Federal ruling on Detroit Legacy license system expected to have big impact

Non-legacy owned dispensaries like Detroit’s Reef Dispensary, are endangered regardless of how a federal judge may rule.

Due in about two weeks, a federal judge’s highly anticipated decision on whether or not to allow Detroit’s cannabis licensing system that favors long-time city residents, will have a significant impact on the city and how the rest of the state handles cannabis licenses.

Up to this point, Michigan has operated as an “open license” state, where anyone can seek a license, and except for local zoning restrictions, there is no limit to the number of licenses. But Detroit has broken the mold by creating a “Legacy” license system that limits the number of dispensary licenses to 75, requires that half of those licenses go to current residents with at least 15 consecutive years of residency (less for those with cannabis-related arrests), and a “one-for-one” system, where a non-Legacy license can’t open until a corresponding Legacy license opens.

Crystal Lowe, a ten year Detroit resident who now lives in neighboring River Rouge, argues that the Legacy system is discriminatory, and that she should have the right to open her own store. 

And it’s not just people outside of Detroit that have something to lose. There are currently 46 medical-license dispensaries in Detroit, 42 of them owned by non-Detroiters. That means five currently operating Detroit medical-only dispensaries will have to either close, or sell 51% of their ownership to Legacy Detroiters to stay open and seek a city license. Adding pressure, recreational sales are growing, while medical is shrinking slightly.

“Everything is moving to recreational. Patients aren’t renewing their cards because of access to rec. Patients are moving to stores in the suburbs,” Detroit provisioning center owner Rush Hassan told Grown In last October.

When authoring its licensing ordinance, the City of Detroit raised the stakes by adding a “poison pill” to the legislation: If any portion of the city’s law is struck down in court, the ordinance says, the entire ordinance is made null and void.  Thus, if the city can’t do it the way it wants, then nobody in Detroit gets recreational licenses.

“The driving forces behind that legislative initiative were very vocal about the level of conviction they had for the guiding principles,” Detroit Corporation Counsel Lawrence Garcia told Grown In. “They really want to make sure Detroiters have a stake in a growing industry. If they don’t, then we don’t need this industry in the City of Detroit.”

Is there a federal role?

Attorneys for Detroit, directed by Corporation Counsel Garcia, argued in court that because cannabis is federally illegal, “There is no interstate market for marijuana, so the Detroit legacy provision cannot be said to discriminate against interstate commerce.” And therefore, the federal courts should have no role in determining whether or not Detroit law is discriminatory.

Whether or not the federal government has legalized cannabis is irrelevant, says Kevin Blair, attorney for Crystal Lowe. The interstate cannabis is here in fact, especially as people come from different states to purchase it in Michigan.

“You have to pretend like marijuana is in a silo in Michigan and doesn’t affect cross border finances,” said Blair. “There are many companies that are publicly traded that are operating in the Michigan market. That’s capital going over state lines. [Consider] the number of stores along the border that wouldn’t support that level of retail.”

Regardless of a federal judge’s decision, Counsel Garcia says Detroit Mayor Mike Duggan and Councilman James Tate, the author of the city’s cannabis adult-use ordinance, will remain steadfast.

“When the Mayor and Member Tate made their intentions clear, it’s admirable they want to show people they are going to stick to their promises. They aren’t going to allow outsiders to leave Detroiters out,” said Garcia.