Detroit: Despite Threatened MMJ Crackdown, It’s Business as Usual

michigan cannabis

By John Schroyer

A pair of restrictive zoning ordinances and new licensing procedures that took effect in March had threatened to shutter up to 75% of Detroit’s medical marijuana dispensaries.

But so far the MMJ industry’s worst fears haven’t materialized, and it’s business as usual for most storefronts, industry insiders say.

Detroit authorities, up to now, have refrained from imposing a widespread crackdown on dispensaries. And some dispensary owners have relocated their businesses outside the city, according to one source.

“Many of the distribution centers that we feared would be closed by now are still open,” said Rick Thompson, editor of the marijuana website Compassion Chronicles and a board member of Michigan NORML, a pro-cannabis group.

“There has been some action by the city, but we haven’t seen the gigantic sweep of closures that we anticipated,” Thompson added. “I drive through Detroit, and I still see a lot of locations that they swore that would be shut down still servicing customers.”

The zoning regulations – which reflect an attempt to bring order to the city’s medical cannabis industry in the absence of statewide regulations – require all dispensaries to get licenses.

The new rules also bar dispensaries from locating within so-called “drug-free zones” that the city council adopted in a bid to regulate the MMJ industry. For Detroit storefronts, that includes minimum 1,000-foot buffers from schools, churches, child-care centers, libraries, public housing projects, other dispensaries, and parks.

The threat of closures was so real that a group of dispensary owners even tried suing the city, before abandoning that avenue in April.

Detroit accounts for the lion’s share of Michigan’s MMJ dispensaries. In February, the city’s top lawyer, Melvin “Butch” Hollowell, said there were 211 dispensaries Detroit that would have to meet the new licensing requirements or be subject to closure. According to the Marijuana Business Factbook 2016, Michigan had an estimated 275-325 dispensaries as of early this year, up from 150-250 in early 2015.

Melanie Faison, the owner of Detroit dispensary Miles Green Acres, said she closed her location at the end of March, when the new zoning ordinances went into effect. She did so because her dispensary is across the street from a city park, meaning her location was prohibited under the new law.

But when she saw that the city wasn’t really doing anything to enforce the law against other dispensaries that were still serving MMJ patients, she reopened on May 1 in the same location.

“It’s a big mess,” Faison said, noting that the actual targeted storefronts may be dealing in drugs other than just medical cannabis.

“They’re still raiding,” she said. “But from what I’ve heard, the (dispensaries) that they’re raiding, they’re doing more than marijuana. That’s what I’ve heard.”

Attorney Bruce Leach, who has six dispensary clients who applied for licenses with the city in March, said there’s been zero word from city officials regarding the licensing process.

“The check has been cashed, and the application has been received. I can tell you that. There hasn’t been any other communication,” Leach said. “The industry is fraught with rumors, because nobody has any information from anyone in authority.”

The Detroit Building, Safety Engineering and Environmental Department, which is overseeing the licensing process, did not respond to multiple requests for comment from Marijuana Business Daily.

But Crain’s Detroit Business reported in June that Hollowell, the city’s corporate counsel, said that 250 license applications had been received by March 31 – the deadline for dispensary applications – and that all unlicensed MMJ storefronts would be forced to close by the end of the year.

Still, it’s a little hazy exactly what the status of the Detroit industry is, or what exactly the city intends to do about it.

And despite Detroit’s new zoning requirements, there are still at least 100 applications that will qualify for licenses, Detroit cannabis industry attorney Matt Abel said.

“There are probably 100 in line for licensing that aren’t in drug free zones, so they’re not going to shut those down,” Abel said.

It’s also unclear exactly how many have closed since the end of March, or merely relocated to avoid problems with law enforcement.

Thompson, of Compassion Chronicles, estimated that there could be upwards of 75 that have closed; but Abel said it’s probably more like 20.

One thing they both agreed on, however, is that the dispensaries that closed their Detroit locations haven’t left the industry.

“They didn’t leave the industry. No way,” Thompson said. “When Detroit started to shed those distribution centers, they traveled out to other locations. Now, cities like Lansing, which had a moderate level of centers, have all of a sudden spiked. The city of Flint, which licensed up to 13 centers, now has about 25, because there are some wildcatters that have come in without authorization from the city. So we’ve seen that some of those folks have moved to other areas and set up shop.”

Abel guessed, however, that the handful of Detroit dispensaries may have simply relocated within the city itself to avoid confrontation with officials.

Either way, they’re probably still operating, which means the number of dispensaries in the state likely hasn’t gone down.

How the licensing and enforcement process will play out for existing dispensaries that are flaunting the new ordinances may be an open question. The gray market could flourish for a while if city officials aren’t keen to crack down on dispensaries that are only serving MMJ patients and not selling to, say, minors or otherwise breaking the law.

On the other hand, Abel said, the city has filed suit against at least seven dispensaries to force them to close under a public nuisance ordinance. And Hollowell, the city’s top attorney, said in June that Detroit’s law department is “filing, on average, four to six cases a week” against dispensaries, Crain’s Detroit Business reported.

Abel said the city did indeed target seven dispensaries. It’s unclear whether they had anything in common that would link the cases.

“But the city is taking some action,” he added.

John Schroyer can be reached at [email protected]

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