Nine years after Michigan voters approved medical marijuana, government officials and patients don't know which pot shops will be open or closed in coming months because the laws are so confusing.
How confusing?

On the same day last week when the state announced that existing medical marijuana businesses that want a new state license need to shut down by Dec. 15, a judge approved a ballot question to ask Detroiters if they want more marijuana shops in the state's largest city.

Michigan's medical marijuana industry has been compared to the wild west, where lucrative pot shops run roughshod over unenforced rules and pay no special taxes to operate.

Nowhere is the confusion more prevalent than Detroit, which shut down 175 marijuana shops over the past year. Last week, an advocacy group won a lawsuit to put a question on the city's Nov. 8 ballot that will ask residents if dispensaries can operate closer to churches, liquor stores and parks. On the same ballot, Detroit voters will also decide whether to opt into the state's new law that allows medical marijuana shops to operate legally and pay an additional 3 percent tax atop the state's 6 percent sales tax.

Confused yet?

"With the state law and these ballot initiatives, we're talking about changing the entire game. There's a lot that's still in play, nothing is set in stone," said Detroit City Councilman James Tate, who introduced the ordinance that closed most of the city's dispensaries last year and opposes the new ballot measures.

"It's not unexpected to have hiccups with an industry that has the ability to produce an immense amount of dollars for businesses, for municipalities, but also the potential for being nuisance for residents."

The Detroit vote likely will pit morality versus medical marijuana. The city's churches were critical in arguing for the 2015 ordinance that prohibited pot shops from locating within 1,000 feet of churches, schools, libraries, parks, liquor stores and other pot shops in Detroit, leading to the mass closures.

Detroit World Outreach Church, an influential megachurch, is launching an effort against the ballot measure. A representative for the church declined comment, but other pastors say Detroit doesn't need more drugs.

"I'm opposed," said the Rev. Darren Penson, pastor of Greater Quinn African Methodist Episcopal Church on the city's west side. "We already have enough issues as it is. This will further oppress our people, lead to more drug addiction."

Hazy state rules

Amid the debate in Detroit, the Michigan Department of Licensing and Regulatory Affairs on Sept. 12 dropped a bomb on medical marijuana businesses, announcing that any dispensary that wants to apply for one of five new types of licenses to be issued next year should shut down by Dec. 15 or face a "potential impediment" to getting a license.

Approved last year, the Michigan Medical Marihuana Facilities Licensing Act will grant licenses to dispensaries, testing facilities, secured transporters, growers who can cultivate up to 1,500 marijuana plants and processors who make products such as edible marijuana-infused foods.

The state licenses will only be available in cities that have opted into the state law. So far, nine municipalities have done so, according to Cannabis Legal Group, a law firm based in Royal Oak. The Detroit ballot question would opt the city into the new state licensing program.

The law will allow participating cities to get 25 percent of the revenues from a new 3 percent tax on the gross receipts from dispensaries. A House Fiscal Agency analysis report last year estimates the new tax could bring in $24 million statewide, plus another $50 million from sales taxes. In comparison, Colorado has made $500 million in taxes and fees since retail marijuana sales began in 2014.

Weed relief?

The new laws are expected to bring order to an industry that has been loosely regulated since Michigan voters approved medical marijuana in 2008.

That 2008 law allowed state-approved caregivers to grow up to 12 marijuana plants for each of six medical marijuana cardholders including themselves. Michigan has more than 244,000 medical marijuana cardholders and 40,000 caregivers, according to LARA.

The businesses that sell medical marijuana in Michigan are, by law, called caregiver centers. But in reality, most if not all operate as dispensaries that sell to anyone with a medical marijuana card. That's one reason dispensaries are still considered illegal.

Rolling out the new regulations could deepen confusion, predicted Andre Godwin, spokesman for Sons of Hemp, a group of marijuana business operators who advocate for diversity in the industry.

He said the application period for the new law will take months, and medical marijuana could flood the black market from dispensaries that shut down as they await a license.

Godwin said he uses medical marijuana to treat the pain from a condition he acquired after he said he was exposed to contaminated water 30 years ago when he was in the U.S. Marines. The condition causes egg-sized boils to grow all over his body.

According to Godwin, Michigan's new state law does not address several important unanswered questions:

When a business gets a state license, where will it legally obtain seeds or clones? The state wants growers to track seeds through the growth process to sale — how is that possible? How will cardholders get their medicine if all dispensaries shut down Dec. 15 through early 2018?

"It's all confusing, like it's set up to fail," Godwin said.

LARA is to submit emergency rules related to the licensing process by November and expects to start issuing licenses by the end of March.

In the meantime, patients should have plenty of time to find a legal caregiver while dispensaries go through the licensing process, said David Harns, a spokesman for LARA.

"With the three-month notice (until Dec. 15), patients have time to connect or reconnect with a caregiver to ensure continuity," of access to medical marijuana, Harns said.

Questions for Detroit

Back in Detroit, city officials are trying to balance what voters have said they want — legalized medical marijuana — and vice-free neighborhoods, said Melvin "Butch" Hollowell, the city's corporation counsel.

"We don't think it should be anything unusual about not wanting oversaturation, which is what we're trying to avoid," Hollowell said.

Over the past five years, the city had 283 medical marijuana facilities. Many were within smelling distance of the city's 4,000 church properties and along busy streets. The pot shops were so common that, in some churches, parishioners could look out beyond their statues of the Virgin Mary to see dispensaries decorated with green lights and names like "Mary Jane's."

Since the city's crackdown and zoning changes, only eight medical marijuana businesses have been approved to operate. Eighty-one applications are in the approval process, and another 69 shops are operating while waiting approval from the city.

One of the reasons there are so few dispensaries now is because there are so many churches. A Bridge Magazine analysis of city zoning and assessing records shows there are limited areas of the city where shops could open because of the 1,000-foot prohibition near churches.

Hollowell said there are about 40 remaining legal sites in the city for marijuana businesses. That number would grow significantly if voters pass the referendum that lowers the limit to within 500 feet of a church.

Charles Williams III, pastor at the Historic King Solomon Missionary Baptist Church, said churches can be an important part of the discussion about marijuana dispensaries.

"Churches should have the ability to hold dispensaries accountable. They don't want the lime green buildings with 1,000 signs saying, 'Weed! Come and get it!,'" he said. "We've got way too many churches, way too many liquor and lotto stores in Detroit, the last thing we need is way too many dispensaries. Too much of anything is not good."

Detroit officials also need to ensure there are opportunities for minorities to own medical marijuana facilities, said Williams, who is also president of the Detroit chapter of National Action Network, a civil rights group.

"I do believe there is a way forward for co-existence of any legal businesses in communities in the city of Detroit," Williams said. "These businesses must be held accountable to certain standards to not upset the communities."

Godwin said Detroit has a moral obligation to help marijuana patients like him and not stymie the industry because of moral judgments from churches.

"Some people in Detroit started a witch hunt against dispensaries and got the churches and pastors to join in to say weed is the devil," he said. "Detroit is being sloppy, Michigan is being sloppy. It doesn't have to be this way."

An advocacy group, Citizens for Sensible Cannabis Reform, sued to put both measures on the ballot. Its spokesman, Jonathan Barlow, said the group wants to ensure that African-American and Hispanic entrepreneurs get a chance to operate dispensaries. He said many dispensaries owned by blacks and Detroiters were shut down in the crackdown.

"The city's not seeing the big picture here," Barlow said. "Somebody is going to make money off of this and we need to decide if we're going to participate or five years from now complain because we got left behind."

'The wild west'

In the middle of the debate are entrepreneurs such as Philip Doherty, a 32-year-old who served as a consultant to a dispensary known as the Detroit Grass Station.

It was painted green and white and operated out of a former gas station — and sort of looked like one — on a sparsely populated stretch of West Grand Boulevard in Detroit. At its peak, it raked in as much as $9,000 per day.

Then last spring, the Grass Station became one of 175 such facilities that had to shut down last year due to its proximity to a park. Medical marijuana centers are not allowed within 1,000 feet of outdoor recreation facilities. Grass Station was 892 feet away from one.

Doherty is in the final stages of being approved to open a new medical marijuana facility in the city. If Doherty gets approval from the city's board of zoning appeals as he expects this fall, he said he probably won't open a dispensary right away because he wants to wait and get a state license, too, to make sure he's operating within all laws.

"We're going through the process with the city, and I'm waiting for clarification from the state. There are gigantic questions out there that make it hard for me to develop a business plan," he said.

"I know I'm going into a risky business, and I'm definitely trying to be as above board as I can. That's truly most important."

"Literally nobody knows how things are going to shake out," Doherty said. "It's like the wild, wild west."



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Full Article: Marijuana shops face hazy future as cloud of confusion envelops industry | Crain's Detroit Business
Author: Chastity Pratt Dawsey
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