Detroit Cannabis Sales Saga Hits Another Snag: Lawsuit From MMJ Sector, Here's What We Know

Several medical marijuana business owners filed a lawsuit against the City of Detroit Wednesday to allow existing medical dispensaries to receive recreational sales licenses. The lawsuit, alas, could be yet another setback in getting the city’s legal recreational cannabis program up and running.

It has been just over a month since Detroit's City Council finally passed an ordinance allowing sales of adult-use cannabis to begin, after months of delays.

Now This: Strangled To Death And Out Of Business

In keeping with the current ordinance, medical marijuana facilities are not being offered recreational licenses until 2027 at which time, the plaintiffs argue, they will all be “strangled to death and go out of business long before they are even eligible to apply for (recreational) retailer licenses in 2027."

They are therefore asking the court to intervene and stop Detroit from prohibiting dispensaries that sell both medical and recreational cannabis. The city had set aside half of the 100 highly coveted retail licenses for equity applicants, which include longtime Detroiters and people from communities that have been disproportionately impacted by marijuana prohibition and enforcement.

The plaintiffs, which include House of Dank, Herbal Wellness, TJM Enterprises Services and Detroit Natural Selections Enterprises (all of whom have medical marijuana dispensaries in Detroit), say another issue with this ordinance is that it prohibits ownership interest in more than one such retail license, meaning even if a medical marijuana business owner gets a recreational license, they could only have it for one store location.

Best Case Scenario

The best-case scenario for the plaintiffs, according to the lawsuit, is that Detroit will not award all 100 of its available marijuana retailer licenses by 2027, and the plaintiffs may be able to obtain a recreational license for one of their locations...that is if they're still around.

Worst Case Scenario

"Under the worst case, and most likely, scenario, the city will have awarded all 100of its allowable retailer licenses by 2027, leaving plaintiffs unable to obtain even one such license, which will ensure the financial ruin of their businesses, as well as the termination of dozens of employees, many of whom are residents of the city," the lawsuit said.

Bad All-Around Scenario: Cannabis Sales Dropping

What worries many, especially the MMJ provisioning centers as cannabis dispensaries are called, is that they won't survive anyhow because the number of Michigan residents with medical marijuana cards is declining. 

Indeed, medical marijuana sales were down 44% in April compared with the same month a year ago, from $48 million to $27 million, according to Michigan's Cannabis Regulatory Agency. Meanwhile, recreational sales were up 60% in that same time frame, from $105 million a year ago to $168 million in April.