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Detroit faced numerous delays in recreational marijuana licensing after several lawsuits, ordinance revisions and debates on amendments in recent months. Applications for the first phase of limited recreational marijuana business licenses opened Sept. 1, after two lawsuits challenging the ordinance were dismissed Aug. 30 and a temporary restraining order was lifted. But appeals are expected, and a new lawsuit could still be filed — either of which would halt the process again.
Since the state’s legalization of recreational marijuana in 2018, city officials have worked to implement a social equity program to address inequities among residents disproportionately affected by the drug’s prohibition. The City Planning Commission (CPC), with Council President Pro Tem James Tate, crafted social equity provisions in a 2021 ordinance that included a plan to issue more licenses to those with Detroit Legacy status.
Those provisions have since been removed after a district court judge ruled that the ordinance was unconstitutional in June 2021, saying the city’s process “gives an unfair, irrational, and likely unconstitutional advantage to long-term Detroit residents over all other applicants.”
The benefits no longer exist in the current social equity application. There aren’t any reduced fees or special advantages for the applicants. The same amount of licenses are available to those who qualify as social equity applicants and to those who don’t.
Tate told Outlier Media it was unfortunate that they had to go to court on this ordinance and that he preferred the first ordinance they worked on.
“But as a result of legal challenges, we are at a point where we have this particular ordinance that I still believe provides a better playing field for Detroiters and equity applicants, but to me, I don’t think it goes as far as I would like it to go,” Tate said last week.
It’s unknown how many business licenses will be awarded to Detroiters versus applicants from other “disproportionately impacted communities” around the state. Detroit is among 184 communities in this category. A disproportionately impacted community is any place where the number of marijuana-related convictions is greater than the state’s median and where 20% or more of the population lives below the federal poverty level.
The city says that an applicant is an “individual whose primary residence is located within a disproportionately impacted community,” which can come from any of the 184 communities in the state or from a community outside of the state, said Kim James, director of the city’s Office of Marijuana Ventures and Entrepreneurship.
This means an Ann Arbor resident — which the state lists as one of the communities — or an out-of-state resident could qualify as a social equity applicant for a marijuana business license in Detroit.
No more discounts, special treatment
Before applying through the city, applicants must apply through the state which costs $3,000 just for the application and several more thousands of dollars depending on the type of marijuana business license being sought. The City of Detroit’s application then costs $1,000, and all the licenses cost $5,000.
The application process fails to give social equity applicants, specifically those from Detroit, an advantage or any reduced fees over other applicants. The previous ordinance provided Detroit Legacy applicants with discounted application fees, earlier application periods and had set aside more licenses for Detroit residents.
The city directs potential social equity applicants with links to information and resources, such as technical skills training through the Detroit Cannabis Project, a months-long incubator program designed to guide participants through business basics.
However, the training has been open and available to anyone who applies and is not yet exclusive to only social equity applicants. Tate said the intention was to make these trainings only available to the social equity applicants, but due to the recent court ruling, they are cautious about making them only for Detroiters or social equity applicants.
To apply for a license, applicants are required to already have secured a location — another large cost — but some social equity applicants still may not have a deed or lease to a property.
The city’s land lottery program can help applicants find a location for their business. To be eligible for the land lottery, applicants must have Detroit Legacy status, but the program is not available yet, Kim James said.
Details and a list of eligible properties will be available on the website after Sept. 30, she said. The first round of applications ends at 8 a.m. on Oct. 1, which means social equity applicants with Detroit Legacy status who need assistance in securing a property are unlikely to have a successful application and would probably have to wait for future phases to apply again.
How will licenses be issued?
Phase two of the licenses are estimated to be at least 180 days after the first phase, which would slate it for next spring. Tate said the spacing out of phases is intentional in order to give those interested in applying time to gather the required information and fees.
Kim James said this current ordinance is still beneficial to social equity applicants from Detroit even though being a Detroit resident is no longer the sole eligibility for licenses.
“We have added the criteria on both sides of the equation for both non-equity and social equity applicants, so I feel like it gives more opportunity across the board to social equity applicants including in Detroit,” she said.
This criteria includes a point system that requires applicants to earn a perfect score from the 100-point rubric to be put into a lottery for the first licenses. It looks at each applicant’s business plan, site control and ability to pay taxes.
However, the criteria list the same requirements for both “non-equity” and social equity applicants, which fails to give much of an advantage to social equity applicants.
There is an additional 27-point social equity scale where all applicants need a minimum of 5 points to qualify for the lottery. For non-equity applicants, they must sell or lease a licensable property to an equity applicant or partner with them to gain points. Meanwhile, social equity applicants gain points by living in a community where the poverty level is at least 20%.
Licenses are set to be issued in December for the first round of applications, but City Council needs to approve a third-party vendor to score and judge the applicants.
“Some would say that we may be going too slow, but I would say we’re being very deliberate on how we approach it because we don’t want to have missteps that would create even more legal challenges than we’ve had in the past,” Tate said.
Kim James said a local vendor within the tri-county area has been selected, and her office is working on final contract details before the council can go forward with the approval process.
Reach MALAK SILMI, the Report for America Corps Member for Outlier Media, at malak@outliermedia.org or 734-985-0377. Lynelle Herndon is the Detroit Documenters Coordinator for Outlier Media and can be reached at lynelle@outliermedia.org.