Detroit City Council Approves Adult-Use Cannabis Participation

Michigan’s adult-use cannabis retail footprint is set to grow by more than 20% thanks to the state’s largest city opting in for participation.

Detroit City Council members voted, 8-1, April 5 to allow adult-use cannabis sales in their jurisdiction, a decision that comes more than three years after Michigan voters approved Proposition 1 in the November 2018 election.

Under the new ordinance, 100 retail licenses will be available, half of which will be reserved for social equity applicants, the Detroit Metro Times reported. That number represents a 21.7% increase from the 460 active adult-use retail licenses in the state as of Feb. 28, according to Michigan’s Marijuana Regulatory Agency (MRA).

In addition, the ordinance also paves the way to licenses for consumption lounges and microbusinesses.

“The goal has never been to simply have licensing within the city, but to create policy that works to address the inequities that so many Detroiters have experienced trying to pursue an opportunity in this industry,” the ordinance’s sponsor, Council President Pro Tem James Tate, said in a statement to the Metro Times.

The move comes nearly 10 months after U.S. District Judge Bernard Friedman issued a 19-page injunction blocking a previous attempt to license cannabis retailers in Detroit.

Under the previous proposed ordinance, business entrepreneurs would have been able to obtain “Detroit Legacy” status for one of the adult-use retail licenses, giving an advantage to people who’ve lived in the city for a certain number of years, according to NPR. The legacy provision would have also given preference to those with low incomes or past cannabis-related convictions.

Friedman wrote that proposal was “likely unconstitutional” is his ruling.

“The city ordinance governing the process for obtaining a recreational marijuana retail license gives an unfair, irrational, and likely unconstitutional advantage to long-term Detroit residents over all other applicants,” he wrote.

The ordinance passed by council members on Tuesday provides separate avenues for Detroit residents and non-residents to receive licenses, so that that the two types of potential license winners do not compete against each other, Metro Times reported.

Councilwoman Mary Waters, who cast the lone dissenting vote, said that she voted against the ordinance because it lacked protections for community members, The Detroit News reported.

“The (ordinance) created a licensing system that opens our city up to exploitation from out-state big-business interests,” she said in a statement. “I will continue to stand with the community and will work to ensure that, despite this broken licensing system, longtime Detroiters have a fair shot at owning the marijuana businesses in our city.”

While Detroit stood on the sideline, Michigan launched commercial adult-use cannabis sales in December 2019. Since then, licensed adult-use retailers recorded $510.7 million in sales in 2020 and $1.31 billion in sales in 2021, according to MRA data.

In fiscal 2021, there were 110 local municipalities (62 cities, 15 villages and 33 townships) from 53 counties that participated in the state’s adult-use retail program. Those municipalities and counties were the beneficiaries of $42.2 million from an annual shared fund that was set aside under the state’s Regulation and Taxation of Marihuana Act (MRTMA).

Those participants received $56,453.44 for each retail store or microbusiness licensed in their jurisdictions. Detroit could possibly multiply that number by 100 for more than $5.6 million in additional revenue.

In addition to retail, the ordinance does not limit the number of licenses that may be issued for growers, processors, secured transporters or safety compliance.

Applications for adult-use licensing could begin as early as April 20, when the ordinance goes into effect.