Marijuana issues vex Detroit area communities

Warren — Michigan voters will decide in November whether to legalize recreational marijuana use, but regardless of how that issue turns out, some Metro Detroit communities already have their hands full deciding how to regulate medical marijuana operations.

The questions local officials are grappling with include how many dispensaries to allow, where they can be located and what other limitations should be placed on their operations.

Legalized marijuana sales — medical or recreational — offer the tantalizing prospect of fresh tax revenue for cash-strapped communities, but some municipal leaders fear the consequences of acting too fast.

More:State aims to have permanent medical pot rules in place by late November

“It’s like the Gold Rush of the 1800s in California,” said Warren Mayor James Fouts, who recently vetoed three medical marijuana proposals. “Except this time it's Warren and it's marijuana. But we aren’t the Wild West. We need to be careful on how we handle things – for public safety and for the good of all citizens.”

All of this is a backdrop to the statewide ballot issue which, if approved Nov. 6 by voters, will permit recreational use of marijuana by persons 21 or over and provide other regulations, said Josh Hovey, director of the Committee to Regulate Marijuana Like Alcohol, a group that's promoting the proposal.

He stressed that cities would still have the power to restrict or ban marijuana facilities if Michigan becomes the 10th state to legalize marijuana possession and use.

“It will not be permitted to be smoked on the street," Hovey said. "All we are trying to do is remove the criminality out of using it."

State regulations approved in December 2016 govern the licensing of dispensary and grow operations for medical marijuana and personal use. But communities have been slow to enact regulations.

The consumer market unquestionably is here. Michigan has more than 218,556 registered medical marijuana patients. Yet, of the state's 1,773 municipalities, just over 100 -- fewer than 10 percent -- have passed ordinances regarding marijuana use, according to attorney Matt Abel of Cannabis Counsels, a Detroit-based law firm.

“They are finally getting around to it,” said Abel. “A lot of elected officials are more conservative and nobody wanted to jump in first but it’s pretty clear it’s coming. And when revenues start trickling in, more will come on board.”

David Harns, a spokesman for the state Medical Marihuana Licensing Board, said Michigan has just 16 licensed medical marijuana facilities, with 230 applications pending.

Unlicensed businesses were permitted to operate over the past year under an extended emergency order but faced a Saturday deadline to close.

But early last week, the state Department of Licensing and Regulatory Affairs gave some medical marijuana businesses a reprieve, extending emergency rules and giving them until Dec. 15 to obtain state licenses. The order made the extension available to businesses that applied for licenses before Feb. 15 and had submitted a marijuana facility license application before June 15.

Then on Thursday, Michigan Court of Claims Judge Stephen Borrello issued an injunction against the state’s medical marijuana rules, preventing the closure of 98 medical marijuana facilities not covered by LARA's order.

‘We aren’t the Wild West.”

Fouts, who believes he is seeing a “rush to judgment,” put the brakes on medical marijuana in his city by vetoing three proposals, including an ordinance that would have allowed the city to start accepting dispensary and grow license applications this month.

The City Council took up all three of his medical marijuana vetoes last week but did not get the five of seven votes needed to override them.

“I’m not against medical marijuana,” Fouts said. “That’s not the point. But I think there has been what I call a rush to judgment to try and get things going. And I think the marijuana business – the millions and billions of dollars that can be made – is driving this. And city officials want to get a share of the tax dollars it might bring with new businesses, dispensaries, etc."

Fouts said he is relying on advice of others at city hall, including his city attorney, that there could be liability questions.

The mayor said the city building inspections department, which would approve dispensary locations and sizes, among other issues, has told him “we aren’t ready to start making those kinds of decisions yet.”

“I’ve had some people come up to me and say how they are from other cities but want to come to Warren because it’s friendly,” Fouts said. “Well, that’s nice but I don’t want to become known as the Las Vegas for marijuana growing and sales. I think we have more to offer than that.”

Fraudulent signatures probed

The city of Troy went before an Oakland County circuit judge this month after an organization – Citizens for a Responsible Troy – sought to have a marijuana ordinance question placed on the November ballot. The group wants Troy to adopt regulations used by the state regarding medical marijuana facilities, rather than enact local ordinances.

The group felt it had gathered enough valid signatures on petitions, only to find they had come up 401 signatures short after Troy City Clerk Aileen Dickson rejected petition sheets that weren't properly notarized.

“There were also names of people who said they never signed a petition,” said Troy City Attorney Lori Grigg Bluhm, who convinced Judge Shalina Kumar to dismiss a request for a court order recognizing the petitions and placing the question before voters.

Bluhm noted the Troy group has the same East Lansing address as the Jobs For Pontiac group that got a marijuana question on that city’s ballot in August.

Pontiac voters approved a measure that will permit 20 dispensaries across the city and an unlimited number of growers, processors, secured transporters and safety compliance facilities. Pontiac is working out how the ordinance can be put into action with other city building and safety codes.

Attorney James J. Kelly, who represents Citizens for a Responsible Troy, said the group will file an emergency appeal with the Michigan Court of Appeals once he obtains a copy of Kumar’s ruling. Kelly said 4,500 signatures were collected, well above the 2,925 needed, and that the fraudulent names “likely number only about 20.”

“More importantly, there were complete petition sheets not counted because they were not notarized,” Kelly said. “We believe even if there are signatures in question, their number will be very small and we will be able to meet the number needed.”

Dickson said fraudulent signatures – including those of elected Troy officials who opposed the ballot question -- have been turned over to the Oakland County Sheriff’s Office for investigation of possible election violations.

“Fraud? We are willing to cooperate with law enforcement looking into that,” Kelly said.

'Secret' votes alleged 

Owner-operators of an entity called MPM Companies LP are suing the city of Hazel Park after being denied licenses for three medical marijuana provisioning, processing and growing facilities this summer. They had proposed to open operations at 721, 871 and 877 E. Eight Mile.

Under the city’s rules, if the number of qualified applicants exceeds the number of available licenses, the city must rank applicants in a number of categories ranging from moral character and finances to business plans and potential impact on neighboring properties.

The MPM Companies own and operate businesses in and outside Michigan, including real estate, construction, health care, manufacturing and cannabis operations. The company's attorney declined comment Wednesday on the complaint or the business.

According to Oakland County Circuit Court records, MPM began considering a Hazel Park operation in 2017 and entered into leases along Eight Mile in 2018 “for the purpose of building a medical marihuana ‘campus’ that would include facilities for growing, processing and dispensing marihuana."

In its lawsuit, the company said it decided to make the investment in Hazel Park based on the city establishing “a transparent, merit-based process for awarding licenses that ostensibly eliminated subjectivity and favoritism – assuming, of course the Council would actually follow its own ordinance.”

The company’s application was among more than 60 received by Hazel Park, which in subsequent months made “few if any public pronouncements” about any decisions, the suit alleges.

“After months of silence and with less than 24 hours’ notice, the Council held a Saturday morning ‘work study session’ on June 16, 2018, to review and discuss” the applications, according to the lawsuit.

A public notice of the meeting was posted at 2:30 p.m. June 15, to discourage attendance by the public and applicants, the company believes. No audio or video record was made of the session, the suit says.

On June 21, the successful applicants were announced at a City Council meeting, with a notice posted the day before.

The lawsuit alleges council members anonymously submitted personal lists of applicants and the most popular were selected. It described the process as  "throwing transparency and objectivity out the window,” in violation of the ordinance requiring the city to evaluate and rank applicants.

The lawsuit asks for a preliminary injunction barring Hazel Park from issuing any licenses and setting aside those awarded at the June meeting. It also asks the city be instructed to comply with its own ordinance.

"We're not unduly concerned about the lawsuit and our attorney is studying it and will respond," said Hazel Park City Manager Edward Klobuchur, who declined comment on its allegations. "We don't feel the complaint has any basis in fact."

Klobuchur said Hazel Park has received "about 68 applications" for various marijuana-related facilities but was still reviewing applications. At least three licenses for dispensaries have been approved but none are operating in the city, he said.

Attorney Jeff Schroder, who also represents Citizens for a Responsible Troy, said a lot of communities have taken a “wait and see” approach to licensing for a variety of reasons but now appear ready to act. Many applications have been backlogged due to additional state requests for further information.

“It’s a complex process,” said Schroder. “The initial application process is extensive but seems to grow. I’ve seen one where the documentation requested by the state filled three bankers’ boxes. Personal histories, loans, property records, on and on. It’s like getting a casino license.”

mmartindale@detroitnews.com

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