Why The Lawsuit Over Detroit's Residency-Based Cannabis Licensing Is One To Watch

Detroit's cannabis license registration and its residency-focused ordiance were online for just a few days before a federal judge put a temporary halt to the process.

The ordinance, which sets aside half of recreational weed licenses for Detroit residents, is being challenged as unconstitutional.

Proponents of the regulation say the city's plan serves as a way for Detroiters to join a market most locals were left out of during medical cannabis licensing.

What's The Concern In Detroit?

In November, the City Council unanimously passed an ordinance to ensure that long-time citizens, dubbed legacy residents, received priority in Detroit's new recreational cannabis market. 

In January, Detroit opened its license application process for up to 75 retail locations and 35 consumption lounges.

Of the city's 46 medical dispensaries, Detroiters own just a handful of licenses. In 2020, Mayor Mike Duggan said only four of the city's stores were owned by locals.

Who Qualifies As A Legacy Resident?

The ordinance describes legacy applicants in three ways.

The first group is citizens who have lived in Detroit for at least 15 of the last 30 years.

Applicants also qualify if they are low-income and lived in the city for at least 13 of the last 30 years.

Residents living in Detroit for 10 or more of the last 30 years who have a cannabis conviction or a parent with a cannabis conviction also qualify. 

Under the ordinance, legacy applicants receive a 99% reduction in license fees in 2021, with the discount dropping to 75% the following year. Detroit plans to offer city-owned land to legacy operators at a 25% discount.

Those policies were put on hold on April 8 with the issuance of a temporary restraining order against the city. 

The order freezes the application process until a hearing can determine whether preliminary injunction should be issued, which could potentially further delay the opening of recreational cannabis businesses in the city. 

In her lawsuit, Lowe argues that her years living in the city and its surrounding suburbs should qualify her for legacy status.

The lawsuit argues the the parameters of the cannabis ordinance are unconstitutional, highlighting Detroit's enhanced residential requirements compared to other American cities.

Opposing Viewpoints On Detroit's Cannabis Licensing 

In early April, Lowe's attorney Kevin Blair, called the ordinance "economic protectionism," saying the state has struck down what he called "municipal licensing schemes" in the past, adding that such rules discriminate based on a person's residence.

Christina McPhail-Stockdale, founder of the law firm McPhail Stockdale, disagrees with Blair's response, stating that numerous other residency-based parameters remain in place. McPhail is also a co-founder of the Inkster-based grow and processing venture Michigan Agricultural Services.

She acknowledged that residency bans have been struck down before.

"Even though it's correct the Supreme Court has done that, with respect to cannabis, it's different."

McPhail-Stockdale noted that the city's five-year residency rule on social equity is not being challenged.

Jess Jackson, owner of the bud-and-breakfast location Copper House Detroit, said she filed her pre-qualifications the same day the court order was issued.

The ordinance helps bring Detroiters back into its local market while creating a race-neutral industry in the city, she said. 

Jackson, who took part in community workgroups to write the ordinance, said the cannabis legislation met citizen concerns.

"It is what the residents of the city wanted," she added.

Sahir Al-Salam is a legacy Detroiter, grower and owner of Detroit Life Lounge. Al-Salam, who co-founded Michigan Agricultural Services, supports the bill to address contract bidding inequity and help residents support their city.

Noting the lack of Detroiter-owned medical businesses, Al-Salam asked, "What are the license holders that are in our city doing to support the people who actually come from the city?"

Al-Salam added that the court order puts a hold on businesses that are in progress, from securing real estate to investors.

Addressing Racial Disparity In Detroit

Proponents of the ordinance feel that the decision impacts a city often left on the outs.

"If we want to talk about economic protectionism, we need to look at the legacy of capitalism in this country and whom that protected and benefitted," Jackson stated.

Detroit's population is 78% Black, while Michigan's overall population is 14% Black, according to Census data. 

Jackson touched on the city's hardships, including its 2013 bankruptcy filing.

She also brought up Detroit's red lining history that continues to live on in the language of housing contracts and economic opportunities for Black citizens.

"There are lots of things that long-term residents have endured at the hands of economic protectionism of white people," said Jackson.

She added that people outside of Detroit should care about the case's outcome, as the federal judge's determination could set a precedent across the country.

According to the Michigan Eastern District Court clerk's office, the next motion hearing in the case is scheduled for May 27.