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Detroit’s process for licensing recreational marijuana establishments on hold due to lawsuit

Jars of marijuana strands
Rob
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Detroit’s process for licensing recreational marijuana businesses is on hold because of a lawsuit arguing the process violates the law by favoring Detroit residents.

Proponents say it simply levels the playing field for Detroiters trying to get a foothold in the cannabis industry, and rights some historical inequities.

“We went to jail the most,” says Mitzi Ruddock with the group Black Cannabis Access. “We paid the price, we’ve been impacted the most. Now we’re not able to create generational wealth from it?”

A part of Detroit’s adult-use marijuana ordinance sets up a process where marijuana business entrepreneurs can get “Detroit Legacy” status for one of the city's 75 licenses. Morning Edition host Doug Tribou talked with Michigan Radio Detroit reporter Sarah Cwiek about some of the issues at play in the lawsuit. Below is the interview, edited for length and clarity:

DOUG TRIBOU: So tell us about Detroit's adult use marijuana ordinance. What is the issue here?

SARAH CWIEK: The part of the ordinance that's in question here is something called the Detroit Legacy Status. Basically, it sets up a special category of people who have lived in Detroit for at least 10 out of the past 15 years or have some other additional considerations such as being low income or having a past marijuana conviction.

Being a legacy Detroiter gives you a lot of advantages in this process including first priority in the review process.

  • At least 50% of licenses in most of the 10 license categories must be awarded to certified Legacy Detroiters.
  • A 99% discount on licensing fees in 2021 and 75% discount on licensing fees in 2022.
  • A 75% discount on city-owned land.
  • Ability to apply for a one-year "provisional" license if the applicant does yet own a property

DT: And why did the city of Detroit decide to go that route with all of those options?

SC: Well, I think the city looked back at its experience with the medical marijuana industry and saw that the vast majority of the medical pot shops in Detroit were owned by non-Detroiters, and most of the owners were white in an industry that tends to be very white.

There's also a sense that the people who suffered the most in the war on drugs – African-Americans and people of color – aren't the ones who are profiting now off of marijuana being legal.

A lot of cities and states have social equity programs to try to promote diversity in the marijuana industry. The state of Michigan has one, but it hasn't been particularly successful at diversifying the cannabis industry.

Rebecca Colett is the founder of the Detroit Cannabis Project. She wanted the city of Detroit to take a bolder approach.

REBECCA COLETT: “It had to be something above and beyond just a mediocre coupon, a mediocre press release that says we care about diversity. Do you?”

SC: But you can't set up special categories within the law that are explicitly based on race. The Detroit Legacy provision was a way to work around that, but the federal lawsuit specifically challenges that portion of the ordinance.

DT: So Detroit had gotten its licensing process up and running. Then this lawsuit came along. What are the main arguments in the lawsuit?

SC: It was filed on behalf of a woman named Crystal Lowe, who according to the complaint lives in River Rouge. Lowe says she's been in the cannabis industry and wants to open an adult-use shop in Detroit, but since she doesn't live in the city right now, the lawsuit argues that she will be shut out of the adult-use industry in Detroit altogether.

The lawsuit claims Detroit's licensing scheme is unconstitutional, and in violation of the equal protection clause of the Michigan Constitution and the commerce clause of the U.S. Constitution because it unfairly favors Detroit residents.

In the lawsuit, the city says its licensing scheme does not favor Detroit residency per se.

“The ordinance provides those Detroiters who have undoubtedly experienced the deleterious effects of the war on drugs, an opportunity to compete on equal footing with others who are applying for adult use, retail or establishment licenses,” the city said in a court filing.

The plaintiff in this lawsuit, Crystal Lowe, says she's lived in Detroit for 11 years of her life, she wants to open a shop in Detroit, and that she has significant experience in the cannabis industry. It's not totally clear who she really is, but when you look at who is going to benefit from this lawsuit, assuming that they win, it's the sort of big multistate operators who tend to dominate a lot of the cannabis industry across the country.

DT: And the possible victory for the multistate operators is not because they're specifically tied to the lawsuit, but because a victory for the plaintiff in this lawsuit could open the door for anyone to come in.

SC: Yes, exactly. And this whole Commerce Clause issue is about not disrupting interstate commerce and, you know, sort of setting up protectionist policies for people who live with within a certain state or certain cities.

DT: So what happens now?

SC: The judge gave the plaintiffs an early victory by granting a temporary restraining order, which is putting Detroit's licensing process on hold right now.

A hearing Thursday on a preliminary injunction would extend the hold on licensing until the lawsuit is resolved.

Detroit's ordinance itself also has what people have called a “poison pill” written into it, which says that if any part of the ordinance is struck down, the whole thing is going to be repealed. If that happens, Detroit will likely prohibit adult-use marijuana establishments altogether.

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