Judge Dismisses Lawsuits Challenging Detroit’s Adult-Use Cannabis Ordinance

A judge dismissed two lawsuits Aug. 30 that challenged Detroit’s adult-use cannabis ordinance, paving the way for city officials to start processing applications for licenses, according to the Detroit Free Press.

"Although the city's 2022 marijuana ordinance is a complicated scheme, it is unambiguous and provides a fair licensing process, which comports with the mandates of the [Michigan Regulation and Taxation of Marihuana Act]," Wayne County Circuit Judge Leslie Kim Smith said in an opinion in the first lawsuit, House of Dank v. city of Detroit, which was filed in May.

In that case, a group of medical cannabis dispensaries—House of Dank, Herbal Wellness, TJM Enterprises Services and Detroit Natural Selections Enterprises—challenged a provision in Detroit’s adult-use cannabis ordinance that they said barred medical cannabis operators from receiving adult-use licenses until 2027.

Smith said in her opinion that the plaintiffs’ interpretation that medical cannabis businesses cannot apply for adult-use licenses until then was incorrect, the Detroit Free Press reported.

A second lawsuit, filed in June by medical cannabis company JARS Cannabis, sought to block the ordinance altogether, alleging that it violates Michigan law by giving preferential treatment to certain applicants.

Smith’s opinion for the JARS lawsuit said that there is no preference for equity applicants because non-equity applicants are able to apply for adult-use cannabis licenses at the same time, the Detroit Free Press reported. Smith’s opinion went on to say that nothing in Michigan’s law limits a municipality in developing its own criteria and scoring system for awarding licenses, according to the news outlet.

Michigan launched adult-use cannabis sales in December 2019, and Detroit City Council approved its adult-use cannabis ordinance in April 2022, nearly 10 months after a U.S. district judge issued a 19-page injunction to block the city’s previous attempt to license adult-use cannabis businesses within its jurisdiction.

The original ordinance would have allowed entrepreneurs to obtain “Detroit Legacy” status when applying for 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 granted licensing preference to those with low incomes and those with past cannabis-related convictions.

Detroit’s revised ordinance makes 100 adult-use cannabis dispensary licenses available, and mandates that half must be issued to social equity applicants, which include both longtime Detroit residents and individuals who live in communities where cannabis-related convictions are greater than the state average, according to the Detroit Free Press.

The new ordinance also 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.

Detroit officials began accepting applications in April for adult-use cannabis cultivation, processing, transportation, testing facilities and event organizers. City council members then voted in July to open the licensing process for adult-use dispensaries, consumption lounges and microbusinesses Aug. 1, but Smith had granted JARS Cannabis’ request for a temporary restraining order until the case was resolved.

Detroit spokesperson John Roach told the Detroit Free Press that “the law department is reviewing the recent rulings and we will know more about the licensing process and application timeline in the next couple of days.”

Mike DiLaura, House of Dank’s general counsel, said he and his clients “are evaluating the judge’s opinion.”

"There's no doubt we’ll be appealing the ruling,” DiLaura told the Detroit Free Press.