Dec. 7 2017 10:24 AM

City to strike against dispensaries not seeking licenses

City to strike against dispensaries not seeking licenses

Lansing’s Wild West era of medical marijuana dispensaries is rapidly coming to an end.

An estimated 60 dispensaries have until Dec. 15 to apply for 20 licenses under the city’s new ordinance.

City Attorney Jim Smiertka said Monday that proceedings to shut down those that do not apply will begin within two weeks after the deadline. His options include cease and desist letters, enforcement of new zoning restrictions and civil infractions.

Dispensaries have been illegal under state court rulings, but pro-marijuana Mayor Virg Bernero has held back enforcement. Mayor-elect Andy Schor, who takes office Jan. 1, is less pot friendly.

The city’s nonrefundable application fee is $5,000, the maximum a jurisdiction can charge under state law. That alone is expected to take a toll on how many dispensary owners will take a chance on filing one.

“You don’t want to pay a $5,000 fee and then not get it back from the city, you know,” said Jacob Rufenacht, owner of KIND Dispensary, 2201 E. Michigan Ave. “That’s why these people aren’t applying.”

Indeed, as of Tuesday, no dispensaries have applied for a city license, City Clerk Chris Swope said.

But dispensaries may have been waiting for state licensing regulations, which were issued on Monday.

Swope Dispensaries in communities that will allow them, such as Lansing, will need both a local and state license to operate legally.

Like Lansing, the state will consider dispensaries illegal if they do not apply for a license by its deadline, Feb. 15.

The ordinance gives Swope the authority to decide who gets dispensary licenses. He also has the latitude to extend the application period or create a new one, but as of now Swope said he has no plans to do so.

He made it clear that the city will move quickly to shut down any businesses who have not applied for a conditional city license by Dec. 15.

“I’m not directly involved in enforcement, so they won’t be my steps. I’ll be communicating with other city departments,” Swope said. “I know there will be enforcements beginning on those that do not apply by the deadline.”

Under the recently adopted city ordinance, 25 provisioning center licenses will be issued over the next year. Twenty licenses are up for grabs in this first phase, as required under the ordinance. The second phase, which must begin within one year of phase one, would allow a maximum of five licenses to be issued. There are no city caps on the other marijuana facilities like growing operations, processing facilities, secure transporters and testing centers.

Smiertka said that if no one applies by Dec. 15, Swope could begin a new application period for licenses.

Swope said he has no plans to do so, but didn’t rule it out. “That’s not a bridge I’m going to cross until I get to it.”

Rufenacht said that this lack of clarity on how many licenses can issued under the ordinance between the two phases is troubling.

“That’s not good for the patients, that’s not good for Lansing, it’s not good for the economy, it’s not good for anything,” the provisioning center owner said.

With uncertainties in state and local enforcement and licensing processes, businesses have been hard pressed to justify paying the city’s $5,000 application fee, said Rufenacht.

State licensing officials at the Michigan Department of Licensing and Regulatory Affairs had promised emergency rules last month, but they weren’t released until Monday What worries some in the medical marijuana trade is that they follow city rules, but inadvertently violate state regulations.

Businesses will have until Feb. 15, 2018 to submit state applications and a $6,000 fee, which could be raised during the approval process, or face closure. Any business not operating under a local municipality’s law Dec. 15, could face action by state or federal authorities, according to the rules issued by LARA Monday.

Swope, who is responsible for scoring applications to determine which businesses will be granted a license, said he was surprised at the lack of applicants, but was expecting a last-minute rush as the application period drew to a close.

“We did expect to start getting applications as soon as we opened, but I can understand the logic of waiting and making sure what the state is gonna do,” Swope said.

Despite some clarification in the processes, concerns remain. Newly appointed Medical Marijuana Commissioner John Addis raised concerns about the financial expectations for those applying for various licenses in the state.

The city ordinance requires applicants to have a minimum net worth of $100,000, while state rules require applicants to have assets of anywhere from $150,000 to $500,000.

Addis pointed to these financial requirements, as well as legal fees necessary to navigate the application and appeals processes, as potentially skewing the distribution of licenses to big businesses.

“Some of those financial requirements are going to be a lot easier for the big, flush bank accounts of the big players, and it does seem to make it harder for startup small businesses to compete,” Addis said.

Addis, who represents the 4th Ward, is one of four commissioners, nominated by Bernero and approved by the Council on Nov. 27. The three others: Brockton Feltman from the 1st Ward, Anita Turner from the 3rd Ward, and Tracy Winston, an at-large member. A 2nd Ward representative for the body has not been announced.

Schor said it was unclear if Bernero would appoint someone to that position or leave it for Schor.

“I think those of us on this commission are well aware that there will be very, very little for us to do,” Addis said, “for a while, at least.”