Cannabis Businesses Sue Detroit Over Adult-Use Ordinance

Detroit City Council members approved an ordinance allowing adult-use cannabis businesses within the city last month, more than three years after Michigan voters approved an adult-use legalization measure in the 2018 election, and now a lawsuit threatens to further postpone the city’s adult-use rollout.

A group of medical cannabis dispensaries in Detroit—House of Dank, Herbal Wellness, TJM Enterprises Services and Detroit Natural Selections Enterprises—filed the lawsuit May 11 in Wayne County Circuit Court, according to the Detroit Free Press.

The plaintiffs are challenging a provision in the city’s adult-use cannabis ordinance that bars medical cannabis operators from receiving an adult-use license until 2027, the news outlet reported.

The dispensaries claim that the city’s medical cannabis businesses will have likely closed down due to lack of sales by the time Detroit opens the adult-use program to medical operators, the Detroit Free Press reported. They are asking the court to block the city from prohibiting dispensaries that sell both medical and adult-use cannabis.

The plaintiffs’ argument rests on claims that Michigan’s adult-use cannabis law specifies that once municipalities opt in to the program, they cannot bar medical cannabis licensees from seeking licenses to operate in the adult-use market, according to the Detroit Free Press.

The lawsuit also takes issue with a provision in Detroit’s ordinance that prohibits cannabis business owners from having ownership interest in more than one retail license, which means that even if a medical cannabis business receives an adult-use license, the business could only operate one retail location, the Detroit Free Press reported.

Under Detroit’s adult-use cannabis ordinance, 100 retail licenses will be awarded, and half will be issued to social equity applicants. The ordinance also creates licenses for consumption lounges and microbusinesses.

The city approved its current ordinance nearly 10 months after U.S. District Judge Bernard Friedman issued a 19-page injunction blocking a previous attempt to license adult-use cannabis dispensaries in Detroit.

The original ordinance allowed entrepreneurs to obtain “Detroit Legacy” status when applying for the adult-use licenses, providing an advantage to applicants who have lived in the city for a certain number of years. The legacy provision would have also provided licensing preference to those with low incomes or past cannabis-related convictions.

Detroit’s revised ordinance provides separate processes for residents and non-residents to receive licenses to ensure that the two types of applicants do not compete against each other in the licensing process.

The city began accepting applications for some types of adult-use cannabis businesses April 20.