Plan would mandate half of pot businesses in Detroit for residents

Christine Ferretti
The Detroit News

Detroit — The city is working on a law to ensure that at least half of the licensed recreational marijuana businesses operating in Detroit are owned by residents. 

Detroit Mayor Mike Duggan is expected to detail the proposal before an invitation-only crowd during his seventh State of the City address on Tuesday evening inside Flex-N-Gate, an east side auto parts manufacturing plant.

The second-term mayor has collaborated with Detroit City Councilman James Tate on a component of an ordinance focused on equity in Detroit's marijuana industry and rules for how recreational pot shops will operate.

"Our position is going to be that we will approve recreational marijuana being sold in Detroit only under an ordinance where half of the businesses are owned by Detroiters," Duggan told The Detroit News in a Monday interview.

Jacob Samways, left, lets Gregg Etzel, 67, smell some marijuana flowers in December at Exclusive in Ann Arbor. In Detroit, officials agreed to temporarily prohibit adult-use marijuana establishments.

"I'm sure it's going to cause some anxiety. But the fact of the matter is, if we sit by and do nothing, we're going to wake up in three years and 90% of the wealth created by this industry will flow outside the city."

Voters in Detroit and across the state approved a ballot proposal in November 2018 to legalize adult-use of recreational marijuana. More than 1,400 municipalities since have instituted bans to block recreational marijuana businesses from opening in their communities.

In Detroit, officials agreed to temporarily prohibit adult-use marijuana establishments through Jan. 31. Last month, that opt-out period was postponed until the spring as Tate's office continues sorting out the key elements of the recreational marijuana ordinance.

Tate has said that the potential billion-dollar industry should have a "pathway for Detroiters to be gainfully employed."  A draft ordinance prepared in the fall, Tate has said, didn't go far enough to help residents of the post-bankrupt city.

In July 2018, the council approved a law that capped allowance to 75 sites for medical marijuana sales and laid out where they could locate. Today, there are about 40 in Detroit. Only four are owned and operated by city residents, Duggan said. 

Given what's happening in the suburbs, where the majority of communities have banned recreational sales, the mayor said Detroit will be the center of retail sales.

"We have an obligation to the people of the city to be able to buy marijuana legally, but the question is: Who sells it?" Duggan said. "I just want Detroiters to get a fair share of the wealth that's generated by this opportunity." 

The ordinance, if approved, would not affect the medical marijuana businesses operating in Detroit. Going forward, he said, the 50% requirement would apply for licenses for medical, recreational or so-called microbusinesses.

Some marijuana advocates, city residents and prospective shop owners have applauded the city's efforts to set a standard for inclusion. But others have been frustrated with the delays they say are causing hardships. 

Tate on Monday reiterated that the law is "better right than rushed."

A group of Detroit businesses sued the state of Michigan last week in a bid to relaunch recreational marijuana sales in Detroit. 

The lawsuit filed Thursday focuses on the city not having an ordinance in place barring adult-use marijuana businesses on Nov. 1, when the state began accepting license applications, and a state rule that seeks a local clerk's signature on an application.

Detroit's council approved its temporary ordinance barring recreational marijuana businesses effective Nov. 12, 11 days after the state application window began.

Tate's proposed ordinance also is expected to address those who qualify as "equity applicants," including those who have lived in the city for a specific number of years or individuals convicted of low-level marijuana crimes as well as their dependents and parents, he said. 

Tate's office has convened workgroups to develop concepts and identify the challenges faced by African Americans and other minorities who are seeking to get into business and avenues to help, including a reduction in application fees. 

A fund to aid with start-up and technical assistance also is being considered. It's unclear where the dollars would come from or how such a fund would be managed. 

Tate at noon Friday will host a Facebook live discussion on including a social equity component in the law and address questions about the city's interim opt-out. 

"We've seen how this industry has the ability to change lives," Tate said. "We have to make sure that Detroit is taking advantage of this time in history. We will not have this opportunity again as we move forward."

The state's Marijuana Regulatory Agency issued the first recreational license in November. Recreational sales began Dec. 1.

Currently, 97 recreational licenses have been issued in the state, said David Harns, a spokesman for the state's Department of Licensing and Regulatory Affairs, in an email Monday. 

From Dec. 1, 2019, through Feb. 23, 2020, adult-use retail sales totaled $27,637,460, Harns said. 

Duggan said he expects Detroit will be sued over the proposed licensing policy. But he and Detroit's law department believe they are on solid footing, he said. 

"We could be just like most of the suburbs and say, 'No licenses, period,'" the mayor said. "We think if we have a right to say none at all, we have a right to say we'll approve them so long as Detroiters get an equal share."

Harns said any residency requirements for licensing "would be decided and enforced at the local level."

Duggan and Tate say it's unclear whether the proposed ordinance will be completed prior to the March 31 opt-out deadline. 

"It may seem like a slow process for some but these are very intentional conversations we're having with those who have made their way to the industry but have seen that there's a ceiling that has nothing to do with abilities, and more with resources and connections," Tate said.

"We're looking at leveling the playing field."

Duggan is also expected to reiterate Tuesday the transformation of the long-vacant Michigan Central Depot in Corktown that's undergoing a $350 million makeover by Ford Motor Co., as well as the new Fiat Chrysler Automobiles NV plant that promises 5,000 jobs.

Duggan hinted Monday that a number of other major projects are "in conversations" but said he'll leave it to the companies involved to announce them when the time is right. 

The mayor said Detroit is competing against the Metro Detroit suburbs and other states for industry, and despite rhetoric attacking corporations over tax breaks, the city will continue to support abatements to stay competitive. 

"We're going to keep partnering with companies who give preference to hiring Detroiters, and I'm glad to give them incentives to come in if you give our residents incentives to work," he said. 

Separately, Duggan said he will convene a series of eight forums across Detroit in March and April to educate residents on Michigan's no-fault auto reform and the rate cuts afforded to residents once the law kicks in on July 2. 

A component of the law, he said, provides that individuals with health care from their employer don't have to pay for it a second time on their car insurance. 

"I'm going to tell our 9,000 employees tomorrow night that July 2 most of them are going to see significantly more money in their pockets," he said. "The people in Detroit have waited a long time for that."