In an advisory bulletin published on October 3, 2019, the Michigan Marijuana Regulatory Agency (MRA) outlined the requirements for filing annual financial statements. Only facilities licensed as of August 1, 2018 must file for the reporting period beginning on August 1, 2018 and ending on July 31, 2019. The annual financial statement must be filed by December 31, 2019, follow specific procedures, and contain specific schedules.
Annual financial statements must be an agreed-upon procedures engagement conducted by an independent CPA. Additionally, financial statements must contain the required agreed-upon procedures and schedules and must be numbered as indicated. The seven (7) required agreed-upon procedures are:
- Procedure 1: Randomly select and trace two revenue sales transactions from the METRC system for each month of operation in the reporting period.
- Procedure 2: Randomly select and trace two cash disbursements for each month of operation in the reporting period.
- Procedure 3: Obtain the quarterly Form 941 payroll tax reporting and trace total wages and tax liability amounts reported on Form 941.
- Procedure 4: Randomly select 5 individuals if the license has 100 employees or less or 5% of individuals if the license has more than 100 employees on whom the licensee performed a background check and subsequently hired as an employee or contractor and inspect each chosen employee or contractors’ W-2 or 1099.
- Procedure 5: Obtain a list of all equity owners of the licensee and list disbursements recorded through equity.
- Procedure 6: Trace and compare sales of products, payment terms, and payments made for all licensing agreements if there are no more than 5 effective at any time during the reporting period or 25% of licensing agreements if there are more than 5 in effect at any time during the reporting period, but no less than 5 licensing agreements must be selected for each license.
- Procedure 7: For provisioning centers only, obtain quarterly excise tax reporting for each calendar quarter for gross retail receipts from August 1, 2018 through March 6, 2019 and trace and compare the gross receipts reported per METRC for each quarter to the gross receipts reported to the Michigan Department of Treasury for that respective quarter.
Specific tracing requirements for each procedure and specific information for the required schedules that must be attached to each procedure can be found here.
Finally, annual financial statements must cover all licenses that are held by a licensee during the stated reporting period. Licensees may submit one single annual financial statement for the licensee. However, schedules required by the procedures must be submitted in the following manner:
- Procedures 1 and 2: Individual schedules must be submitted for each license. However, for licensees with stacked class C licenses at a single location, procedures 1 and 2 may be conducted on the stacked licenses collectively. For stacked class C licenses at multiple locations, conduct procedures 1 and 2 on the stacked licenses at each location and submit individual schedules for each location.
- Procedures 3 through 6: For all licensees, conduct procedures 3-6 for all licenses collectively.
- Procedure 7: Each provisioning center held by the licensee requires an individual schedule.