The Liability of Limits

[dropcap class=”kp-dropcap”]W[/dropcap]e know that the lynchpin of the Medical Marihuana Facilities Licensing Act (MMFLA) was “local control,” meaning that representatives and senators from more conservative districts could go back to their communities and say, “Don’t worry. You don’t have to do this marihuana stuff.” This provision, Section 205(1), gives municipalities control not only over whether to opt in to the MMFLA, but over which license types to allow, how many to allow and where to put them. This makes sense considering the lack of state license caps and the industry’s frantic interest in Michigan; however, municipalities are learning that limiting licenses is problematic and fraught with liability.

There are two primary ways to limit the number of businesses in a community: First, is through what I call “hard caps,” meaning the city council sets a number, and second, is through restrictive zoning so that the number of available properties is naturally low. The latter is, in my opinion, the way to go, because once a municipality decides to hard cap permits, its options are suddenly all bad.

“This makes sense considering the lack of state license caps and the industry’s frantic interest in Michigan . . .”

Choice Number One: First come, first served. Or is it first qualified? Or first to a zoning hearing? This option is awful on so many levels. Whether the line starts the night before or a week before, when a million-dollar license is in play, people behave badly: Think fist fights, camping on doorsteps and litigation. Is it a race to the finish? If you were second in line for four licenses but your competition next door gets approved first, can they knock you out of contention?

Choice Number Two: A lottery. Arguably the only objective option, a blind draw out of a hat is still problematic because the winners may never qualify for a state license. As time passes, better qualified and desirable business owners have moved on and the community’s patients are stuck with fewer facilities. Let’s also remember the dismal success rate for the world’s lottery winners. Random may be objective, but do communities want to leave this to chance?

Choice Number Three: The point-based application (or the lawyer permanent employment system). The first time I saw this overkill, request-for-proposal style system my first though was “lawsuit.”  These are new on the scene, so it’s appropriate to ask where they came from. Most other states legislated state-level monopolies, severely limiting licenses and awarding them through a bid system. Hopefuls spent tens of thousands of dollars on consultants creating flashy massive presentations. Out of work because those licenses were awarded, those consultants are now in Michigan using fear to sell this monstrosity to small municipalities who not only do not have the resources but, let’s face it, the knowledge, to make any kind of intelligent decision. Moreover, every factor is imperiled by subjectivity and human error. It is a process designed to shrink the applicant pool through trickery and to unfairly advantage deep pockets. Let the litigation begin.

To the credit of Michigan’s municipalities, they are spending huge amounts of time and resources, carefully considering their options to make the best decisions for medical cannabis patients and for their communities. They would be well served by seeking the advice of their municipal counterparts where the industry is working well without issue.