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Detroit firms hoping to sell pot plan to sue state

Craig Mauger
The Detroit News

Lansing — Detroit businesses are planning to sue the state of Michigan later this week in a bid to launch recreational marijuana sales in Detroit.

The lawsuit will focus on Michigan's largest 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 a firm's  application.

Attorney Denise Pollicella, who is representing a group of Detroit businesses, says the rule seeking a local clerk's signature contradicts the legalization law approved by voters in 2018. The Michigan law says municipalities must have ordinances "in effect" to ban adult-use marijuana businesses to block state applications.

An employee prepares smell samples of marijuana flowers for recreational sale for customers to check on the fragrance of products at Exclusive Provisioning Center in Ann Arbor on Dec. 1, 2019.

"There are rules that conflict with the statute and undermine the statutory purpose," Pollicella said in an interview.

Eleven marijuana businesses, most of which are in Detroit and multiple ones in Traverse City, will be plaintiffs in the upcoming lawsuit, she said.

In Detroit, the City Council approved an ordinance temporarily barring recreational marijuana businesses effective Nov. 12, 11 days after the state's application window began, Pollicella said. Despite the delay in the ordinance taking effect, Detroit businesses that wanted to get licenses still couldn't get the required local official's signature, the attorney added.

In December, two Detroit businesses filed a lawsuit seeking recreational marijuana licenses. In the past few weeks, the state denied their applications and the previous lawsuit was dismissed, spurring the upcoming suit focused on the emergency licensing rules that were put in place in July 2019.

Matthew Erickson, a spokesman for the state's Marijuana Regulatory Agency, declined to comment on pending litigation.

But in response to the past lawsuit, Michigan Attorney General Dana Nessel's office argued that the Marijuana Regulatory Agency "enjoys broad discretion" in determining whether to issue a license.

Pollicella argued that marijuana businesses in Detroit that applied for licenses between Nov. 1, when the application window opened, and Nov. 12, when they city's ordinance took effect, should have been able to get licenses.

The state's refusal to grant the licenses has hurt the businesses financially as recreational marijuana retailers in Ann Arbor began sales on Dec. 1, she said. As of Feb. 2, there had been $17.6 million in adult-use recreational marijuana sales in Michigan.

"The businesses and the people of the city of Detroit are losing, and they are not just losing, they are losing millions of dollars," said Pollicella, who added that the suit was not about Detroit's practices but the state rule.

Stuart Carter, owner of Utopia Gardens, a medical marijuana business in Detroit that's one of the plaintiffs in the upcoming suit, said he's already begun losing business to licensed recreational marijuana retailers in other jurisdictions.

“We’re struggling along," Carter said. "I can’t say I am too happy about being left on the side of the road."

Utopia Gardens could begin selling recreational marijuana "almost immediately" if granted a recreational license, Carter said. But he said he would first want to reach an understanding with the city of Detroit, which he said has "good intentions."

In January, the City Council voted unanimously to extend its temporary ban on recreational marijuana sales until spring as it continues to work on a law to ensure city residents can participate.

The ordinance allowing recreational sales remains in the works, Detroit City Council member James Tate said Tuesday. The goal, he said, is to have it completed by the end of next month.

“March 31 is the date that we extended it to," Tate said. "We’re working to make sure we hit that date. But if not, we will potentially have to extend it beyond that."

In Traverse City, the city commission temporarily barred recreational marijuana businesses in a vote on Dec. 17, 2018, according to meeting minutes. However, that ordinance ended Dec. 6. On Dec. 13, commission members extended the ban until May. That left an apparent seven-day gap when the ordinance wasn't in effect, according to the meeting minutes.

Traverse City Mayor Jim Carruthers said his city continues to work on an ordinance that would eventually allow recreational marijuana businesses. But a final decision isn't expected until late May, he said.

Staff Writer Christine Ferretti contributed.