Marijuana ordinance that gives Detroiters priority proposed by city leaders

Christine Ferretti
The Detroit News

Detroit — City leaders on Monday unveiled proposed regulations for the operation of recreational marijuana shops, with controversial provisions to give residents priority.

City Councilman James Tate joined with Mayor Mike Duggan and members of the community for a press conference at City Hall to present Detroit's long-awaited ordinance for recreational marijuana, which guarantees no less than half of all licenses awarded will go to legacy residents.

The plan, city leaders note, was crafted to ensure residents disproportionately affected by the nation’s failed “War on Drugs” will have an equitable opportunity to participate in an industry that's estimated to yield $3 billion in annual sales.

Detroit Councilman James Tate answers questions about the proposed ordinance for adult-use marijuana establishments.

The ordinance will give special preference to residents under a certification that the city is calling "Detroit Legacy."

Applicants can qualify for the "legacy" certification if they've lived in Detroit for 15 of the last 30 years; lived in Detroit for 13 of the last 30 years and are low-income; or lived in Detroit for 10 of the last 30 years and have a past marijuana-related conviction.

The city's Office of Civil Rights, Inclusion, and Opportunity department will begin certifying applicants as soon as the law goes into effect. If approved, the city expects the adult-use law to kick in this January. 

"This is an industry that is in its infancy in Detroit, and we have to make sure that we nurture it properly and make sure that it grows strong, not reckless, and is a bridge to generational wealth that has been out of reach for so many families in our city," Tate said.

The city proposes that legacy Detroiters be able to purchase city-owned land at 25% of the fair market value and all of their application fees be slashed to 1% of the total cost. They also will be offered an exclusive, six-week early licensing period.

Afterward, individuals who already operate medical marijuana facilities will get their own reserved 6-week application process before all other applications will be reviewed.

The city will license up to 75 adult-use retailers, the same amount that it allows for medical marijuana provisioning centers. 

Duggan on Monday said only four of the city's 46 medical marijuana dispensaries —permitted under a law approved by Detroit's council in 2018 — are owned by residents. 

But opponents of the proposal say a "social equity" component that would cater to Detroit residents first and guarantee at least half of the licenses given out for adult-use sales overall also go to Detroiters is anything but unfair.

"Nobody has hip-checked anybody in the city of Detroit out of this industry," said Denise Pollicella, managing partner of Livingston County-based Cannabis  Attorneys of Michigan.

Pollicella agrees there are ways to incentivize Detroiters to break into the industry.

"But to do it at the exclusion and literally at the expense of people who went into the city and bought distressed properties and made them beautiful, made neighborhoods around them safer, and created $15-an-hour jobs is wrong," she said.

The ordinance comes after Tate last fall said an initial draft last fall didn't go far enough to ensure opportunities for residents. 

Tate's office convened workgroup sessions with industry professionals and grassroots advocates to develop the social equity component of the law and identify challenges faced by Black entrepreneurs. 

The licensing will cover 10 state-approved categories, including medical marijuana provisioning centers, adult-use retailer establishments, growers, processors, safety compliance facilities, temporary marihuana events, microbusinesses, designated consumption lounges and secure transporters.

Designated consumption lounges and microbusinesses will be limited to no more than 35 citywide, the ordinance notes.

The city intends to work with philanthropic groups and private lenders to develop sources of funding and expertise to back Detroit-owned marijuana business start-ups.

The mayor said he and council "stood up to pressure" by delaying allowance of recreational marijuana sales and have vowed that they wouldn't implement a policy that would have meant that Detroiters "will be locked out."

"We welcome the investment of those outside this community ... but those outside this community have to understand that we demand there has to be equal equity for Detroiters," he said. "Everybody is welcome. We want a process that is fair."

Pollicella countered that nothing in the existing medical marijuana laws have excluded Detroiters from securing property and permits to open shops in Detroit. 

"The fact that people in Detroit who did this are from the suburbs is simply how it happened," said Pollicella, who represents clients in the industry who live both in and outside of the city. "Detroit runs the permit process."

Pollicella also represents a group of Detroit businesses that sued the state of Michigan in February in a bid to relaunch recreational marijuana sales in Detroit. 

The case is pending in the state Court of Appeals, she said Monday. 

Jess Jackson of Detroit, who will be applying for a marijuana license, holds up four fingers to indicate the four medical dispensaries owned by Detroiters out of 46 in the city.

Resident Jess Jackson, who runs Copper House Detroit, a cannabis-friendly "bud and breakfast," participated in some of the workgroup discussions over the proposed law.

The 33-year-old, with a master's degree in education and business administration, said money and access to capital are big hurdles. Just to apply for a license from the state is $6,000 alone, she noted. 

It's her goal to take advantage of the legacy Detroiter offerings in the ordinance to seek out a growers license and operate a consumption lounge. 

"This creates opportunity and an incentive for folks with capital who believe in the Detroit legacy and want to support entrepreneurship in Detroit to partner with us," she said.

Voters in Detroit and across the state approved a ballot proposal in November 2018 to legalize adult-use of recreational marijuana. There are 1,410 municipalities with bans to block recreational marijuana businesses from opening in their communities, according to state figures provided Thursday. 

The City Council first agreed to temporarily prohibit adult-use marijuana establishments through January and later postponed the opt-out period as work on the ordinance continued. It now runs through Oct. 31. 

On Tuesday, the council is expected to vote on another extension of the opt-out through Nov. 24. 

Currently, 424 recreational licenses have been issued in the state, said David Harns, a spokesman for the state's Department of Licensing and Regulatory Affairs. 

Adult-use retail sales have totaled nearly $376 million, he said. 

State officials have said residency requirements for licensing are decided and enforced at the local level.