Black Entrepreneurs Are Failing in Detroit's Weed Market.  Is the City to Blame?

Black Entrepreneurs Are Failing in Detroit’s Weed Market. Is the City to Blame?

The biggest change in the new ordinance: It reserved dispensary and consumption lounge licenses for “equity” applicants, rather than “legacy” applicants. Equity applicants were defined as individuals residing in a community with a higher rate of marijuana arrests than Michigan’s median and where at least 20 percent of the population have incomes below the federal poverty threshold. But critics said the change merely amounted to using different terminology to establish a similarly discriminatory licensing structure.

Once again, almost immediately, the city got sue. This time, however, the plaintiff wasn’t a single woman claiming discrimination.

In May, House of Dank and three other businesses filed a lawsuit in state court arguing that they’re being unfairly frozen out of the city’s fledgling recreational market until at least January 2027. That’s the date when the ordinance allows dispensaries to convert their medical licenses to adult-use licenses. They argue that the new ordinance violates state law and will lead to the “financial ruin” of their businesses. A second lawsuit filed earlier this month in state court by two other cannabis companies argued that the ordinance’s “unreasonably impracticable” rules violate state law and would impose a “death sentence” on their businesses. They’re asking the court to block Detroit from implementing the ordinance.

(In April, the city began accepting applications for some categories of adult-use licenses such as grow operations, and so far has received 33 applications. But it hasn’t yet started accepting applications for dispensary and consumption lounge licenses.)

“Given the clear and obvious issues with this ordinance and the previous one, you have to wonder whether city council even wants recreational dispensaries,” said Scott Roberts, one of the attorneys representing the plaintiffs in the second case.

Denise Pollicella, a cannabis attorney who has been involved in challenging litigation ordinances throughout Michigan but who isn’t involved in any of the current lawsuits targeting Detroit, said cities have two clear pathways to avoid getting sued. They can either allow unlimited licensing with strict zoning rules (for example, limiting marijuana businesses to a certain section of the city, or prohibiting them from operating within 1,000 feet of a school). Or they can allow only those businesses that have obtained medical licenses to apply for recreational licenses.

“It makes me sad that that the city is doing something they know will prevent recreational adult use facilities from opening simply because they don’t want the medical marijuana facility owners to have them,” Pollicella said. “It’s ridiculous. Detroit is a very large city. Nobody has ever prevented Detroit residents from getting permits.”

Tate remains committed to the approach Detroit has taken, despite the repeated legal setbacks. He argues that it’s more important to create a market that benefits longtime Detroit residents than to get it up and running quickly.

“There’s always those who want to create roadblocks,” Tate said. “It’s one thing to put together an ordinance, just to check the box and say that we’ve got one. It’s another thing to really look back and say we fought as hard as we could for the residents that we serve.”

But in the meantime, Detroit’s medical marijuana entrepreneurs — the very people Tate said he is trying to help — are slowly going out of business.

Jay Snipes and her husband Mark opened West Coast Meds on the city’s West Side at the end of October. Sales were sluggish from the outset and have eroded steadily since. They knew it would be challenging to create a viable business but figured it would give them a toehold and eventually allow them to transition to the recreational market. It took them several years just to find a location that fit the city’s zoning rules and check the other boxes necessary to get a medical license.

On a recent weekday, I visited the Snipes’ brightly lit shop, stocked with flower, wax, resin and other cannabis products. For nearly an hour, as we discussed the business’ travails, not a single customer walked through the door. Snipes, a 41-year-old Black woman wearing a green polo shirt emblazoned with the dispensary’s logo, told me they get about 20 customers per day currently, and that they’d need to do 10 times that volume to be financially viable. Every day, she said, they get calls from people asking if they’re selling to recreational customers, and they have to turn them away.

“We’re actually debating closing our doors at this point,” said Snipes. “I’ve never seen it this bad.”

But West Coast Meds isn’t among the medical shops that have sued Detroit, and Snipes said they have no intention of taking legal action. Like Kimberly Scott, she blames the long delay in establishing a recreational market on “greed” from the medical businesses that are suing the city, rather than on city officials for creating an improper licensing structure.

“Right now, all of the dispensaries in Detroit [are] suffering. To put out a lawsuit, it’s just going to make it worse,” she said of the delay in getting the adult-use market up and running. “It’s not perfect, but it’s something to get us started, to stop the bleeding basically.”

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