House of Dank claims that an impending Detroit ordinance will prevent most medical marijuana dispensaries from obtaining recreational retail licenses for at least 5 years–even as new adult-use dispensaries are allowed to set up shop.
A chain of marijuana dispensaries has filed a lawsuit against Detroit, alleging that an impending city ordinance will harm the region’s burgeoning cannabis industry.
According to The Detroit News, the local city council approved the ordinance last month. The law stipulates that existing medical marijuana establishments must wait at least five years before applying for a license to sell recreational-use marijuana.
“Commencing on January 1, 2027, any licensees which are holders of one or more licenses to operate a medical marijuana provisioning center in accordance with this article and which have been the holder of such licenses since prior to the effective date of this ordinance, may apply for an adult use retailer license,” the ordinance states.
The News notes that the lawsuit was filed by four House of Dank dispensaries, all operating under different names.
In its complaint, House of Dank alleges that Detroit is inappropriately favoring recently established retailers at the expense of established businesses.
“Specifically, the City is attempting to give certain preferred newcomer applicants an artificial head start by preventing existing medical marijuana provisioning center licensees in the city from even applying until at least 2027 — which clearly violates both the letter and spirit of the Michigan Regulation and Taxation Marihuana Act,” the lawsuit says.
Michigan’s recreational marijuana law, passed by a voter referendum in 2018, expected that businesses holding medical marijuana licenses would transition to recreational licenses upon receiving approval from local government bodies.
House of Dank says that Detroit is defying the spirit of the law by preventing medical marijuana businesses from selling to recreational customers.
“As currently written, the second ordinance prohibits plaintiffs from even applying for an adult-use marijuana retailer license until Jan. 1, 2027,” the lawsuit alleges. “This means that, over the next four and a half years, plaintiffs must watch as other entities apply for, and receive, marijuana retailer licenses, despite plaintiffs’ years-long commitment to operating in the city.
“The City’s current ordinance does the exact opposite by intentionally singling out and punishing the existing provisioning center licensees, who will all certainly be strangled to death and go out of business long before they are even eligible to apply for adult-use retailer licenses in 2027,” the lawsuit states.
House of Dank claims that Detroit’s marijuana ordinance will cause it “hemorrhage customers,” who will likely take their business to recreational dispensaries that do not require prospective clients to have prescriptions for cannabis products.
MLive.com notes that, as of April 2022, medical marijuana sales have plummeted and now account for just 14% of all cannabis sales in Michigan.
Michael DiLaura, an executive for House of Dank, told The Detroit News that “a number of stakeholers” feel wronged by the city’s decision, which uses a special formula that privileges recreational dispensary license applications filed by residents of communities disproportionately affected by the “War on Drugs.”
If businesses score similar ranks, a third-party appointed by the city will host a lottery-type system to choose selectees.
“It’s like the old taxi medallion or golden ticket,” DiLaura said. “That’s just not right and not the best way to design inclusion and opportunity. These stores should be open, we should encourage more people to get into business but prioritize those that paved the way.”