60-plus communities opt out of marijuana sales

Beth LeBlanc
The Detroit News
In this Monday, Jan. 1, 2018 file photo, a customer purchases marijuana at the Harborside marijuana dispensary in Oakland, Calif., on the first day that recreational marijuana was sold legally in California. State regulators get credit for taking on the massive job of transforming the longstanding illegal and medicinal marijuana markets into a unified, multibillion-dollar industry, but the results have been mixed. Some companies are doing well, but many others are not.

As dozens of Michigan communities opt out of allowing recreational marijuana retailers, at least one longtime cannabis activist is arguing the proactive move may not be necessary in the first place.

Communities wishing to open their doors to recreational marijuana businesses must make specific changes to their zoning ordinances to allow such businesses, making a formal opt-out at this stage redundant, said Rick Thompson, owner of Michigan Cannabis Business Development Group.

“They do still have to specifically authorize (recreational marijuana) shops,” said Thompson, citing the cases of several provisioning centers shuttered between 2009 and 2017 on the basis of zoning ordinances that did not specifically allow for marijuana sales.

But Thompson's interpretation runs counter to what many communities interpret to be an opt-out process, in which the only way to close their doors to the businesses is through a proactive ordinance banning them. The Michigan Municipal League has been telling its members as much since November.

"In order to have commercial operations, you can do nothing and they will come into your community," said Chris Johnson, general counsel for the league. "Or you have to specifically opt out in order to prohibit a recreational marijuana facility.”

The state declined to comment on the issue, considering it legal advice.

The question arises after dozens of communities in recent weeks rushed to pass resolutions and ordinances banning recreational marijuana businesses, hoping to pre-empt any interest from marijuana entrepreneurs while the state works out the regulatory framework for such businesses.

The general understanding of the law voters approved in November has been that, unlike the “opt-in” medical marijuana industry, communities wishing to avoid recreational marijuana shops must “opt out” by passing a resolution.

The ballot committee that worked to pass the recreational marijuana initiative in November did not believe enabling ordinances would be necessary, arguing that a business could operate by right in an appropriately zoned area, regardless of any marijuana-specific language in the ordinance. Essentially, that right would make an “opt-out” the only proactive way to close a community to the industry.

“Hopefully, LARA’s rule-making process will likely add some clarity to this question,” said Josh Hovey, a spokesman for the Coalition to Regulate Marijuana Like Alcohol.

As of Dec. 27, 60 communities had informed the state of their decision to prohibit recreational marijuana businesses, but several more have done so without notifying the state.

The opt-out communities include such southeast Michigan cities as Troy, Pontiac, Livonia, Birmingham, Monroe, Northville, Allen Park and Grosse Pointe; northern Michigan cities include Sault Ste. Marie and Ironwood; and West Michigan communities such as Kentwood and Grand Haven.

Pontiac's attorney advised the City Council that "opting out had to be a proactive process," Mayor Deirdre Waterman said. 

While each council member had varying reasons for voting to opt out, one of the overriding motivations was to give the city more time to implement an ordinance allowing medical marijuana sales, an initiative supported by Pontiac voters in the August election. 

"We’ve been working very diligently to try and implement that in a way that is of the best benefit to Pontiac and its citizens," Waterman said. 

While local ordinances can ban commercial marijuana businesses, they also can allow them with some restrictions that are not “unreasonably impracticable” or conflict with the law. 

Some options include requiring businesses to obtain local licenses in addition to a state license; restrictions on public signage; limits on the hours and locations of businesses; or a fee of up to $5,000 for administrative costs. 

Colorado has a similar system, allowing communities to decide whether to opt out of all marijuana business or opt out of just the recreational or the medical marijuana industry. 

Of the 272 communities in Colorado, 97 have signaled to the state's Marijuana Enforcement Division that they welcome recreational marijuana businesses, said Shannon Gray, the state's marijuana communications specialist. 

In August, the state released a market and demand study indicating "that the commercial marijuana industry in Colorado is satisfying the demand of Colorado residents and visitors" and businesses are operating competitively and responsibly, Gray said.

The anti-marijuana group Healthy and Productive Michigan has been aiding communities seeking to opt out under the premise that proactive action was needed. President Scott Greenlee said he was unaware of varying viewpoints on the matter but expects the issue to be one of several needing clarification before the commercial industry can find its feet.   

“I think long-term some of this is going to end up in court,” Greenlee said. “For now, we still would encourage municipalities just to take the formality of voting to opt out.”

As with most new laws, the new voter-approved initiative has some gray areas that will likely get sorted out when the state finalizes its licensing structure, said Denise Pollicella, managing partner of Cannabis Attorneys of Michigan.

Until then, many of the opt-out decisions seem to be precautionary, she said.

“I think there’s enough wiggle room on both sides to make communities cautious and act pro-actively,” Pollicella said.  

The ballot language allows the state up to a year to finalize the rules governing the licensed recreational marijuana industry, but the rules are expected to be similar to those currently governing the medical marijuana industry.

For now, the state has guaranteed that, at the least, it will notify each community when it receives a recreational marijuana business license application for that area.

“When we get an application we will check with the local municipality and see if there is anything in place that prohibits the business from being licensed,” said David Harns, a spokesman for the state’s licensing and regulatory administration.


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