Detroit officials on Thursday issued nearly three dozen licenses for retail adult-use cannabis shops, more than four years after Michigan voters approved a measure to legalize recreational marijuana in the state.

The licenses were issued after U.S. District Court Judge Bernard Friedman on Wednesday morning denied a request to postpone the issuing of cannabis retailer licenses. The judge’s decision was made in a lawsuit challenging Detroit’s licensing regulations, which include provisions to encourage ownership in the regulated marijuana industry by local residents and those harmed by decades of marijuana prohibition.

“Our goal from the day voters approved the sale of adult-use marijuana was to make sure we had a city ordinance and a process in place that provides fair and equitable access to these licenses and the courts have affirmed that we’ve done just that,” Detroit Mayor Mike Duggan said in a statement on Thursday.

Recreational Pot Legalized In Michigan In 2018

Following the approval of a 2018 statewide ballot measure to legalize adult-use cannabis, licensed sales of recreational marijuana began in some Michigan cities in December 2019. An ordinance to regulate adult-use cannabis sales was passed in Detroit last year, but legal challenges led a federal judge to rule that the measure was “likely unconstitutional.” 

An amended ordinance was subsequently unveiled by the city council in February. A lawsuit was filed again, with plaintiffs arguing that the city’s cannabis ordinance unfairly favored longtime residents. The Plaintiffs in the case had asked Friedman to pause the licensing process while the case was decided, but the judge denied that request on Wednesday.

“I am thankful for Judge Friedman’s wisdom in ruling today against the Temporary Restraining Order that would have again prevented Detroit from moving forward with our current Adult-Use Marijuana Ordinance,” Council President Pro-Tem James Tate said about the judge’s decision.

“We make sure we do the right thing,” Tate, who led the drafting of the ordinance, said at a press conference Thursday morning. “I’ve always said — and I’ve been told — if you do the right thing, everything will work out. It may not happen exactly when you want it to or not always how you want it to, but eventually, it’ll work out.”

The city issued a total of 33 licenses for adult-use cannabis retailers on Thursday. Twenty of the licenses were issued to so-called social equity applicants, including people who live in communities that have been disproportionately impacted by marijuana prohibition policies and those with certified Detroit legacy status who currently live in Detroit or another disproportionately impacted community. The remaining 13 licenses for cannabis retailers issued on Thursday were awarded to non-equity businesses.

A total of 90 applications were received by the city for the 60 adult-use cannabis retailer licenses available in the first round of dispensary licensing, but city officials said that only 33 of the applicants met the requirements for the highly coveted permits. The city also received several licenses for cannabis microbusinesses and consumption lounges, but regulators have not yet issued those types of licenses. Detroit regulators began issuing licenses for cannabis growers and processors in April. 

“The recreational marijuana industry has tremendous potential to generate wealth in income for our city, as well as personal and generational wealth for those who participate,” said Detroit Deputy Mayor Todd Bettison.

City leaders plan to hold at least two more rounds of retail cannabis dispensary licensing, with the next round opening as soon as next month with city council approval, according to Anthony Zander, director of Detroit’s Department of Civil Rights, Inclusion and Opportunity. The city will award up to 30 additional retail licenses, 20 microbusiness licenses and 20 consumption lounge licenses in the next round.

Although the federal judge decided against putting a halt to issuing the first adult-use dispensary licenses, Tate said the city should be prepared for more legal action.

“By no means is the so-called battle over,” he said. “We’ve already been told that we’re going to get sued again. We know that’s the nature of this game.”

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A lawsuit filed on Sept. 28 in the U.S. District Court for the Eastern District of Michigan claims that the city’s adult-use cannabis ordinance is unfair to longstanding city residents. The lawsuit comes from plaintiffs Arden Kassab, who owns multiple medical cannabis dispensaries in Detroit, and PharmaCo.

In June 2021, a lawsuit concluded with an opinion from U.S. District Judge Bernard Friedman stating that the city of Detroit’s process of obtaining an adult-use cannabis license was “unconstitutional” and “gives an unfair, irrational and likely unconstitutional advantage to long-term Detroit residents over all other applicants.” The most recent lawsuit claims that “…Detroit has essentially rebranded the ‘legacy’ program’ as a ‘social equity’ program.”

The result of that case caused a delay in the processing of recreational cannabis applications, and the city revised the rules later that year in November 2021.

However, the newest lawsuit claims that the revised ordinance did not solve the problems. “While Detroit alleges that its new cannabis ordinance cures the constitutional deficiencies found by Judge Friedman, the … (ordinance) remains ‘far more protectionist than it is equitable,’” the new lawsuit states, quoting Judge Friedman’s original statement from 2021.

According to the Detroit Free Press, one example was provided to illustrate the issues with the ordinance in its current form. Plaintiff Arden Kassab lived in Pontiac for “many years,” which is an area that is both negatively affected by the War on Drugs, and they also have a cannabis conviction. However, Kassab no longer lives in Pontiac and no longer qualifies under the current rules.

Similarly, plaintiff PharmaCo (a subsidiary of Red White & Bloom) can’t currently obtain a recreational license because “it must divest itself of substantial real property or business ownership interests in order to obtain social-equity points needed to compete,” the Detroit Free Press states.

The revised ordinance set aside half of the licenses to be reserved for “equity applicants,” such as those who are current residents in the city, as well as those who live in specific areas of Michigan that have higher cannabis convictions, and also where 20% of the population lives below the poverty line, according to federal standards. Previously, the ordinance reserved half of the licenses for “legacy Detroiters,” or people who have been residents in Detroit for a specific amount of time.

Although Michigan legalized recreational cannabis in November 2018, the city of Detroit didn’t approve adult-use sales until November 2020. The first lawsuit arrived less than one year later in June, followed by the revision release in November 2021. The ordinance took effect in April 2022, but in May a new lawsuit (from House of Dank) emerged to address concerns about conflicts with state law. Another lawsuit (from JARS Cannabis) arrived in June claiming that the ordinance violated state law.

By August, both of the lawsuits were dismissed. On Aug. 30, Wayne County Judge Leslie Kim Smith wrote in an opinion stating that the ordinance was fair. “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 MRTMA [Michigan Regulation and Taxation of Marihuana Act],” Smith wrote.

Applications for adult-use licenses opened on Sept. 1, 2022 and closes on Oct. 8. In a statement, Detroit Mayor Mike Duggan expressed his confidence in the ordinance. “We are going to make sure there is equity in this process for Detroiters.”

Likewise, City Council President Pro Tem James Tate told CBS News Detroit in early September that the process has been lengthy, but the ordinance is fair. “Getting to this point has been an overly protracted process dating back to 2020 when the first ordinance was unanimously approved by Detroit City Council,” said Tate. “Now with the lawsuits and the failed ballot initiatives seeking to overturn our ordinance behind us, Detroiters and other equity applicants will have a fair opportunity to compete for adult-use licenses in a city that welcomes all to participate in the multi-million-dollar adult-use cannabis industry.”

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Two lawsuits filed in Michigan earlier this year challenged the recreational cannabis ordinance in Detroit. However, the lawsuits have now been ruled on, and the city can proceed with recreational cannabis license applications.

One lawsuit was originally filed by House of Dank (which owns four dispensaries) in May, and argued against the ordinance’s rule that prevents medical cannabis dispensaries from applying for a recreational cannabis dispensary license until 2027.

Wayne County Judge Leslie Kim Smith on Aug. 30, who presided over House of Dank v. City of Detroit, wrote about the ruling in his opinion. “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 MRTMA [Michigan Regulation and Taxation of Marihuana Act],” Smith stated.

Additionally, Detroit City Spokesperson John Roach said 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,” according to the Detroit Free Press.

Detroit’s first round of recreational applications were set to begin on Aug. 1, but Judge Smith issued a restraining order that prevented Detroit city officials from proceeding.

The second lawsuit was issued on June 3 by JARS Cannabis, which owns two dispensaries in Detroit, and more throughout the state. The lawsuit claimed that it violates state law, and presented issues with the city’s scoring system.

Recreational cannabis sales began in Michigan in December 2019, but the city of Detroit didn’t introduce its ordinance to allow recreational cannabis sales until November 2020. Now with the resolution of the two lawsuits that were putting the plans on hold, those who want to apply for a license to operate a dispensary, microbusiness, or consumption lounge, can do so as of Sept. 1.

Detroit Mayor Mike Duggan spoke at a press conference on Aug. 30, explaining how the last two years of litigation has slowed Detroit’s progress. He described medical cannabis being “controlled by wealthy folks who don’t live in the city, and Detroiters have not benefited from it. Since the beginning, Councilman [James] Tate has said we want recreational marijuana businesses in the city but not if that means Detroiters are going to be excluded.”

Duggan also expressed his confidence that the system is fair. “Everyone is entitled to apply tomorrow but we are going to make sure there is equity,” Duggan said. 

Registration is open between Sept. 1 and Oct. 1 through homegrowndetroit.org. During the first phase, 60 licenses are available (40 dispensaries, consumption lounges, and 10 microbusinesses. Half of these licenses will be awarded to social equity applicants, which are individuals who either living in “any community where marijuana-related convictions are greater than the state of Michigan median and where 20% or more of the population is living below the poverty line.”

Later on, 100 more retail licenses, 30 consumption lounge licenses, and 30 microbusiness licenses will become available, spread out in three phases.

Councilman James Tate was also at the press event. “The city’s 2022 marijuana ordinance is unambiguous and provides a fair licensing scheme,” Tate said, reading out a portion of the opinion written by Judge Smith.

In his own words, Tate also spoke about the future of cannabis in Detroit. “I am excited that we are on the verge of having Detroiters and other equity applicants having a fair process that will allow them to participate in this multimillion-dollar industry. It is complicated, it is challenging, but it is now possible and that’s the beauty of this fight.”

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