State forces 161 medical pot shops in Detroit to close

The state is forcing 161 medical marijuana businesses in Detroit to immediately close after they were blocked by the city from meeting a deadline to apply for a state operating license.

City officials passed a 180-day moratorium last month ahead of the state’s Feb. 15 deadline, which stopped the processing of all medical marijuana applicants seeking local approval. The closures are expected to prompt legal action from the businesses.

Medical marijuana facilities in Michigan were required to apply for their state license — with local approval — in order to continue operations. Some applications were submitted without local approval, which automatically disqualified them, state officials said.

“All the (cease and desist) letters have been hand-delivered,” said David Harns, spokesman for the Department of Licensing and Regulatory Affairs.

According to Harns, 208 medical marijuana businesses statewide should have received cease and desist letters in the last few weeks. A total of 215 businesses applied on time with approval from their local municipality to temporarily operate while awaiting a state license.

The cease-and-desist orders come as the state continues the process of more tightly regulating the medical marijuana industry under a 2016 law that aimed in part to address confusion surrounding the legality of dispensary shops that opened after voters in 2008 approved marijuana for medical use. The new law includes a 3 percent tax on provisioning centers.

Initial licenses to grow, process, sell, transport or test marijuana will be issued by June 15.

Harns said because of the legal roadblock in Detroit, facilities that didn’t receive the local approval in time for the state deadline are being ordered to close. The Medical Marihuana Licensing Board has the discretion to decide if applications that come in late should be approved.

Detroit’s moratorium was put in motion last month and prohibits all departments from accepting or approving applications for permits from medical marijuana facilities.

Prior to the moratorium, the city had completed approval forms for 70 facilities allowing them to move forward to the state, Detroit Corporation Counsel Lawrence Garcia said.

At the time, the city’s law department had argued that it was premature to process applications without a final decision on a lawsuit that challenged medical marijuana voter initiatives passed by city residents in November.

The proposals eased restrictions on medical marijuana dispensaries. Wayne County Circuit Judge Robert Colombo ultimately overturned one of the zoning initiatives and rolled back part of the other that changed distance requirements between medical marijuana facilities and other dispensaries, parks, day-care centers, liquor stores and arcades. The judge said zoning could not be changed through a voter initiative.

Garcia said Thursday that Detroit still has an “adequate” number of dispensaries to serve medical marijuana patients in Detroit. The city would be careful about considering any other dispensaries for operation moving forward, he said.

“Those people may have missed the deadline, and they are going to have to live with that,” Garcia said. “I think they are being unfair in expecting the city to provide an indefinite number of business licenses for medical marijuana dispensaries.”

Garcia said Detroit police have the authority to shut down unlicensed medical marijuana facilities. However, the city doesn’t have the manpower to do comprehensive sweeps so it will often rely on Michigan State Police for assistance, he said.

The state’s law calls for the Department of Licensing and Regulatory Affairs to notify Michigan State Police and the Michigan Attorney General’s Office of any unlicensed activity.

Michael B. Stein, a Bloomfield Hills attorney who represented businesses that were impacted by Detroit’s moratorium, said he expects some medical marijuana facilities will take legal action against the city of Detroit. He called it a “shame” that businesses are being forced to close now.

“The fact that they were forced to shut down because of what the city was doing due to no fault of their own,” Stein said. “I believe there will be ramifications for the city of Detroit.”

Jonathan Barlow, spokesman for Citizens for Sensible Cannabis Reform, which is the group that gathered thousands of signatures for Detroit’s ballot measures, said it’s unfair for the state to shut down businesses when there has been so much confusion locally over the law.

State and local officials should be organizing groups or town halls to better educate the community, he said.

“People have been unclear for a long time,” Barlow said. “This has been a major downfall and hit to what seems to be the most progressive city in the state as it relates to the (medical marijuana) industry.”

nterry@detroitnews.com

Twitter: @NicquelTerry

Associated Press contributed.