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

Detroit leaders announced a draft ordinance this week that would legalize recreational cannabis sales by January 1, 2021 in the city, setting off a series of negotiations on and off the city council floor between those who seek a bigger share of the cannabis-industry pie for existing Detroit citizens and the forty-six existing medical cannabis dispensary owners within the city of Detroit.

The ordinance, introduced by Detroit Councilman James Tate, in conjunction with Mayor Mike Dugan, sets limits for various recreational license types, and requires 50 percent of all licenses to be awarded to “legacy” Detroit residents, a designation set through a combination of residency and past prosecution for cannabis offenses. Legacy licenses will also get a leg up in that they will be considered first, according to license administration rules being drawn up by the city, during an exclusive six-week licensing period for city residents. 

As the ordinance is worked out, debate is centering around plans for 75 dispensary licenses, majority ownership for half of which would go to legacy Detroiters. This plan immediately sets up a conflict, since there are currently 46 medical cannabis dispensaries in Detroit, only four of which are owned by city residents. Half of 75 is 37, meaning five current dispensary owners are likely to be left out in the cold – or be forced to sell 51% ownership to Detroit residents in order to stay in business.

“We have to make sure we provide opportunity for those who are in the City of Detroit,” Councilman Tate told Grown In. “Everyone is going to have to get creative to make this work. You may have 49 percent of something, or zero percent of nothing.”

Tate is aware that he’s being combative, and says as a member of the Council, he has a one-time chance to make a difference for his constituents and provide city residents ownership opportunities in the cannabis business, where there is a history of suburban ownership of almost every type of Detroit business, not just cannabis.

“Only four of the 46 are owned by Detroiters. That shows right there that you have a problem. If you don’t address it now, it’s only going to get bigger and messier,” said Tate.

For Rush Hasan, director of operations for The Reef Medical Provisioning Center in Detroit, the possibility of not getting a recreational license is enough to consider shutting down his business.

“If we don’t get a recreational license it might make sense for us to close up shop and move somewhere else. Everything is moving to recreational. Patients aren’t renewing their cards because of access to rec. Patients are moving to stores in the suburbs,” said Hasan who has operated his store in Detroit for four years.

“We’re still trying to understand why that 75 number is being used for recreational. I hope we have our time in the next council meeting to pose these questions,” said Hasan.

“Ideally, what we’d like to see is, whatever licenses are there, double that number for rec, and give the the legacy applicants a right to those that are not part of the old cap. I think many [existing] businesses would be happy to donate to a social equity fund to help those who fit the requirement for a legacy application. We had proposed that to the city but they set it aside, they were not interested,” said Hasan.

“I think Councilman Tate is trying to not increase the number,” said Matt Abel, a Detroit resident and executive director of Michigan NORML. “I think one of the ways he may sell this to his more conservative base is by convincing them, ‘At least we’re not going to have more stores.’”

An important point of history, Abel points out, is that during the years when Michigan had legalized medical cannabis use, but did not stipulate rules for medical cannabis dispensaries, almost 300 grey market cannabis shops opened in Detroit, almost overrunning the city.

Tate agreed with that assessment.

“When they had the grey market it was 300 [dispensaries]. That is what people remember, and that’s when residents were going, ‘What in the world is happening? This is not the city I want to live in,’” said Councilman Tate. “We had at some point, it was back to back next to each other; it was crazy. 75 is not the final number we’re going to have, but for right now, I think that’s a happy medium in terms of over-saturation.”

Coming legal battles

Almost everyone involved with Detroit and cannabis agrees there will be some sort of legal battles over who gets a license.

“The day we had the press conference, I got one guy who told me he was going to sue,” said Tate.

Abel points out that there are numerous concerns that need to be addressed with the legislation, especially zoning, since Detroit has a large number of pocket parks and storefront churches, each of which would set off the 1,000 foot exclusion zone for a cannabis business. 

“We want to clean up the language around what is a park, a church, a school. There are a lot of buildings that used to be a school but now present an opportunity for entrepreneurship,” said Tate. Churches will have to prove they are operational and have non-profit status. Parks without programming or facilities will need to be redefined.

Abel also points out that the city ordinance includes a poison pill, stating “Should any provision of this ordinance governing adult-use marihuana establishments be ruled invalid, unconstitutional or struck down by a court of law, Subsection (b) of this section will be thereto repealed, and future adult-use marihuana establishments will be prohibited.” 

That’s unusual for a city ordinance, agrees Abel. “It certainly is.”

The draft city ordinance also stipulates that license applications will be reviewed in “random order”, which Abel says state law does not allow since, “Random is not one of the options, you can either cap it or not cap it.”

“This is an opportunity now to course correct,” said Councilman Tate. “We’re not trying to harm others. There are multiple ways to seize opportunities in this industry.”

Note: This report originally stated that Rush Hasan was the owner of The Reef. He is not and is actually the director of operations.


Editor Mike is a co-founder and the editor of Grown In, a U.S. national cannabis industry newsletter and training company. His career has taken him from Capitol Hill to Chicago City Hall, from...