Aug. 3 2016 11:46 AM

City's proposed marijuana law would cripple dispensaries

This marijuana leaf sign on Kola, a dispensary at 1106 N. Larch St., would be illegal under the ordinance being considered by the Lansing City Council — one of the less onerous regulations by the measure.
Ty Forquer/City Pulse

Lansing has an estimated 70 marijuana-oriented businesses scattered throughout the city. In just a few months, many of them could disappear.

An ordinance being considered by the City Council would alter the Lansing's laws regarding the sale of medical marijuana. It is still in draft form — its fourth so far — but provisions as they stand create an immense financial burden for people in the medical marijuana business.

“I don’t think it’s designed to encompass my business, but if it passed I would cease to exist. It would price my business out. There’s no way that I would be able to come up with $65,000 for a business that’s just starting,” said Sam Johnson, operator of Lansing’s Capitol City Seed Bank, which provides patients seeds to grow their own plants.

Though not explicitly a dispensary, Johnson’s business would be affected by the changes because he is a “medical marijuana establishment,” a caregiver who provides seeds to patients.

And if the ordinance is approved in its current form, $65,000 is the minimum capital a potential dispensary owner will need to operate — and that does not include other costs like materials or payroll.

To begin, owners would face an application fee of $5,000 (only $2,500 of which is returned if rejected), and then an annual fee of $10,000 to maintain the license. The applicant must also always have at least $50,000 in a readily accessible account to maintain its store — something that existing dispensaries will have to provide as well, even if they are already established. Johnson says this is an obstacle he will not be able to overcome.

“There’s nothing I can do, I can’t pay those fees, I can’t do that,” Johnson said. “It creates such an overhead that the business can’t operate.”

The high cost of licensing is just one of many hurdles the proposed ordinance would impose on dispensaries.

For example, dispensaries and growing facilities may not operate within 1,000 feet of elementary and secondary schools and child care facilities.

Among the restrictions listed in a section called “Minimum Operational Standards” are:

— Dispensaries, unlike drugstores, cannot operate from 10 p.m. to 9 a.m.

— Marijuana cannot be consumed on the premises.

— Dispensaries must operate surveillance cameras and keep video recordings offsite for at least 14 days.

— Marijuana leaves are prohibited on exterior building signs.

— Marijuana-related promotion of any sort within 1,000 feet of a primary or secondary school or child-care facility is prohibited.

Fines for violating the ordinance begin at $500 and go up to $750 a day “plus costs” if they continue for more than a day.

The ordinance would give the city clerk the authority to grant licenses. It would establish a five-member commission appointed by the mayor made up of one representative each from neighborhood and marijuana advocacy organizations; a member of the Planning and Neighborhood Development Department; and two members of the public. The city clerk could not approve an application unless a majority of commission members has also approved it. The police and fire chiefs or designees would be non-voting members.

The Bernero administration resisted regulating dispensaries and grow operations in the city, hoping the state would approve regulations. The House of Representatives has passed such legislation twice in the last five years, but the Senate has failed to act.

As dispensaries proliferated in Lansing, the administration finally yielded to calls from the Lansing Regional Chamber of Commerce and neighborhood voices from the south side and started on the road toward regulation. Lansing’s new city attorney, James Smiertka, has made the new ordinance a priority.

Robin Schneider, legislative liaison for the National Patients Rights Association, called the proposed ordinance a “placeholder” till the state acts. She said the goal is for the state to establish “provisioning centers” to serve medical marijuana patients.

Dispensaries are only supposed to serve patients through their caregivers, who are limited to five patients each, whereas anyone with a state medical marijuana card could buy pot at a provisioning center.

The proposed ordinance also would require businesses to provide a “patient education plan to detail to patients the benefits or drawbacks” of certain strains.

Businesses must also give a written description of the “training and education” of all employees. And they must give the city a “proposed business plan” including but not limited to the ownership structure and a current organizational chart covering all employees.

Schneider recommended that the city focus on clarifying caregiver rights when formatting the ordinance, because there is potential that the bill will not pass through the Senate. For instance, she said the city shoulc clarify whether multiple people can pool their money to provide the $50,000 in liquid assets for the dispensaries — if the amount stays the same.

“We will see a lot of amendments and conversation, and I applaud all the hard work going into these from the Council members and city attorneys,” Schneider said. “It’s a complicated issue,” adding that the Council is “hearing from a lot of different interests.”

Schneider also said that it is important to remember that “it’s not recreational marijuana, it is medicinal.”

The Public Safety Committee is scheduled to resume discussions on the ordinance on Aug. 12.