Better than it could have been, but a blow to a growth business in Lansing.
That’s a quick look at the Lansing City Council’s ordinance passed last week to regulate the medical marijuana business.
The ordinance, which was approved 5-3 last week at a special meeting and endorsed by pro-pot Mayor Virg Bernero, sets no limits on the number of facilities for growing, processing and testing pot or businesses to transport the product.
But it set a cap of 25 on the number of dispensaries, ultimately putting under at least 45 more dispensaries — and some estimate the number at 55 or even 65. That means lost jobs and empty storefronts across the city. Moreover, because of stringent zoning restrictions, those that do make the cut may have to move, an added expense.
Still, 25 was perhaps three times greater than the limit that more conservative Council members were seeking.
The ordinance was adopted after at least 18 months of work, nearly a dozen drafts and many hours of public testimony. Councilwoman Judi Brown Clarke, a candidate for mayor, worked with President Patricia Spitzley to introduce the draft that was ultimately adopted. Brown Clarke moved to adopt the ordinance despite complaints from other members they had not had a chance to read it.
Brown Clarke, Spitzley, Kathie Dunbar, Tina Houghton and Jessica Yorko cast yes votes, while Wood, Adam Hussain and Jody Washington opposed it.
The new law takes effect Oct. 10, after which City Clerk Chris Swope, who is charged with determining license recipients, can begin sifting through applications. He said he has not yet decided when he will begin accepting applications.
Spitzley and City Attorney Jim Smiertka said they do not expect dispensaries to be targeted for closure immediately, “There will be a phase in,” said Smiertka. “And I will exercise my prosecutorial discretion on this. It is unlikely I will be taking immediate actions.”
Spitzley was even more clear. “I just don’t see Chief Yankowski doing raids to shut these places down,” she said, referring to Lansing’s police chief. “I just don’t.”
However, the state department charged with regulating medical pot announced Tuesday that it wants dispensaries to close by Dec. 15 if they want to win a state license. (See related story.) Dispensaries and related businesses will need both city and state licenses to operate in Lansing.
Dispensary owners caught a few breaks. Wood, Washington and Hussain wanted far fewer dispensaries. And at the last minute, provisions were dropped requiring security guards during business hours and prohibiting drive-thru windows, to make it easier for patients with debilitating conditions.
Wood tried during the meeting to limit grow operations in the city to two, which failed, 5-3.
Dispensaries flourished under Bernero, who saw it an economic driver with new jobs, property improvements and increased tax revenues. But as he contemplated running for a fourth term — which he ultimately decided not to do — he bowed to pressure from the Lansing Regional Chamber of Commerce and neighborhood leaders, particularly on the south end, to place a moratorium on dispensaries last year.
Even with far fewer dispensaries, officials expect the city to net an estimated $2 million in fees and new tax revenues next year.
The new statewide law, which takes effect Dec. 15, will impose a 3 percent excise tax on gross receipts from dispensaries. That money will go into a new tax fund in the Treasury Department. From there, the money will be split up as follows: 25 percent to the municipalities where marijuana facilities are located; 30 percent to the counties where those facilities are located, 5 percent more to those counties for the exclusive use of the sheriff, 30 percent for the state’s first responder fund and 5 percent each to the Michigan Coalition on Law Enforcement Standards and to the Michigan State Police.
That might seem like small potatoes in the state’s $56 billion budget. But Randy Hannan, Bernero’s chief of staff, laid out a rosy financial picture of the economic impact of the industry in a statement to the Council. Based on a House Fiscal Agency analysis, he said, if the city sees the full 25 dispensaries and 20 other licenses for related businesses, it will gain nearly $1.7 million in taxes from the sale of pot, while also cashing in on payroll taxes and annual application fees. Hannan said altogether the city could expect as much as $2 million more annually in its coffers.
Under that law, marijuana will be taxed with the state and local municipalities sharing those dollars. But a catch in the law credits local governments with shares of the tax dollars based on how many licenses are within their jurisdiction, not on the percentage of sales of marijuana. The county also stands to rake in much needed cash as well.
But East Lansing Mayor Mark Meadows said he’s not sure the taxation scheme will work as well as it has been imagined.
“I think it looks and works really well on paper,” said Meadows. “I am just not sure it will work out as everyone is planning.”
East Lansing passed an ordinance last year allowing dispensaries in the business corridor near US 127 on Lake Lansing Road, Meadows said.
“So far, there have been no takers,” he said. “I expect that will change.”
He said the city’s Planning Commission could take up a comprehensive licensing ordinance as soon as next month. While the details are still being worked out, Meadows, said he personally is “leaning” towards putting caps on the number of licenses allowed in the city. Regardless, he expects an ordinance allowing the facilities to be approved by the time the state has finalized its rules.
“It’s not a matter of if it will pass, it’s a matter of when,” he said. “I think it’s a pretty clear expectation that marijuana will be allowed in East Lansing.”
Dion’trae Hayes, supervisor in Lansing Township, said the municipality had not yet taken any action on creating an ordinance.
“We are waiting for the state rules to come out,” she said. “Then we will be able to determine if we are leaning one way or another on this.”
Over in Delta Township, in Eaton County, leaders there are also taking a wait and see approach to the new licensing options, said township Supervisor Ken Fletcher. Last year, the township, at the urging of local law enforcement, banned provisioning centers from operating there.
“It was just enough there in Lansing,” he said. “We didn’t want to see that happening in Delta.”
And Fletcher said he does not believe that the board will revisit that decision anytime soon, but after the state finalizes all its rules it may look at approving licensing for some of the other offerings.
“I could see some grow operations here,” he said. The western side of the township, towards Grand Ledge, is zoned agricultural, which would allow a grow operation. But he said unlike some communities, Delta simply doesn’t have the idled manufacturing facilities many municipalities believe could be brought back to life and onto the tax rolls with marijuana grow and processing operations.
That’s something Meadows agrees with.
“If we had an abandoned manufacturing place, I’d be pushing for that to be used for a grow operation,” he said.
The new state law requires local governments to not only approve a licensing request with the state, but to have an ordinance in place to regulate such licensed facilities within its boundaries.
Earlier this year, Spitzley and Washington told City Pulse in a Facebook Live interview that they expected not only that marijuana was headed for legalization, but that any ordinance the city created would lay the groundwork for regulating that as well.
Meadows, a former state lawmaker, said he too expects marijuana legalization to pass if it gets on the ballot in 2018. If it does, he said, he expects the regulatory framework created for dispensaries would likely be transitioned to legal pot as well. That’s the model Colorado used when voters there approved decriminalizing marijuana in 2012. That went into effect Jan. 1, 2014.
State Rep. Andy Schor, D-Lansing, widely expected to be elected mayor of Lansing in November, voted for the new state regulatory framework.
Schor said Monday evening that he has not read the 44-page city ordinance, but will “study it when I get in office and see what is and is not working.”
He said that while he favors legalization, he is not certain if he is elected mayor he will become as vocal a cheerleader for that as Bernero has been.
“I am not sure I would feel comfortable taking that position for 114,000 citizens of Lansing,” he said.
His reason? While knocking doors, he is hearing reticence from voters over the unchecked proliferation of marijuana shops, particularly along the city’s major commercial corridors like Cedar Street.
Despite city voters’ overwhelmingly supporting a charter amendment to decriminalize small amounts of marijuana possession and approval of the medical marijuana act, Schor said he’s not sure the votes are there now for full decriminalization.
“I’m just hearing a lot at the doors,” he said. “They voted in favor of all this, but they are not happy at all about dispensaries in the city. I think that will mean any effort to decriminalize will not get as much support as many people think.”
Meadows said he expects that if the coalition pushing the 2018 initiative gets the required signatures that the GOPdominated Legislature will move quickly to adopt a law to circumvent the ballot question.
“They will see that an initiative like that will bring out voters who are not generally in favor of the Republican agenda,” he said. “So they’ll adopt the law to avoid that.”
Schor said he’s not sure that’s accurate. “Republicans have been clear that they were OK with medical marijuana but not with legalization,” he said. “I don’t see them adopting anything but letting the voters decide. There are so many other issues that could be on that ballot that I am not sure this one issue would impact voter turnout all that much.”