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Although cannabis sales in Michigan increased 32% over the previous year to a record $221.7 million, the growth of the state cannabis industry brings a few challenges.
Is the Recreational Cannabis License System The Main Issue?
Several cannabis businesses in communities in southeast Michigan have been waging disputes in Michigan’s court system for years, reported Crain’s Detroit.
Despite the unlimited licenses for marijuana operations, it is up to local municipalities to authorize sales.
“The driver of all of this is probably the worst decision that the drafters of the adult use statute made — requiring that competitive selection process,” said Lance Boldrey, partner and cannabis attorney at Detroit-based law firm Dykema Gossett PLLC. “It all sounds well and good from a policy standpoint, trying to eliminate picking favorites, but it is the longest process and most expensive process for applicants to follow, and you end up with these lawsuits that can tie applicants up in court for three or four years.”
Meanwhile, in Oakland County, a judge ruled that the city’s scoring system was unfair to Common Citizen a medical cannabis company. According to Common Citizen, the city’s process for issuing medical marijuana licenses was arbitrary and generated conflicts of interest.
“We’ve heard of a lot of municipalities are hesitant to opt-in because they don’t want to get sued,” Doug Mains, partner at Honigman LLP, co-author of the MRTMA ballot language and attorney for major operators said. “The medical system was always first-come, first-serve or a lottery, and the suspicion was always that the township president’s brother-in-law got all the licenses.”
Boldrey noted a few keys to avoid lawsuits, such as unlimited licensing, replacing scoring systems, and using zoning to limit market participants.
“So many of these frameworks are simply unworkable and all the applicants will continue to jockey for position,” Boldrey concluded. “Until all of these suits are settled, we’ll have no idea what any given city’s landscape will look like.”
David Morrow, founder, and CEO of Lume Cannabis in Michigan commented: “The zoning can get so finite that it points to a single address. Usually, it’s a site that isn’t worth more than $200,000 but can now sell for $3 million because it’s zoned for a dispensary.”
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