With Detroit poised to open up the city to recreational marijuana retail and production opportunities, a push is under way to give longtime city residents, people of color and those hampered to find employment because of minor drug convictions a chance to participate in the businesses that the industry creates.
By designating themselves as “Legacy Detroiters,’’ residents could improve their prospects of getting into the cannabis industry, where non-residents have held a monopoly on related businesses in the city, according to Detroit Councilman James Tate and Mayor Mike Duggan.
“In the past when licenses for marijuana businesses become available, they tend to go to non-residents, rather than those who live in this community,” said Duggan in October. “What Councilman Tate has crafted here in partnership with our law department ensures that longtime Detroit residents will have the opportunity to build real wealth as part of this lucrative new industry.”
And for Black residents, who are disproportionately likely to have a marijuana arrest or conviction, the adult-use recreational marijuana license is an opportunity for those individuals to bypass the roadblocks to employment that come with a criminal record.
The Federal Bureau of Investigation (FBI) reported that police across the nation arrested 545,602 people for cannabis-related crimes in 2019, according to Forbes. The arrest rate is 9% higher than the 495,871 people arrested for violent crimes the same year.
But Black people are 3.64 times more likely to be arrested for marijuana possession than white people, according to a nationwide 2018 report released by the American Civil Liberties Union (ACLU).
Who is a Legacy Detroiter?
Under the ordinance, city government defines the term “Legacy Detroiter” as someone who has:
Lived in Detroit for 15 of the last 30 years
Lived in Detroit for 13 of the last 30 years and are low income
Lived in Detroit for 10 of the last 30 years and have a marijuana conviction, or have a parent with a marijuana conviction
The application can be found on the city’s website at www.detroitmeansbusiness.org. Interested parties must submit copies of documentation to certify their status including pay stubs, tax returns, mortgage or rental lease documents. The city is also offering residents reduced application fees, and up to a 75% discount on city-owned land. Per the ordinance, the city will not issue a license if it will result in Detroit resident licensees being under 50% in the specified categories.
Michigan Gov. Gretchen Whitmer signed a series of bills into law in October expanding eligibility requirements for criminal record expungement, including for those with misdemeanor marijuana convictions.
“Many are now profiting from the same plant that has led to countless criminal convictions which devastated countless families within our city,’’ Tate said. “The time has come for equity currently not present within Detroit’s cannabis industry.”
The first step for city residents interested in securing an adult-use recreational marijuana-related license is to apply for certification as a “Legacy Detroiter” on Tuesday. The license application for the general public opens April 1.
Plenty of citizen support
The state’s cannabis industry dates back to 2004, when Detroit voters first endorsed marijuana for medicinal use. Four years later, the entire state backed a similar measure in a ballot measure.
Michigan has experienced economic benefits from the existing medical cannabis market, with more than $500 million in state legal medical sales and more than 10,000 jobs, according to the Detroit Regional Chamber of Commerce. Studies suggest that the combined medical and recreational sales in Michigan could reach between $1.6 to $2.2 billion annually.
From a national standpoint, the industry is estimated to yield $3 billion in annual sales. In Michigan, adult-use retail recreational sales have totaled about $376 million from more than 400 locations, according to the Michigan Department of Licensing and Regulatory Affairs (LARA).
Voters again weighed the issue in 2012 as Detroit residents approved small amounts of marijuana for use on private property.
In 2018, Michigan voters overwhelmingly approved marijuana for adult recreational use, 56% to 44%. It is among 15 states, Guam and Washington, D.C., where recreational marijuana is legal, according to U.S. News and World Report.
The law allows for Michiganders older than 21 to consume and possess marijuana. They can grow up to 12 plants in a household and possess up to 2.5 ounces of the drug and 15 grams of concentrated marijuana.
Cities and municipalities, however, can opt out creating an ordinance to regulate pot businesses as more than 400 communities have done, according to a LARA report.
With 69% of the Detroit electorate supporting the recreational marijuana measure, the City Council in January 2019 unanimously agreed to delay sales in the city until leaders could craft an ordinance that would best give community residents an opportunity to participate as licensees. All but four of the city’s 46 medical marijuana businesses are owned by non-city residents. According to Duggan, medical marijuana license holders were given a head start in obtaining a recreational license.
However, in October, the state Marijuana Regulatory Agency announced that beginning March 1, recreational cannabis applicants will not have to first hold a medical cannabis license, a reversal in the original provision in the law. For example, several adult-use dispensaries secured preliminary city approval in Grand Rapids and retail recreational cannabis sales started there in October.
Detroit officials say that the regulatory agency’s decision is a game-changing opportunity to create more local ownership.
Attorney Maurice Morton, a former Wayne County assistant prosecutor, now advocates for those previously incarcerated for marijuana-related offenses to have a shot at the licenses and supports the city ordinance.
“This ordinance is important to promote diversity, inclusion and to help get others involved in this industry,” said Morton, a Detroit resident who is African American. He owns a large-scale grow and processing center in Detroit.
The ordinance, which gives significant preference to long-time Detroit residents in terms of the number of licenses issued, discounts on land, and other incentives, will allow 10 types of licenses: medical marijuana provisioning center, adult-use retailer establishment, grower, processor, safety compliance facility, temporary marijuana event, microbusiness, designated consumption lounge, and secure transporter.
The city also is offering residents reduced application fees and up to 75% discount on city-owned land. Per the ordinance, the city will not issue a license if it will result in Detroit resident licensees being under 50% in the specified categories. Licensing fees cost $1,000, but only $10 for legacy Detroiters.
Start-up costs for a retail business can range between $250,000 to $750,000, according to Gary Cohen, an industry analyst.
Councilman Tate, who is African American and lifelong city resident, created a workgroup of about 40 people, which was quarterbacked by his staffer, DeAndree Watson, to draw up the proposal. Some members of the workgroup were proponents and prospective entrepreneurs; others were City Council staffers and municipal lawyers. The team worked on the effort for more than one year.
Margeaux Bruner, political director for the Michigan Cannabis Industry Association, a Lansing-based advocacy group, supports Detroit’s ordinance. Bruner, who is African American, is also a board member with Minority Cannabis Business Association, a national organization.
“I feel the program reflects the will of the citizens,” said Bruner. “It is a standout for Michigan because it is being spearheaded by CRIO [Detroit’s Department of Civil Rights, Inclusion and Opportunity], and prioritization was given to historic harm and economic empowerment through ownership.”
Yet some are not convinced that interested residents will still find major hurdles to the business opportunities that the measure was designed to create.
Jessica Jackson, a Black Detroit resident, is concerned about whether city residents will be able to acquire the necessary financial resources to secure licenses, whether it be partnering with those who have the funding or securing start-up capital from lending institutions.
“I think that the ordinance has great intentions. If executed properly, it will greatly benefit legacy Detroiters,” said Jackson and her wife, Cara, who operate Cooper House, a “bud and breakfast” site in Northwest Detroit.
The business gives couples and larger parties an opportunity to use cannabis in a recreational setting. Jackson, however, does not sell cannabis on the site.
Jackson wants to secure a city recreational marijuana license.
“Detroit, when we open our doors to an adult-use market we create and open up an opportunity for us,” Jackson added. “That’s the story that I want to tell. That Detroit got it right.”
But many commercial lending institutions do not work with marijuana-related startups and existing businesses because the substance remains technically illegal under federal law.
“The banks getting involved and making loans for marijuana businesses is far dicier than it is for other businesses,” Mayor Duggan said. He added that the city is looking at ways to assist perhaps through a philanthropic fund.
Christina McPhail-Stockdale, a Detroit attorney, said she and her husband, Mark, have held information seminars designed to inform people about business opportunities in the industry and they are considering applying for both a recreational and medical cultivation facility in Detroit. She said that more attention needs to be paid to the needs of city residents to secure financing and acquire real estate, pay for architectural services, and other issues associated with setting up a business.
“The city historically appears to preserve premier land for your [Dan] Gilberts and [Mike] Ilitches,” said McPhail-Stockdale, who is African American, referring to Detroit business magnates. “And what if the land is privately owned or not by the government? So, even if you have a license without a fee, where are you going to do the business? How much will it cost you to buy the land? Most people who have property, commercial property in the green zone district aren’t going to sell it to you for $5.”
Coleman Young Jr., a Detroit resident, former state House and Senate member, and cannabis business advocate, said on balance that he likes the ordinance but also said that city and state governments can do a better job of sharing opportunities, including reduced fees and other incentives for longtime city residents.
“The people who do have the money have to have a local Detroit partner in order to qualify for the legacy Detroit program,” Young said.
Eric Foster, a Racial Equity Advisory Workgroup committee member with Michigan’s Marijuana Regulatory Agency, has helped Grand Rapids, Muskegon, and Muskegon Heights draft recreational marijuana ordinances. He believes that the city of Detroit’s local preference could result in legal challenges and court action. He describes it as “overcorrecting” and could create a competitive disadvantage for non-resident applicants “off the rip.”
“On paper, it’s a great idea, but you can’t start and say that we gotta game but if you come from the other side of the tracks you can’t play in the game,” Foster said.
Foster cites a situation where officials in the state of Maine dropped an adult-use marijuana residency requirement after a legal challenge. The Wellness Connection, the largest medical marijuana company in Maine, sued the state in March. It argued that the residency requirement violated the U.S. Constitution by favoring residents over nonresidents.
Nonetheless, Tate said that he would fight “until hell freezes over” for Detroit residents to participate in economic development opportunities in the recreational marijuana industry.
“We have taken the necessary time to craft legislation that is not aimed at excluding anyone from their goals to succeed in this market but to ensure that we are legally providing a pathway towards inclusion and opportunity for residents of our city, which has been disproportionately impacted by marijuana convictions,” he said.