May 13, 2022 - News

Cannabis ordinance challenged, with more suits to come

Illustration of marijuana in an hourglass.

Illustration: Lindsey Bailey/Axios

Look out for more litigation on the horizon after the first challenge to Detroit's recreational cannabis ordinance came this week.

Driving the news: Cannabis retailer House of Dank sued the city because it says new rules allowing recreational businesses to open in Detroit don't give pre-existing medical shops a fair shot at competing.

  • House of Dank has five medical cannabis shops in Detroit.
  • The lawsuit argues that the ordinance that's being rolled out right now unlawfully bars existing medical retailers from applying for a recreational license until 2027.
  • The plaintiffs want a judge to rule that the city can't stop medical retailers from getting a recreational license.

Why it matters: Detroit has already lost major cannabis dollars to surrounding cities that acted quickly to allow recreational businesses to set up shop after Michigan voters approved non-medical use in 2018.

  • Any further delays here could exacerbate the economic disparity.

Yes, but: City Council President Pro Tem James Tate, who spearheaded the ordinance, has stood by these rules by arguing they were crafted to ensure the industry gives long-time Detroiters an equitable shot at participating.

By the numbers: Businesses like House of Dank are worried because recreational sales are eclipsing medical, meaning shops that don't go rec are likely to eventually flounder.

  • Michigan-wide recreational cannabis sales totaled $1.3 billion last year, nearly three times medical's $481 million, according to the state's marijuana agency.

The other side: Jay Snipes, co-owner of medical cannabis retailer West Coast Meds, disagrees with the lawsuit's interpretation of the ordinance. She expects medical businesses can still apply. Regardless, the threat of more lawsuits means more uncertainty.

  • "The dispensaries in Detroit literally cannot afford for [the recreational licensing process] to be stopped again," she tells Axios.

The latest: This lawsuit isn't looking to stop the process — there's no request for a restraining order — so it appears the city's business licensing process will continue despite the challenge.

  • The city's previous attempt at instituting a recreational weed program was full-on halted in litigation last year.
  • The city declined to comment on the suit.

What's next: It's likely the ordinance will be challenged several more times, Denise Pollicella, founder and managing partner of Howell-based Cannabis Attorneys of Michigan, tells Axios. And unlike this suit, the next ones may seek to stop the application process.

  • Cities in Michigan that use merit-based scoring systems to pick and choose what pot businesses can open, like Detroit, have been getting sued. One example is Berkley.

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