Federal ruling looms in legal challenge to Detroit's recreational pot law

Sarah Rahal
The Detroit News
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A federal judge in Detroit heard arguments Thursday in a legal battle that has halted the processing of applications for recreational marijuana businesses in the city. 

U.S. District Judge Bernard Friedman last month ordered Detroit to temporarily stop processing applications amid a lawsuit that argues a provision of a new city ordinance regulating recreational pot operations gives unfair preference to longtime residents  deemed legacy Detroiters. 

Recreational marijuana being sold at Arbors Wellness in Ann Arbor, Mich. on Dec. 1, 2019.  This is the first day of legal recreational marijuana sales in Michigan.
(Robin Buckson / The Detroit News)

Friedman granted the preliminary injunction in favor of Crystal Lowe, a resident and prospective marijuana business operator, who sued the city over the ordinance on claims the law is "discriminatory" and limits her chances. 

Lowe's attorney Kevin Blair argued to the judge Thursday that the ordinance is a penalty for people, like Lowe, who temporarily moved out of the city and it does nothing to help "folks who have been disproportionally affected by the war on drugs."

"The city has stated they're purposely restricting to allow 'naïve and unsophisticated' legacy applicants to get ahead," Blair told Friedman. 

Emily Palacios, an Ann Arbor-based attorney representing the city, countered Blair has failed to demonstrate how the ordinance provisions violate Lowe's equal protection rights under the Michigan Constitution, as alleged. 

The ordinance, Palacios told the judge, only gives preference in the order in which applications are certified and it gives a boost to Detroiters who would be disadvantaged.

"The city's licensing program is not causing residents and nonresidents to face-off in direct competition," Palacios said. "The city has constructed a program by which there are two sets of licenses available; 50% of the licenses are going to go to Detroit legacy applicants and 50% to non-Detroit legacy applicants. Their opportunity to compete is equal on both sides of the ledger."

Friedman listened to a half-hour of arguments from each side Thursday before noting he intends to issue a ruling within three weeks. 

After two years of debate, the City Council in November unanimously approved the ordinance that gives special preference to residents under a certification the city calls "Detroit Legacy." As of April, there were still no legal recreational pot businesses operating in the city.

Being granted legacy status does not guarantee a license, and there are already more applications filed than the city can accommodate, officials have noted. 

To qualify for legacy status, residents must have lived in Detroit for 15 of the last 30 years; 13 of the last 30 years and be low-income; or 10 of the last 30 years and have a past marijuana-related criminal conviction or have parents who have a prior controlled substance record when the child was under 18 years old and still live in the city.

► RELATED REPORT:  Michigan's recreational pot sales dampened by pandemic but projected to set records

Lowe has lived in Detroit for 11 of the past 30 years and her mother was charged with a marijuana-related offense in 2007 when Lowe was 19. She has spent a decade working in the state's marijuana industry, but "according to the City, (Lowe) has not lived in Detroit for long enough to deserve an equal shot at this opportunity," the lawsuit states.

"By guaranteeing that at least 50% of the 75 licenses go to Detroit legacy applicants, the city has put non-legacy applicants at a stark disadvantage," according to the suit.

The Civil Rights, Inclusion & Opportunity Department reported to the City Council on March 29 that more than 400 Detroit legacy applicants had been certified. Qualifying residents get a 99% discount on licensing fees this year and a 75% discount in 2022. They also receive a 75% discount on city-owned land.

The ordinance includes a provision that if the legacy program is struck down by courts, no adult licenses will be issued by the city.

Blair previously told The Detroit News that he's never seen a similar provision anywhere in the state.

"It's usually the exact opposite so that if any provision is struck down, the rest of the ordinance remains in place, and the City Council decided to do the exact opposite here, so that if anyone challenged the constitutionality of this, then there won't be any adult-use licenses in Detroit," said Blair.

"A business might open and a year later, the ordinance could get challenged, and then that license would essentially be worthless because, according to the ordinance, the license isn't going to be renewed," he added. 

Nickolas Calkins, senior partner as Scott Roberts Law, a boutique marijuana law firm based in Detroit, said he's impressed Friedman is taking time to flesh out the arguments in the impactful case. 

"It's not just going to be related to the city of Detroit, but other municipalities," he said. "... if the residency requirement is upheld in Detroit, I think you're going to see this kind of process implemented throughout the state and vice versa if it's struck down."

Of Michigan's 1,773 communities only 95, or 5%, including Detroit, have opted-in to the Michigan Regulation and Taxation of Marijuana Act to allow marijuana businesses, according to the state's Marijuana Regulatory Agency. 

srahal@detroitnews.com

Twitter: @SarahRahal_

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