May 11 2011 12:00 AM

What will happen to the 41 operating medical marijuana dispensaries in Lansing? A draft regulation ordinance that would force most of them to move surfaces, raising questions


The Lansing city attorney has presented a
draft ordinance to regulate medical marijuana dispensaries in the city
that if enacted would force 37 of them to move from their present
location to stay in business.

The draft ordinance,  written
by City Attorney Brig Smith with input from Lansing City Councilwoman
Carol Wood, has raised the eyebrows of some dispensary owners and local
attorneys because it would restrict new dispensaries to industrially
zoned areas of the city and force those not in those zones to move if
they want to stay open.

The draft ordinance makes no provision
for grandfathering existing businesses in their current locations if
they are outside of industrially zoned areas.

“Those existing businesses in commercial
areas who say they’re allowed to be open, this (ordinance) says, ‘No,
you aren’t,’” Smith said Thursday. “And that would be decided in court.”

However, both Wood and Smith agree this
aspect of the ordinance could change as it is examined in the Council’s
Public Safety Committee, which Wood chairs.  But Wood said she is in favor of limiting new businesses to industrially zoned areas.

Forty-seven addresses are grandfathered
in with the city where medical marijuana businesses may operate during
the moratorium that started in December and lasts until July or if a new
ordinance regulating them takes effect before July.

Of those, 41 are operating. Only four of
them are in areas zoned for industrial use: Victoria’s Club Med-a-sin at
1039 N. Cedar St., Mid-Michigan Patient’s Group at 821 E. Kalamazoo
St., Grand River Alternative Medicine at 711 E. Grand River Ave. and
Buono’s at 1419 Turner St.

So does the city really intend to force
the other 37 businesses to move? If not, why didn’t the city attorney
add a line to the ordinance that says existing businesses not in
industrial areas can stay open? And why does this ordinance suggest
dispensaries are legal businesses but restricts them to industrially
zoned areas? 

“I think it’s a starting point. I’m not
saying it’s the ending point,” Wood said, adding that putting them in
industrial areas came from neighborhood groups’ concerns of the
“proliferation” of dispensaries, particularly on the east side. “I want
people to understand this is a first blush. I’m not saying I’m opposed
to looking at grandfathering in or doing something for those already
established as long as they meet with the licensing requirements.”

But why not just include it in this draft?

“I don’t know. That’s a good question,”
Wood said. “We’re talking about a draft we’ve got out there. That’s why
you go through the process.”

Aside from existing businesses, Wood said
it would be “her preference” that any future businesses would be in
industrial areas. “But I’m only one vote on the Council.”

Industrially zoned areas dot the city and sometimes are adjacent to commercially zoned properties.

Smith, who drafted the proposed
legislation, said Monday that the issue of forcing businesses to move is
“one of a number of issues” that needs to be addressed at the committee

“The nature of any legislation is that
it’s worked out in the committee process. I would cite you to
‘Schoolhouse Rock!’” he said, referring to a children’s cartoon series
that did an episode on how laws are made.

One dispensary owner — Shekina Peña of
Your Healthy Choice Clinic at 628 E. Michigan Ave. — said “this doesn’t
look like Brig’s work at all,” suggesting the ordinance goes too far by
restricting commercial entities to industrial zones. Smith’s response:
“I have worked in conjunction with Council member Wood’s vision. I have
done my best to effectuate that vision with the understanding from
‘Schoolhouse Rock!’ that going through committee (and getting reworked)
is how a bill becomes a law. If there is concern in the community, the
committee should address that.”

Smith said that the city faces “tension”
at the county level from two prosecutors who disagree on whether
dispensaries are legal. Ingham County Prosecutor Stuart Dunnings III
thinks they’re illegal, Eaton County Prosecutor Jeff Sauter thinks
they’re legal, Smith said.

The city is in both counties.

“If Eaton County feels one way and Ingham County feels the other way, that’s a tension the city must face,” he said.

Mayor Virg Bernero weighed in on the
proposed ordinance Monday. He’s against it and would like to see a more
“progressive” regulatory approach from Council, allowing storefronts
throughout the city but not in neighborhoods.

“I think it’s the wrong way to go,”
Bernero said. “We need to facilitate what the voters voted for. I want
to keep them (dispensaries) out of neighborhoods. What I envision is a
regulated storefront.”

Bernero said East Lansing’s commercial
medical marijuana ordinance — which was adopted in March and limits
businesses to professional-office zoned areas — is “decent” but creates
“marijuana ghettos.”

Bernero said he’s “disappointed” with the
first draft of Lansing’s ordinance. “I haven’t seen the progressive
leadership of Council step up. There are progressive voices on Council —
they need to step up.”

Two components

The proposed ordinance regulates
dispensaries in two ways: through zoning restrictions and licensing
requirements. In order to open, a business must first obtain a license
from the City Clerk’s Office, which would last a year. The Council would
determine prices of those for medical marijuana dispensaries. One of
the license requirements is that a dispensary cannot violate any portion
of the ordinance, which ties into the requirement of being in an
industrially zoned area.

The draft ordinance would regulate
dispensaries and cultivation businesses. A dispensary is defined as “a
nonresidential land use where marihuana is distributed by one or more
primary caregivers but is not grown or cultivated.” A cultivation
business is defined as “a nonresidential land use where marihuana is
grown or cultivated in an enclosed, locked facility by one or more
primary caregivers but is not distributed.” Both types of businesses
would be restricted to industrial areas.

A “stakeholder” in either of these
businesses includes “a partner, a member, an officer, a director, an
employee, or any person with an ownership interest of 10 percent or
more.” Their identities would have to be disclosed.

A zoning dilemma

By limiting businesses to industrially
zoned areas, the proposed ordinance creates a “nonconforming use”
situation for those 37 existing businesses not in industrially zoned

Two local attorneys said that if the city
forces the 37 dispensaries in Lansing to move in order to stay in
business and owners decide to challenge the ordinance in court, the
question won’t be about whether they are allowed to stay, but if the
dispensary itself is a legal business.

Matt Newburg, a local attorney who
specializes in medical marijuana law, said case law throughout the state
is clear on nonconforming uses. If a municipality drafts a zoning
ordinance that forces a business into non-compliance, that business is
allowed to continue operating. However, if you apply this concept to
dispensaries, whose legality is being questioned in the state Court of
Appeals, this issue isn’t so clear.

An Isabella County circuit judge ruled
this winter that a dispensary in Mount Pleasant is operating legally
under the state Medical Marihuana Act.

That case, the state v. McQueen, is being appealed to the state Court of Appeals.

By allowing them in industrial zones,
though, Newburg said the city is implying that they’re legal businesses
and are a “legal nonconforming use” and should be allowed to stay put.

Mary Chartier, of the Lansing-based firm
Alane and Chartier, agrees with Newburg. Chartier questions the motives
of limiting dispensaries to industrial zones.

“Either it’s a legitimate business that’s
going to be allowed in the city or it’s not. If it is, pushing them
into a dark corner doesn’t seem to be the best action,” she said. “The
city can’t have it both ways. It can’t recognize them as a legitimate
business and then push them into a corner and still want their tax
revenue. This (ordinance) seems to be an assault on legitimate
businesses for legitimate patients. They should be treated like any
other business.”

Mark Wyckoff, director of the Planning
and Zoning Center at Michigan State University, said that because
businesses opened before the city specifically authorized them, the city
could argue that dispensaries are therefore prohibited. If a dispensary
challenges a forced move in court, Wyckoff said that even though the
city is attempting to regulate them, they weren’t recognized as
permitted uses before the ordinance and would not have
non-conforming-use protection. All of this leaves a lot of open-ended
questions for Lansing dispensary owners, he said.

“The court would have to decide. This is
not a unilateral thing,” he said. “If you were going to invest in one of
these businesses, I’d pick the five that are in the zone that are in
place. They may suddenly increase their market share.”

When asked if regulating zoning for
dispensaries is in a league of its own, Wyckoff said, “Oh, yeah. You
have a new set of legal arguments: Is the use itself even lawful?
Whatever sense you make of (regulating dispensaries) is ephemeral. This
is a moving target and it’s going to continue to move for quite some

A similar situation in Ann Arbor

Lansing is not the only city that is
attempting to regulate commercial medical marijuana businesses after
some have already opened.

In Ann Arbor, between two and 15
dispensaries opened before the Ann Arbor City Council adopted a
moratorium in August on new ones. Ann Arbor City Councilwoman Sabra
Briere said that “nobody had a clear grasp of how many medical marijuana
dispensaries were in operation” at the time of the moratorium and still
don’t. She said that’s creating a problem at this point because the
licensing portion of the proposed ordinance grants licenses in
proportion to how many are open.

As for zoning, Ann Arbor’s proposed
ordinance is similar in that it would regulate nonresidential grow
operations and dispensaries. However, Ann Arbor is considering allowing
new dispensaries in the downtown, unlike Lansing.

“We focused always on not treating
medical marijuana as if it were different from any other activity. It’s
just a business,” Briere said.

But when Briere told dispensary owners
they may have to move locations based on where the city ultimately
allows dispensaries, she said they were receptive to the idea. 

“I empathize with the business owners who
may find themselves in the wrong zone but I don’t feel any unit of
government owes them an apology that they’re in the wrong zone,” she
said. “They were very grateful anyone bothered to care about their
financial well-being,” she said.

Robin Schneider, president of the Capitol City Compassion Club, a nonprofit
dispensary at 2010 E. Michigan Ave., called Lansing’s proposed
ordinance “not acceptable” and “a joke” if it forces people to move. She
said she doesn’t have a problem with it in “its entirety other than the
fact it doesn’t say existing businesses are grandfathered in.”

“As long as they do that I won’t have much of a problem with it,” she said.

Leo Jerome owns two properties listed in
Lansing’s moratorium — 3165 E. Michigan Ave. and 6420 S. Cedar St. — but
no businesses are operating there. Jerome has attended several Public
Safety Committees over the past few months when medical marijuana was on
the agenda. He was at the Public Safety Committee meeting Thursday
because he’s considering potential investors who may want to open a
business at his properties.

He’s hoping the city thinks twice about forcing businesses to move and limiting them to industrial areas.

“We filled up a bunch of empty stores on
the main drags. Now you’re going to take these stores and make them
empty again?” he said. “And does it have to be in an industrial zone?
Why put them in the side alleys?”