMPTS THE CANNABIS INDUSTRY FROM THE TAXES THAT AFFECT TOBACCO PRODUCTS. WHAT’S YOUR RESPONSE TO THAT?
I don’t know which creative writing major came upon that particular phrasing, but it doesn’t make sense to me. While politicians sat on their hands in Lansing, the citizens wrote a good initiative, passed a good initiative, and, in doing so, set that tax rate. There’s no loophole. I think that was just a creative term that was attached to this pro-
posal to try to help propel its consideration.
WHAT ALTERNATIVES COULD BE USED TO GENERATE THE FUNDS THE GOVERNOR IS SEEKING TO FIX MICHIGAN ROADS?
We need to realign the formula so that the revenue from the gas tax actually goes to the communities that have the traffic and have the roads that are generating those tax revenues.
The other big piece is that Michigan has continued to build a new road infrastructure to serve new people in farther-flung areas and has been unwilling to fix the infrastructure that we had already built. We should fix [existing roads] first. Beyond that, I think the best approach is to utilize user fees. We should be doing more to get revenue from out-of-state and overweight trucks.
DO YOU THINK THERE’S MOMENTUM BEHIND THIS PROPOSAL?
I’m not hearing a lot of energy behind it, but it’s possible that I’m not the one that
folks are [contacting] to lobby in favor of it. What I’ve heard from the governor’s team is just that they really want to get this road issue addressed in a more thorough and sustainable way. They felt an obligation to propose something, and this was a part of it.
There are some other revenue options, like potentially increasing our corporate profits tax. But the way that the House Republicans have advanced their plan makes it harder to get any sort of a deal, because their plan is really more of a press release. It’s built on a lot of hope and creative accounting.
IS THERE ANYTHING ELSE YOU’D LIKE TO ADD ON THIS TOPIC?
There’s a lower barrier of entry to get into the cannabis business in Michigan than in other states. And that was done intentionally, because we wanted there to be real competition between different types of players. If you have a family that owns just one shop, and they’re struggling to get by, and they don’t have big out-of-state investors, this [new tax] could be the thing that knocks them out of the industry. I really don’t think we want that. I don’t think [the proposed tax is] in the public interest. I don’t think it’s in the interest of consumers. And it’s certainly not in the interest of those small-business operators who just want to get a chance to compete.
“There’s no loophole. I think that was just a creative term that was attached to this proposal to try to help propel its consideration.”
A Taxing Issue
Concerns about state dues are front and center in the Michigan cannabis industry after Gov. Gretchen Whitmer proposes a big hike
By Paris Giles
When Michigan voters legalized adult-use cannabis in 2018, it was lauded as a win for the industry — and mostly it was. But turns out, it’s complicated. Almost seven years later, operators are hurting financially. Low prices, continued federal illegality and the financial setback of Internal Revenue
Code Section 280E, and other obstacles in the industry are taking their toll. Now, the question of state taxes is causing even more concern after Gov. Gretchen Whitmer proposed a new tax earlier this year.
“Most [cannabis businesses] are paying between 30% and 60% in overall taxes,” notes Cassin Coleman, who works
countrywide, including in Michigan, in the licensing and compliance space, and also in advocacy. In fact, when we speak in mid-May, Coleman is headed to Washington, D.C. Given the precarious state of Michigan’s cannabis industry, it’s no wonder that eyes rolled and throats tightened when, in February, Whitmer’s office proposed closing a “loophole” exempting the cannabis industry from wholesale tax. The goal of such a change would be to raise $470 million as part of a $3 billion budget to improve the state’s transportation infrastructure. Coleman explains that experts back-calculated and figured this would mean a 32% wholesale tax on cannabis in order to funnel money toward improving Michigan’s roads.
“Most people are already operating in the red, literally using lines of credit from everywhere or not paying their bills to make ends meet,” Coleman says. “So even a small change in what’s required to be paid could potentially put hundreds of retail locations and processors and farmers to the point where they can’t keep up.”
Coleman also notes that it’s not uncommon for some cannabis companies to structure their operations so they have individually licensed operations that are associated but not actually the same entity. “So you could be talking about a company that, for all intents and purposes, is vertically integrated, from cultivation all the way through retail or even a designated consumption establishment,” they say. “But they all have slightly different investment partners and are all separate entities, even though there may be one majority shareholder.” Would a 32% tax apply each time materials are transferred from entity to entity?
It’s unclear how it would all work, if
approved, but the industry is understandably worried. One concern that’s been raised is whether the wholesale tax would be essentially passed on to consumers — who already pay a 6% sales tax and a 10% excise tax — through higher prices. If so, would that turn enjoyers away, ultimately, from legal establishments back to black-market dealers? Coleman doesn’t necessarily think so.
“It is more expensive today to buy an eighth on the [black] market by about double, sometimes more than double, than it is to buy in a licensed dispensary,” Coleman says. “And while I appreciate that people think that we might go back to that direction because we’d have to do something about pricing, the fact is, pricing today is not sustainable, and consumers aren’t willing to pay more.” Could consumers slowly trickle back toward the neighborhood dealers over time? Maybe.
What’s more likely, Coleman thinks, is consolidation. “We’ll see a lot of smaller businesses, craft businesses, go out and not be able to exist any longer.”
So far, the 32% cannabis tax proposal is just that: a proposal. As of this writing, no new law has been passed, and so there is still time to bend the ears of your local lawmakers. “Maybe she’ll change her mind,” Coleman says about Whitmer. To that point, this issue’s cover story spotlights the Michigan Cannabis Industry Association’s annual Lobby Day, held this past March in Lansing. Lobby Day is an opportunity for MiCIA members to meet face-to-face with legislators to share their concerns and provide valuable insight into the industry. The proposed wholesale tax on cannabis was just one of several issues brought up during the course of the day. Read more about the MiCIA’s Lobby Day on page 14.
“Most people are already operating in the red, literally using lines of credit from everywhere or not paying their bills to make ends meet. So even a small change in what’s required to be paid could potentially put hundreds of retail locations and processors and farmers to the point where they can’t keep up.”
—Cassin Coleman, industry consultant
Cannabis Taxes by State
See how Michigan’s rates compare with a few other major players’
The use of recreational cannabis is currently legal in 24 states and Washington, D.C., and state tax codes vary widely. See how a few of the other major players’ tax regulations compare with Michigan’s.
CALIFORNIA
Cannabis sales in the Golden State are subject to a base sales and use tax of 7.25% (more in certain areas), and at press time, the excise tax was set to increase from 15% to 19% on July 1; that’s subject to change every two years under the current tax code. Also at press time, Assemblymember Matt Haney, D-San Francisco, was sponsoring Assembly Bill 564, which, if made law, would cancel the excise tax increase.
COLORADO
Recreational cannabis and cannabis-infused products sold in Colorado are subject to a specific 15% sales tax, while the state’s standard 2.9% sales tax gets tacked onto medical cannabis and tangible accessories such as bowls or papers. Recreational cannabis and products are exempt from that 2.9% sales tax.
ILLINOIS
Cannabis cultivators in Illinois are subject to a 7% wholesale tax at the initial sale. On top of the state’s general 6.25% sales tax (and any local taxes), consumers buying cannabis with an “adjusted” (i.e., there’s math involved) delta-9-THC level at or below 35% are subject to an additional 10% excise tax; that goes up to 25% for cannabis with more than 35% delta-9-THC. Edibles are hit with a 20% tax.
—Paris Giles
Cannabis Real Estate Reality Check
The market for property has changed
By Harry Barash
For many, joining the cannabis real estate game used to mean finding a property in the green zone and paying over market value for the privilege to get into this unknown and federally illegal industry. Prices could be as much as two times market value for warehouse/industrial space and up to 10 times market value for retail space depending on the location. During the early licensing period, even those ridiculous numbers were justified based on the market prices for products at the time and the margins for retailers.
After their doors opened, many cannabis businesses went from a healthy projected return on investment to set up for failure within a 12-to-24-month period. Everyone was committed to cannabis and had to move ahead or lose what they had invested. For the first several years of licensing, the only option to get into the booming industry was to pay for inflated first-generation real estate. Many got in for much higher on the flip. In addition to the elevated real estate prices, the cost of getting into the cannabis space in general was significantly higher than in other industries. A multitude of factors were to blame: continued federal illegality; ridiculously high licensing fees; the pandemic; Internal Revenue Code Section 280E; and contractors, subcontractors, and others who were charging a premium while prices were crashing. We all knew this was coming, but it happened way faster and more dramatically than anyone anticipated.
Here we are today: The price of flower could not be lower, the market is oversaturated, and annual retail sales are projected to decline from $3.27 billion in 2024 to $2.7
billion in 2025. There are no signs that wholesale pricing will be going up anytime soon, so survival through 2026 should be a good indicator of who will likely be around for the long game.
The price of flower directly impacts cannabis real estate. We went from everything being obnoxiously overpriced to warehouse space having the same value for cannabis uses as for anything else. Retail space is still overpriced but not nearly as much as it used to be. You must be more fiscally responsible and disciplined this time around and learn from the mistakes that got this industry where it is today.
The first consideration of a successful retail store is, and always will be, location, location, location. You can still be successful with a B location and an A operator. If you have both, you will be around for a long time. We are seeing contraction on the retail side in many of the oversaturated markets, such as Bay City, Flint, Battle Creek, Big Rapids, and Lowell. The market is telling us how many stores we need and what and how much they can sell. Now more than ever, manufacturers are looking at becoming retailers or increasing their retail footprint to have more control of their supply chain and be less reliant on the wholesale market, which makes sense if you can figure out how to run retail.
What is the outlook if you are looking to buy or sell? If you are looking to buy, you could do it organically and build out something from scratch. But that is neither practical nor popular these
days, especially when there are plenty of options to choose from now — and likely more in the future — among closed, mostly turnkey facilities available below replacement cost. Many of these spaces will need work done depending on their age and how they were originally built out. If you are a seller, you must be prepared not only to take a loss but also to offer competitive seller financing terms. Sellers that require all cash will not get serious consideration unless their properties can be purchased at a drastic discount. All deals vary based on circumstances. A fair number of companies received temporary financing from institutions that were willing to lend to the cannabis industry, at terms that were not meant to be sustainable in the long run. As a result, you are seeing defaults on loans, receiverships, foreclosure, and, in some cases, personal bankruptcy, which is a whole other subtopic of the industry. I also anticipate more joint venture partnerships, operating/management agreements, and mergers/acquisitions where there is less out-of-pocket cost for the buyer, while the seller maintains some level of ownership with the hopes of getting a better ROI. At this stage in the game, the real estate market boils down to what someone is willing to sell for and what someone is willing to pay.
Harry Barash is the founder of MiCannaPros and is a commercial real estate and cannabis industry professional.
PHOTO BY WILSON SARKIS
Community Choice Credit Union
Elevating cannabis finance with Choice Cash Services
The Michigan cannabis industry is booming, providing economic growth and job opportunities across the state. Yet, many cannabis-related businesses still struggle to access basic banking services. Community Choice Credit Union has stepped up to bridge this gap with Choice Cash Services, a solution designed intentionally around the unique needs of Michigan’s cannabis entrepreneurs.
Leading the charge in Michigan is Donna Bashi, vice president of business development, whose deep knowledge of compliance and financial services helps businesses navigate the industry’s evolving landscape. Supporting the expansion of this work is Dr. Jason Abate, national sales director, whose focus is on breaking down access barriers and growing the cannabis banking team across multiple markets.
Cannabis businesses face complex financial hurdles because of federal banking restrictions, which make traditional banking access difficult. Community Choice recognized this challenge early and built Choice Cash Services, a program that prioritizes security, compliance, and streamlined financial support.
With industry-specific expertise, the team helps cannabis business owners navigate regulatory requirements, ensuring their financial operations remain compliant while minimizing risk. From cash deposit solutions to lending services, Choice Cash Services offers financial tools that empower businesses to grow sustainably and safely.
Beyond servicing the companies themselves, Community Choice is committed to helping the employees who keep Michigan’s cannabis industry thriving. The program extends benefits beyond basic cash management, offering financial education resources, lending opportunities, and tailored support for cannabis professionals.
Whether it’s assisting with direct deposits, providing personal banking solutions, or offering home and auto loans, Community Choice ensures that employees have access to the same high-quality financial services that workers in any other industry have. By breaking down barriers, the credit union helps cannabis workers gain stability and security in their financial lives.
The difference between Community Choice and other financial providers lies in the credit union’s intentional approach. Rather than a one-size-fits-all solution, Choice Cash Services is built around the real needs of cannabis
businesses and their employees.
• Expert compliance guidance: Navigating Michigan’s cannabis regulations can be overwhelming, but Community Choice simplifies the process with hands-on support from financial professionals who understand the industry inside and out.
• Secure cash-handling solutions: Thanks to Community Choice’s specialized cash deposit services, business owners can confidently manage their revenue while mitigating security risks.
• Flexible lending options: Whether for business expansion, equipment financing, or real estate investments, Choice Cash Services ensures cannabis entrepreneurs have access to financial resources that fuel long-term success.
As Michigan’s cannabis industry continues to grow, Community Choice remains committed to supporting its financial well-being. With the leadership of Bashi and Abate, Choice Cash Services empowers business owners and employees alike — offering financial stability, compliance guidance, and the security they need to succeed.
Community Choice is not just a financial provider — it is a true partner in the cannabis industry, helping businesses flourish while strengthening the foundation of Michigan’s thriving cannabis economy.
To learn more, call or text Bashi at 586-255-4979 — no appointments, no waiting, just direct access to the support your business needs.
MANER COSTERISAN Ask the Experts
5
QUESTIONS WITH Maddy Henry
A strong contributor to the Maner Costerisan cannabis industry team, Maddy Henry, a tax consultant and compliance specialist, is an active member of the Michigan Association of CPAs’ Cannabis Resource Group, and she provides guidance and leadership on the planning committee of the BDO Alliance Cannabis Roundtable.
1. YOUR FIRM WAS AN EARLY PARTICIPANT, BUT CAN YOU TELL ME ABOUT THE EVOLUTION OF CPA INVOLVEMENT IN THE CANNABIS INDUSTRY AS THE PRODUCT WAS LEGALIZED IN MICHIGAN?
In earlier days, more firms were “testing the waters,” but as the Michigan market has saturated, they’ve begun exiting the industry completely. There are still great firms that remain committed to serving the cannabis industry, one of which is Maner Costerisan. We’ve invested heavily in understanding the industry and its complex needs.
2. IS THERE A PARTICULAR PRODUCT OR SERVICE THAT YOU WOULD LIKE TO HIGHLIGHT?
I’m most excited about the support our accounting and outsourced services team can offer to our cannabis clients. We have the ability to scale services and customize solutions for each client. We generally don’t offer flat-fee services and instead bill based on time. This is advantageous in a cash-tight industry and allows the client to select exactly what is needed. Often, we will start off an engagement thinking all a client needs is a financial data review or QuickBooks support. Then we receive requests to assist with sales and excise tax filings, recording leases, and budget forecasting. We are happy to help, as our deep knowledge of the cannabis businesses has helped us refine our services and support clients in smart and resourceful ways.
3. WHEN A CANNABIS BUSINESS IS LOOKING FOR CPA SERVICES, WHAT DOES YOUR FIRM OFFER THAT OTHERS CANNOT?
We’ve been talking more about how to tackle Internal Revenue Code Section 280E in light of the currently stalled rescheduling efforts. We’ve explored the process of taking something called an uncertain tax position that 280E is no longer applicable to cannabis. This involves various disclosures, engaging an attorney to draft a formal legal opinion, and a degree of risk. Part of this position is called a “timing argument,” and the basic concept is that the literal reading of 280E says that it applies to any substance within the meaning of Schedule I or II of the Controlled Substances Act. Once the Department of Health and Human Services put forth the recommendation that cannabis has a clinically accepted medical use, it no longer fell within the meaning of Schedule I or II and 280E should no longer apply. This position effectively allows cannabis companies to deduct their ordinary and necessary business expenses and eliminates paying tax on phantom income.
4. ARE THERE ROADBLOCKS THAT YOU CONTINUE TO ENCOUNTER?
Even with the potential silver lining that cannabis may be officially rescheduled to Schedule III due to clinically accepted medical
use, I’m increasingly hearing an argument that 280E will likely only go away for medically licensed sales. From what we’ve seen, most cannabis sales are recreational, so the anticipated 280E relief would be minimal. We hope that doesn’t end up being the case, but we’ll continue to monitor.
5. WHAT DO YOU APPRECIATE MOST ABOUT THIS INDUSTRY?
We’ve definitely grown with the Michigan cannabis market as it ramped up in a short period of time. We’ve had the privilege of working with some truly awesome business owners. They’re passionate about their business and true masters of their craft, and we try to advise them as though we were stakeholders in their company.
HENRY, CPA, PRINCIPAL MANER COSTERISAN
2851 Charlevoix Drive, Suite 210 Grand Rapids, MI 49546
517-323-7500
mhenry@manercpa.com manercpa.com/cannabis
MADDY
Growth takes more than a seed. It takes a strategy.
Michigan’s cannabis market is evolving fast — we help you stay ahead. Oversupply. Shrinking margins. Shifting regulations. In Michigan’s competitive cannabis landscape, success isn’t just about producing great product — it’s about running a smarter business.
At Maner Costerisan, we specialize in helping cultivators, processors, dispensaries, and vertically integrated operators navigate growth, restructuring, and compliance with confidence. As longtime members of the MiCIA, we understand Michigan’s unique market challenges — and how to turn them into opportunities.
Whether you’re preparing for expansion, considering a sale, or trying to tighten operations, our team delivers:
• CFO-level guidance for multi-entity structures
• Accounting Techology and Integration with seed-to-sale and other operational software
• Cash flow forecasting and margin analysis to improve profitability
• FASB-compliant lease accounting and real-time reporting
• Support with audits
We don’t just help you grow — we help you grow wisely.
PLUNKETT COONEY Ask the Experts
5
1. HOW DID HEMP GAIN A FOOTHOLD IN MICHIGAN?
QUESTIONS WITH
Rhonda Stowers, Partner at Plunkett Cooney
Rhonda Stowers, a partner at Plunkett Cooney, weighs in on why industrial hemp adds more stress on Michigan’s cannabis industry.
2020 ushered in an unprecedented number of changes in Michigan, the most obvious being, of course, COVID-19 with all of its related implications. Pertinent to this industry, however, it was also the year that the state enacted Public Act 220 of 2020, known as the Industrial Hemp Growers Act. The act created an industrial hemp program that allows the growing and processing of industrial hemp in Michigan. The act de nes “hemp” as cannabis with a delta-9tetrahydrocannabinol (THC) concentration of not more than 0.3%.
2. HOW IS HEMP VIEWED BY THE STATE NOW?
Skip head four years later. In November 2024, the Michigan Cannabis Regulatory Agency reported on its website that the program was “no longer nancially sustainable” due to the decreased number of licensed hemp growers (from an initial 631 to 34). As a result, the state Legislature is considering rescinding the program and transferring its oversight to the U.S. Department of Agriculture (USDA). The USDA program does not require a license fee, and the licenses it issues are valid for three years.
3. SO, WHAT’S THE PROBLEM IF THE NUMBER OF HEMP GROWERS IS REPORTEDLY DECREASING?
The irony is that while the state is noting a perceived lack of pro t and interest in hemp growth, the cannabis industry is facing a potential market crisis due to the proliferation of hemp and booming hemp sales. In addition to the challenges posed by market saturation, stricter regulation at the state level, continued regulation at the federal level, and threats of higher taxation, cannabis business owners are now in competition with the signi cantly less regulated and relatively untaxed hemp producers, who are exploiting a loophole in the de nition of “hemp,” both at the federal and state levels, by manufacturing and selling other “delta” products, such as delta-8-THC. The introduction of the hemp market is an additional straw on the proverbial camel’s back of the already stressed cannabis industry.
4. WILL THIS LOOPHOLE EVER BE CLOSED?
The one upside to hemp’s impact on the cannabis market and society, generally, is that it has brought increased visibility to the issue. Proposed bills have been introduced at both the state and federal levels to address intoxicating hemp and to close the loophole. However, there
is little optimism that relief will be coming to the industry anytime soon.
5. SO, WHAT CAN I DO TO PROTECT MY BUSINESS?
Industry owners who are seeking to survive should be prepared to navigate the perils of a downturned market, including employee separations, and should also ensure regulatory compliance to avoid costly violations. They should also consider developing creative business structures and strategies to address the uid real estate market in order to remain competitive in the industry.
At Plunkett Cooney, we work to ensure our clients receive quality, individualized service with the goal of achieving the right result.
RHONDA STOWERS PARTNER
111 E. Court St., Suite 1B Flint, MI 48502
810-342-7003
plunkettcooney.com
rstowers@plunkettcooney.com
Get the Plunkett Cooney Perspective™
Business leaders in the cannabis industry say they trust the attorneys of Plunkett Cooney to help them secure and renew licenses, anticipate legal pitfalls and win in court. Grow your cannabis business with confidence. Get the Plunkett Cooney perspective.
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ATTORNEYS & COUNSELORS ORNEYS AT LAW
J Jeffreffrey M. Sc y Schroder
Direct: (248) 594-2796
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2025 MiCIA Events
Michigan cannabis industry networkers flock to the Lansing area this past May
The MiCIA Spring Caucus and Luncheon was held on May 6 at the Eagle Eye Golf Club near Lansing. Speakers included state Rep. Mike McFall, MiCIA lobbyist Kevin A. McKinney, consultant Cassin Coleman, and CPAs Kaleb Grapp and Jennifer Burkhart.
Right after the Spring Caucus and Luncheon, The Exchange hosted its premier B2B cannabis industry networking event May 7–8 at the Eagle Eye Golf Club near Lansing. The event offered an unparalleled opportunity to meet and connect with potential business partners in person.
Left to right: Sarah Spillman, Zariah Schneider, Harry Barash, Robin Schneider, Kenzie Terpstra, and Martez Davis attend The Exchange event.
Above and below: Attendees connect at the Spring Caucus and Luncheon.
Take $500 off your first appointment with us. We’ll send an experienced crew to your facility to handle your harvest, bucking, trimming, or defoliating needs—no strings attached. Discover firsthand the quality, reliability, speed, and dedication that set us apart.
Contact us today and let’s discuss how our team can elevate your efficiency and profitability.
