Company sues Detroit over new recreational pot ordinance

A Michigan cannabis dealer has filed a lawsuit against the city of Detroit over a newly passed ordinance that went into effect last month.

The Detroit News reports that the lawsuit “was filed by four House of Dank dispensaries, each operating under a unique name,” alleging that the city council ordinance violated Michigan’s recreational cannabis use statute for Adult stands adopted by voters 2018.

According to the Detroit News, the ordinance, which officially went into effect April 20, “does not permit medical marijuana facilities to be eligible for a five-year recreational license.”

According to the Detroit Free Press, the plaintiffs allege that “state statutes dictate that once municipalities choose to allow cannabis operations within city limits, they cannot prevent medical marijuana licensees from obtaining recreational licenses,” and that the ordinance is also problematic because it “prohibits possession of an interest in more than one such retail license, meaning that even if a medical marijuana business owner obtains a recreational license, he can only have it for one store location.”

Should the city comply with that ordinance, plaintiffs argue that “medical facilities would not get a chance to obtain a recreational license until 2027, when medical businesses would likely have already closed their doors due to lack of sales,” the Detroit Free Press reported adding that the plaintiffs “have asked the court to step in and prevent Detroit from banning dispensaries selling both medical and recreational cannabis.”

The lawsuit marks just the latest setback in Detroit’s efforts to belatedly establish an adult-use cannabis market in the city.

In 2018, while a majority of Michigan voters approved a ballot measure to legalize adult recreational marijuana use, the state’s most populous city opposed it.

In 2020, a year after the first recreational pharmacies opened in the state, the Detroit City Council approved a plan that paved the way for the city to begin selling adult products.

The Detroit News reported at the time that the plan aimed to “ensure residents have a fair chance to participate in an industry estimated at $3 billion in annual sales” and to ensure that “old Detroiters in are able to buy city-owned land at 25% of fair market value and that all filing fees are reduced to 1% of total cost.”

But last summer, a federal judge ruled that the ordinance was likely unconstitutional because it “grant longtime Detroit residents an unfair, irrational, and likely unconstitutional advantage over all other applicants.”

That forced the Detroit City Council to start over from scratch. Last month, the council passed the latest ordinance, laying the groundwork for the city to begin processing applications from potential retailers.

But the latest lawsuit, filed Wednesday, alleges that the city is “trying to give certain preferred newcomers an artificial head start by preventing existing licensees of medical marijuana supply centers in the city from even applying until at least 2027.” — which clearly violates both the letter and spirit of the Michigan Regulation and Taxation Marijuana Act,” reported the Detroit News.

House of Dank general counsel Michael DiLaura told the Detroit News that “there is [medical cannabis] Businesses employed thousands of people, paid taxes, paved the way for this industry and now they are being unlawfully put out of business.”

DiLaura said there are “a number of stakeholders who feel unfairly treated by the regulation.”

“It’s like the old cab medallion or the gold ticket,” DiLaura said. “That’s just not right and not the best way to design inclusion and opportunity. These shops should be open; We should encourage more people to get into the business but prioritize those who have paved the way.”