A Closer Look at Michigan Designated Consumption

Michigan Designated Consumption Establishments for Marijuana | Microbusiness & Dispensaries

For three months now, the Marijuana Regulatory Agency (MRA) of Michigan has had in place effective emergency rules for the state’s adult-use marijuana program. In use until January 2021, this period is for the MRA to draft formal rules for the program. One of the emergency rules which has received much attention is the creation of a new Michigan marijuana license for Designated Consumption Establishments (DCE). DCEs are commercial spaces in which adults are legally allowed to consume marijuana products. More common names for these Michigan microbusiness designated consumption establishments are cannabis cafes and lounges. It is important to note the DCE license does not authorize the owner to sell cannabis products like Michigan dispensaries.

Creating Designated Consumption Spaces

One issue that commonly arises after a state has legalized cannabis is an increase in possession arrests due to consumption in places other than private property. This gap in legality is often overlooked, but Michigan marijuana lawmakers are proving their close attention to failed models by creating a specific license for designated establishments where cannabis consumption is permitted. This license is available to any applicant; no other licenses are required. The DCE license is also open to marijuana retailers, microbusinesses or anyone wanting to operate a “bring-your-own-cannabis” model. This avenue to come into the cannabis market is perfect for small businesses or those who are simply not keen on growing, processing or operating a traditional dispensary.

Per usual, applicants for a DCE license must have met a multitude of key criteria. The foremost is a location approved and supported by the local municipality. Next, the facility must have:

  • An identified area specifically suitable for marijuana consumption, as well as smoke-free areas. DCE rules do allow facilities in which only non-smokable cannabis is consumed; in these spaces, no specified place for smoking cannabis is required.
  • A smoke-free area for employees to monitor the marijuana consumption area. Facility operators must ensure employees are not subjected to indirect or unintended cannabis consumption while working at the facility.
  • The facility must have a ventilation system that directs air from the marijuana consumption area to the outside of the building, through a filtration system designed to remove visual smoke and odor.
  • The facility must have sufficient walls and barriers to ensure smoke does not infiltrate into nonsmoking areas or adjacent spaces.

Additionally, when applying to be a Designated Consumption Establishment for marijuana in Michigan, microbusinesses will need to submit the following information as well:

  • A Designated Consumption Establishment Plan, or diagram of the facility that explains layout, defines facility locations, and indicates distinct areas or structures distinguishing a DCE from other licenses that may be applicable in adjacent locations. 
  • Building, Construction and Zoning Details so the MRA can verify a safe operation including building and fire safety review, plus ensure a detrimental impact will not occur on adjacent businesses and residences.
  • A Business Plan that must include proposed hours of operation and, if part of the plan, the intended mechanisms for consumers to acquire cannabis at the facility. 
  • A Plan for Responsible Operations such as an employee training program, how consumption will be monitored, plus prevention of over-intoxication, underage access, and the illegal sale or distribution of cannabis within the establishment. 
  • Waste Management Plan for handling and disposal of any waste at the facility, including unconsumed cannabis products left by patrons of the facility.

Applicants for a Designated Consumption Establishment for Marijuana in Michigan also must undergo a preliminary background check. The Initial Applicant fee for a Designated Consumption Establishment is currently $1,000 and is valid for one year. The renewal fee is also $1,000. Like all other Michigan dispensaries and other licenses, MRA reserves the right to increase fees collected by 10% each year.

Helping Communities

The criteria may seem extensive but the Designated Consumption Establishment license is truly beneficial to Michigan dispensaries, consumers and other related businesses, as it will keep the community well within the law. Additional regulations are expected from the MRA as rules are reviewed and feedback is received. Michigan Microbusiness Designated Consumption Establishment licenses are a solution few states have considered, proving the governmental efforts to support cannabis use in The Great Lakes State. Alaska was the first state that permitted dispensaries to hold onsite cannabis consumption licenses, beginning in May 2019.

Seeking more information about license options in various states? CannaCon is the nation’s leading business-to-business cannabis conference. Our goal is to cultivate the cannabis industry by educating cannabis business owners on everything related to cannabis and CBD. Upcoming socially-distanced and hygienic trade shows are scheduled in Chicago Feb. 12-13, Detroit April 2-3, Oklahoma City May 27-28 and Columbus Sept. 24-25. Follow us on social media: Facebook, Twitter, LinkedIn and Instagram for more info!


  1. PamH on November 23, 2020 at 8:07 am

    The liability has to be tight on consumer self-accountability to keep the business open for responsible adults to use. Use memberships. Heck yea! This is cool. Build one with video games and casino sports betting type set-up. Bring your own paraphernalia or make it COVID free with too many bongs and pipes you’ll never have to share and an auto-clave to sterilize pieces between uses. No problem-O!

    • Jeanne E Padgett on January 21, 2022 at 8:16 am

      We should start this together Pam! I think we should also provide coaching for people looking for alternative treatments.

  2. Drew on September 4, 2022 at 4:47 am

    Is this business model designed to be a loss leader for a nearby dispensary? How are these stand alone businesses going to make revenue?

  3. Ron Silberstein on January 8, 2023 at 10:20 am

    There are multiple revenue streams available and our model (Bud’s Place) is expected to be very profitable.

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