April 20 2016 01:52 PM

Lansing, state officials wrestle with regulating medical marijuana dispensaries

Emerald City Dispensary located on Cedar Street is one of many such businesses popping up across the city. Lansing Mayor Virg Bernero wants a moratorium to stop the booming industry until a licensing and regulatory scheme can be created.
Todd Heywood/City Pulse

Despite being ruled illegal under Michigan’s Medical Marihuana Act, dozens of provisioning centers have opened across Lansing in the last year, adding to the score or more that already existed. They’re in abandoned gas stations or strip malls. They fill empty storefronts.

Residents and City Council members alike want to control their proliferation, but the interim city attorney, Joseph Abood, continues to run up against a hard legal fact in Michigan.

“The city cannot allow what the state prohibits,” said Abood in an interview at the end of March, “and the city cannot prohibit what the state allows.”

The city can, though, apparently declare a moratorium on new ones, which Lansing Mayor Virg Bernero called on the Council to do Monday.

“Enough is enough,” Bernero said. “We have a sufficient number of medical marijuana dispensaries in the city to serve the needs of medical marijuana patients. Now we need a comprehensive system of regulations as soon as possible to govern the growing and distribution of medical marijuana.”

State lawmakers are considering legislation — which is hung up in the state Senate’s Judiciary Committee — that would legalize such provisioning centers, require testing and labeling of all product offered for sale, and would generate revenue to pay for the licensing inspections for the centers.

In addition to the move to legalize and regulate the provisioning centers, there are two ballot initiatives circulating in the state seeking authorization to legalize marijuana for recreational use and a bill pending in the House, introduced by State Rep. Jeff Irwin, D-Ann Arbor, which would legalize the drug for sale as a recreational item.

At the end of the day however, confusion reigns on the future of recreational marijuana and restrictions apply to the provisioning of medical marijuana. That makes the state of marijuana in Michigan “hazy” at best, as Steve Japinga, director of governmental relations for the Lansing Chamber of Commerce, put it.

Japinga and the Chamber announced last month that they supported a moratorium on new medical marijuana provisioning centers in Lansing until the city could adopt some form of regulations related to the centers. There are at least 50 such centers operating in Lansing right now, and that estimate could be as high as 60, according to neighborhood leaders who have petitioned the Council to regulate the businesses.

The centers operate with different models. One type is a location where a caregiver can deliver the medications to a registered patient. It prevents patients from having to travel to the homes of caregivers. Another is a provisioning center, or dispensary, acting as the caregiver. For these outlets, many different growers supply the product, and the dispensary then provides it to the patient. And yet another model combines caregiving and provisioning, but also includes a lounge where people use their medication.

The Chamber would like to see testing and proper labeling of all medical marijuana. “We want patients to have access to safe products,” Japinga said.

That’s something that provisioning center operators favor.

“Everybody has to play by the same rules,” said dispensary owner Tom Mayes of Greenwave Connection, which recently opened at 500 E. Oakland Ave.

In a “perfect world,” he said, a system would establish specific rules dictating security measures, tracking of inventory employee education and testing of the marijuana.

Testing is key, said Mayes. State Sen.

Rick Jones, R-Grand Ledge, concurred. He chairs the Senate Judiciary Committee.

“If it is going to be a prescription, you want to treat it as such,” said Jones.

Jones’ Judiciary Committee is sitting on legislation that would do just that. However, he does not have the votes of his fellow Republicans to move the four bills to the Senate floor for action. He requested Senate Majority Leader Arlan Meekoff, R-Olive Township, push the bill out of committee without a committee vote. That move, known as discharge, was rejected, Jones said.

Opposition to the legislation is “all over the board,” he said of to the members of his own party on the Judiciary Committee.

“People don’t like it for numerous reasons,” he said. “They don’t want to vote for anything with marijuana in it. Some don’t want it taxed. Some think the current law is enough and the current dispensaries are acting outside the law, and we should just enforce the law.”

Jones said he thinks cities like Lansing, which are seeing a boom of medical marijuana provisioning centers, should use their local authority to control those businesses through zoning regulations.

That’s something Lansing city officials are working on, said Carol Wood, chairwoman of the Lansing City Council Committee on Public Safety. On March 31, Abood, the interim city attorney, provided a draft ordinance that would regulate the businesses using only zoning rules.

That’s how the city of East Lansing does it, said East Lansing Mayor Mark Meadows. Under that law, Meadows said dispensaries would be subject to various limitations, just as many businesses like bars are. He said dispensaries are required to apply for a special use permit, just as liquor stores do.

“We treat it as a zoning issue,” he said. “We have not had any applications for those businesses, but if we did we would treat them as we do any business.”

However, Wood said the zoning proposal presented by Abood was dead on arrival.

“What we have heard, over and over again, is that people want a licensing process,” she said. She noted that a zoning enforcement proposal would be difficult to enforce because of funding issues.

“We have two people in zoning right now. There’s no way they can investigate all those businesses to make sure they meet whatever zoning rules we adopt,” she said. She noted that under a zoning proposal, there is no revenue generated until the department has determined there are violations. At that point, tickets and fines are issued.

A licensing proposal, she said, would be self funding for inspections and set rigid standards. Dispensary owners, the Chamber, Council members, and state lawmakers, have all agreed that medical marijuana should be tested and labeled. The testing should include the amounts of THC and canniboids and detect mold or pesticides.

“You want to be testing for microbials, like mold and mildew, as well as pesticide residue,” Greenwave's Mayes said. “The only way to know about those things is testing.”

Jones said the legislation bottled up in his committee would do exactly that, and it is part of the reason he supports it.

Wood said she expects a draft ordinance from Abood this week, which will be formally discussed on Friday at the Public Safety Committee meeting, that would have a licensing and regulatory scheme.

“I told him we wanted something that licensed as well as something that was enforceable now,” she said. She said Abood had previously indicated he was working on legislation that would piggy-back off the Senate log-jammed legislation.

“I don’t want to wait for the Senate to act,” Wood said. She’s hoping to pass a licensing ordinance by July 1, the beginning of the city’s fiscal year.

But Lansing already had such an ordinance on the books. Council in 2011 passed a licensing and regulatory framework for medical marijuana provisioning centers and dispensaries. But shortly after that passed, the Michigan Appeals Court ruled that such centers were in violation of the Michigan Medical Marihuana Act as passed by voters in 2008. That resulted in Brig Smith, the city attorney at the time, issuing a legal directive to City Clerk Chris Swope to stop implementing the regulatory scheme. That directive also directed the clerk to return any funds paid to the city to pay for licensing under the scheme.

As a result, most of the city’s more than 40 dispensaries shut down. But after time, dispensaries quietly reopened and many new ones did as well, perhaps from seeing a lack of prosecution and by knowing Bernero supports pot legalization. Many are appearing on the city’s south side, and residents there have been complaining for months.

“We really want to make sure that we are controlling the numbers and making sure that these are safe establishments for people to get their medicine in,” said Elaine Wolmboldt, facilitator for the community organization Rejuvenate South Lansing. “We don’t want south Lansing to become the epicenter of where all the shops are.”

To address that, Wolmboldt and other neighborhood activists circulated a petition calling on the City Council to act. That petition was presented in November.

At the time, there were more than 25 dispensaries between I496 and I96 on the south side, according to medical-marijuana expert Steve Green, who writes the Green Report for City Pulse biweekly.

Meanwhile State Sen. Curtis Hertel Jr., D-Meridian Township, said the state is struggling with regulating medical marijuana and potentially recreational pot.

“I’m concerned with our entire system,” Hertel said. “Right now we have a prescription being treated differently than anything else. That state of Michigan has to decide if it’s a drug, and regulate it that way, or if it is something else and regulate it that way, The medical marihuana legislation made it much, much worse. We need to do something to make appropriate regulations. The state has not done it yet.”

For Joan Nelson, head of the Allen Neighborhood Center on Lansing’s east side, the lack of action is “frustrating.”

“It’s making it all completely crazy,” she said. “It’s a mess. People really need to step up and address this.” She said she can see the upsides of both proposed ordinances — one for licensing and one for zoning.

“There are health and safety issues, so licensing is important, but so is zoning,” she said. “Zoning can help us place those businesses in places where they are not near religious affiliated groups or schools.”

But Kathie Dunbar, a City Councilwoman at-large, said she has concerns about using the zoning laws to control the businesses.

“We don’t regulate pharmacies to say they can only be so far away from schools or churches,” she said at a March meeting of the Public Safety Committee. “I don’t see how this is any different.”

The Chamber's Japinga said he could see where Dunbar was coming from and that’s why his organization supports a moratorium.

“We need to figure this out,” he said. “We need to have some regulatory framework in place.”

Complicating this mishmash of legislative approaches are citizen ballot initiatives that could legalize marijuana for recreational use. The first is being driven by East Lansing lawyer Jeffrey Hank. He’s the head of MILegalize, a petition initiative that would not only legalize recreational use of marijuana but would include a regulatory process by which the state could tax marijuana. Most of the money raised from the proposal would be used for roads, education and local governments.

Hank and his group have until June 1 to turn in 253,000 valid signatures to place the initiative on the November ballot. On March 28, he told the Detroit Free Press that his organization had collected 250,000 signatures, but wanted to turn in 300,000 signatures in order to avoid falling short of the required signatures by having some rejected by the state as invalid.

A second petition drive is being run by the Midland group Abrogate Michigan. It requires 315,000 signatures because it calls for a constitutional amendment, unlike MILegalize.

Buoying the hopes of legalization advocates is a March poll from Lansing-based EPIC MRA. That poll found 53 percent of Michigan voters would support legalization and taxation of marijuana. That’s up from 47 percent in 2013 and 50 percent in 2014.

Legalization could result in a boon for state tax coffers as well. A report by Hillsdale College economist Gary Wolfram said the state could see as much as $44.3 million if lawmakers approve a taxation provision included in the legislative package stalled in the Senate Judiciary Committee. That proposal would include a 6 percent sales tax on medical marijuana sales at dispensaries, plus a 3 percent tax on gross sales for dispensaries every year.

But Wolfram’s proposals could be a bit optimistic. They’re based on an estimate that two-thirds of all medical marijuana users are obtaining marijuana through a dispensary. According to figures released by the state Department of Health and Human Services last month, in 2015 there were 1,018 patients in Clinton county, 2,527 patients in Eaton County and 6,982 patients in Ingham. Those same records show there are 232 patient caregivers in Clinton, 559 in Eaton and 1,434 caregivers in Ingham. Caregivers can provide marijuana to six patients or five and themselves. Those caregivers cannot have more than 12 plants per person at any one time. Individual patients can grow 12 plants each for personal use.

Jones said that provisioning centers or dispensaries are skirting the law, which allows only direct transfer of marijuana from a patient caregiver to a registered patient.

“Here’s what’s happening,” Jones said. “Legal caregivers are growing for four, five patients, plus themselves. But they have an overage. So they are smuggling that to dispensaries and selling it there.”

He said that is happening in “sanctuary cities” such as Lansing.

Jones may be right, but given his inability for over two years to move legislation to the floor for a vote, cities like Lansing and Detroit are left to their devices.

“We can no longer wait for the Legislature to do their job,” Bernero said. “Even though the original medical marijuana law was approved by Michigan voters eight years ago, and after numerous court rulings that have only muddied the waters about the legal status of the medical marijuana industry, it is time for City Council to fill the void. That starts with a moratorium to stop any further expansion of dispensaries operating within the city limits.”