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Recreational Cannabis Ordinance Threatens Black Owned Cannabis Businesses in Detroit, Michigan

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A cannabis company in Detroit is pushing back against the city’s new recreational cannabis ordinance, claiming that it violates Michigan state law.

House of Dank is officially suing the city of Detroit over this new ordinance. The legal language in question was passed May 11. Represented by Kevin M. Blair of Honigman law firm, House of Dank is claiming that the ordinance is in violation because it prevents existing medical dispensaries from getting recreational licenses until 2027. This could put existing medical dispensaries out of business.

“For years now, Plaintiffs have spent considerable time, energy, and money providing safe and reliable access to legal cannabis for medical marijuana patients,” the lawsuit states, according to The Detroit Times. “Many of them have been operating at a loss and are struggling to survive. Now, despite having demonstrated years-long regulatory compliance, as well as economic, civic, charitable, and workforce commitment to the City and its residents, the City has turned its back on these businesses, and effectively, ensured their ruin.”

The plaintiffs also fear that even if they and other businesses, many of which are Black-owned, make it to 2027, there may not be any recreational licenses left. This is the second lawsuit that has been filed against the city so far on this same topic in the past five years.

The city has been dealing with this back-and-forth for some time. Detroit has been attempting to give preference to residents from the city who have been disproportionately impacted by the War on Drugs, but there has also been pushback when they try to provide these protections. Another ordinance in the past was halted when a judge ruled it “gives an unfair, irrational, and likely unconstitutional advantage to long-term Detroit residents over all other applicants.”

A year later, a new ordinance was drawn up that offered licenses for folks from outside the city. This ruling, approved on April 5, offers both equity and non-equity applicants different license tracks so they aren’t competing with each other. However, folks are still not happy because of the five-year provision for existing medical dispensaries.

“The City wasted almost another entire year, attempting to find other ways to funnel the revenue from marijuana sales to its preferred resident business owners, rather than adhering to (the state’s recreational marijuana law) and allowing the existing medical stores to participate in the adult-use market,” the lawsuit continues. “Indeed, the City made a conscious decision to ignore the unambiguous command of (the state law) and instead unapologetically doubled down on its efforts to simply rephrase and disguise the unconstitutional ‘legacy’ preferences as ‘equity’ preferences.”

This is not a new fight for medical dispensaries trying to compete with the recreational market. Since medical cannabis cards take time and money to get, more and more folks are just getting recreational cannabis, even if it is a bit more expensive. Medical marijuana card numbers fell from more than 264,000 in 2020 to fewer than 232,000 so far this year in Detroit, according to the state’s Marijuana Regulatory Agency (MRA). Medical cannabis sales declined from $38.1 million in February 2021 to $26 million in February 2022.

Because of this, medical dispensaries are concerned about keeping their sales up and being able to compete.

“Without the ability to sell adult-use marijuana, [medical cannabis businesses] will not be able to compete with the City’s new, adult-use marijuana retailers,” the motion states. “As a result, the City’s existing medical marijuana stores will be driven out of business … and the individuals who rely on them will be deprived of the medicinal product they require.”

So far, city officials have declined to comment on the latest motion, and it remains to be seen if it will be overturned, but it is clear that medical dispensaries in the area want more protections in place to ensure their businesses can thrive.