Marijuana dispensary to expand into southwest Detroit
Detroit — Southwest Detroit is getting a new joint.
However Michigan residents decide next month on Proposal 1 to legalize recreational marijuana, The Reef, a Detroit medical marijuana dispensary, is planning to expand its operations to new locations and into cultivating and processing the cannabis plant. With a classy new dispensary, it hopes to change the marijuana industry's look.
"We want to move the industry forward," said Rush Hasan, head of The Reef's operations and business development. "We're not leeches on the community. We want to show good things can be done by a marijuana company."
The Reef, short for reefer, is a procurement center at 6640 Eight Mile, one of many along that road. The company is expanding to historic 174 S. Clark, a 1906 building that has housed offices for the Detroit Copper and Brass Rolling Mills Co., the port authority and the Wayne County Sheriff's Office.
The company signed an indefinite lease in August and is investing more than $3 million into the three-floor, approximately 24,000-square-foot building to house a speakeasy-inspired dispensary. It also would provide space for the company to expand into processing and cultivating marijuana, subject to state licensing approval.
"The profit margins are way higher when we grow it ourselves," Hasan said.
He said the new location, yet to be named, would employ about 80 people and be inspired by the 1920s. The Reef plans to use the old safes in the building to store product and have a VIP room for limited products. It also hopes to make the door that separates the dispensary's lobby from the "budroom," where customers select and purchase their cannabis, a revolving bookshelf.
"It's mysterious, like you don't know what to expect," Hasan said. "The building was actually used during the prohibition era of alcohol, and now it's the prohibition of marijuana."
Additionally, glass flooring in the lobby would allow patients to watch the company's 500-plant growing operations in the basement. Hasan said he got the idea on a trip to Pompeii, Italy, where glass tiles allowed tourists to see excavation sites.
"I literally just stood there for 15 minutes watching the workers," Hasan said. "We wanted to think of something that would differentiate us and give our visitors something to do while they wait."
The Reef's construction contractors also have put the company in contact with the HBO show "Tanked" to possibly design a custom-made fish tank for the space.
The Reef was looking in this industrial area east of the under-construction Detroit-Windsor Gordie Howe Bridge for about six months before the building became available when another dispensary pulled out. It is in one of the few zones approved by the city for marijuana operations.
Even then, Hasan said The Reef ran into some problems getting zone approval from confusion over whether the building was in a "green zone." The company, however, received the zoning grant earlier this week and is waiting on approval for its business license in the city.
After obtaining that, he said The Reef plans to apply for its state licenses and complete demolition inside the former port authority. Hasan said he expects renovation to be completed in February, though the state licensing process could take longer. The company is hoping for a late winter or early spring opening.
"We are taking a risk by building at the same time we're applying to the state," Hasan said, "but with our track record at The Reef, it shouldn't be a problem."
He said the company is open to selling recreational marijuana if Michigan voters legalize it Nov. 6, but he said its business plans do not rest on that vote.
"We would be interested in selling recreational marijuana if the regulations make sense," Hasan said. "If the regulations are too vague and we can't work it out, we think we would end up losing business if we made a mistake."
A second location is only the beginning for The Reef. Hasan said the company is looking to build, starting next year, a 200,000-square-foot center next door to its Eight Mile location. The $20 million-$30 million project would provide space for cultivation and processing as well as for an education center that the company hopes would provide classes and seminars on medical marijuana.
The company is looking beyond Detroit, as well. Hasan said it is exploring expansion to other Michigan communities such as Pontiac and perhaps to California and Colorado, where recreational marijuana is legal, over the next two to three years.
Barton Morris, a lawyer with the Royal Oak-based Cannabis Legal Group, said Michigan's guidelines to apply for marijuana licenses require the disclosure of financial, litigation and criminal histories of all stakeholders in a company, including owners, investors and shareholders.
"I think the rules are more onerous than they are in other states," Morris said. "We've seen licenses be denied because someone forgot to disclose a minor criminal violation. That is probably a lot broader and far-reaching than other states."
The Reef sees that as an advantage. Hasan said when the company was doing market research, he was surprised to find a black market for cannabis thriving in California and dispensaries operating under retail instead of cannabis licenses.
"We were so uneasy," he said. "We were like, 'I really think we can do well, because if we bring our experience and mindset of doing it right, we might be one of the leaders in the state.'"