November 24, 2021

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Judge rules pot license limit is legal

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Sept. 3 – TRAVERSE CITY – A divided decision on a lawsuit contesting Traverse City’s non-medical marijuana regulation may have resolved questions about its legality, at least for now.

State law allows the city to limit non-medical marijuana retailers to four, even though it allows up to 13 medical marijuana sellers, 13th district court judge Thomas Power said Tuesday. He also noted that the limit does not violate the procedural rights of a handful of medical marijuana sellers who wish to become non-medical marijuana dealers.

For one, Power said that the plaintiffs in the case – Leoni Wellness, Green Peak Industries, SecureCann, who act as House of Dank, and 314 Munson Avenue LLC – have no substantive or substantive right. City medical marijuana ordinances made it clear that obtaining a permit under these rules did not guarantee a retail permit for non-medicinal marijuana, he said.

Second, the city has a rational basis for limiting the number of licenses, regardless of whether people agree or not, Power said. Whether or not the city wanted to become a destination for marijuana was a consideration, especially given its reputation as a party town, as some claim.

“Again we can argue whether this is a good idea or not, but that is a political issue that falls to the city commission, and their decision to limit the number of licenses is rationally related to that concern,” he said.

Power dismissed arguments from Frank DeLuca, an attorney with 314 Munson Ave LLC, that state law prohibits local regulations authorizing only certain medical cannabis establishments and others only for non-medical cannabis.

DeLuca pointed to a section of the Michigan Regulation and Taxation of Marihuana Act, or MRTMA for short, that anticipates any local regulations that would prohibit the two species from being co-established. Allowing different limits for the two species would leave eight medical marijuana sellers empty-handed.

He also cited an affidavit from Heather Azzi, General Counsel of the Cannabis Trade Federation and formerly with the Marijuana Policy Project. She stated that she had written while at the former MRTMA and that Traverse City’s ordinance was against the letter, intent, and spirit of the law.

Traverse City’s outside attorney Peter Worden said the law allows cities to ban or limit the number of non-medical marijuana facilities that can operate there. It also states that if local governments limit the number of these companies, they must license competitively.

DeLuca argued that the section of the law limiting the number of marijuana establishments does not apply to Traverse City’s situation and that it is trumped by the requirement that both types of businesses be co-resident.

But Power said the law does not support claims that every medical marijuana retailer is entitled to a license, only that they cannot be prohibited from seeking and obtaining one. Traverse City law doesn’t prohibit that, he added.

“Any medical retailer has just as much right to apply for and apply for a recreational retailer license as anyone else who would apply,” said Power.

Plaintiffs had some success on Tuesday, with Power agreeing that the city’s rating section it had previously accepted for granting retail non-medical marijuana licenses through a competitive process was illegal.

This rubric has been suspended since November 2020 when Power issued an injunction to grant licenses using the rubric.

Worden argued that a sentence in this law allowed the city to introduce other standards beyond mere compliance with MRTMA.

But Power disagreed and read several items under the heading, from requiring a building to be at least 90 percent of the allowable height and size, to improving the sidewalk and providing “green infrastructure” in parking plans.

After reading each item on what Power called the “wish list,” he said repeatedly that this might be a great idea, but had nothing to do with whether the applicant was best suited to the state’s non-medical marijuana law to be observed.

The city could also enforce these standards in other ways, such as:

Trial is still scheduled for mid-September, and lawyers from the city and medical marijuana companies will meet on September 8th to see if there are any questions.

Worden said afterwards that he was disappointed that Power decided against the rating section, but not surprised. The judge expressed similar concerns when the injunction was issued.

City commissioners are already in a process to rewrite this rating section, Worden said – the city is searching via an online survey from September 3rd to 12th and an open house on September 8th from 3:30 to 6am according to contributions to the proposed rules: 30 p.m. at the city opera, it says in a message from the city.

Worden was glad to hear that Power agreed that the city’s licensing restriction would not violate state law or due process rights, he said.

Messages for DeLuca were not returned as of Wednesday.

It remains to be seen whether this judgment will stand. Power said he was awaiting an appeal and a “real result” from the state appeals court.

Worden said he would need to speak to city officials before knowing whether Traverse City would like to appeal Power’s ruling on the rating section. However, this would make little sense given the progress made by the Commissioners in drawing up a new draft, he added.

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