Oct. 30 2018 01:58 PM

City sues state over medical marijuana rules


WEDNESDAY Oct. 31 — Lansing dispensaries are allowed to remain operational into November following multiple lawsuits recently filed against the state of Michigan — including one from the capital city itself.


As the threat of a medical marijuana drought loomed over Lansing, city officials filed a complaint on Tuesday in the Michigan Court of Claims that aimed to extend today’s deadline previously set by the Department of Licensing and Regulatory Affairs. The rules, originally, required unlicensed dispensaries to close by today.


And that’s where Lansing — along with others across the state — spotted a problem.


Meanwhile, in a separate but strikingly similar lawsuit, Michigan Court of Claims Judge Stephen Bordello issued a temporary restraining order that effectively prohibited LARA from enforcing today’s deadline. Unlicensed facilities originally pegged for closure, at least for now, can remain operational, records state.


Borello ordered that LARA is restrained from enforcing the Halloween deadline — as well as any others that might be imposed in the near future — until the court rules otherwise. A show cause hearing has been scheduled for Nov. 9 at the Court of Appeals in Lansing. Lansing officials said they hope to argue their case at the hearing.


“The city clerk is doing every possible to get this done legally and quickly,” explained Schor, labeling the impending deadline as “unfair” for both shops and patients.“The state keeps moving the target, and that will have a negative impact on the ability of Lansing residents to get this legal medicine that they need.”


The ruling arrived hours before dispensaries were set to close following a complaint filed on Monday by First Class Inc. — a business that represents marijuana-related interests across the state. The deadline was in “direct contravention” of the purposes of the Medical Marihuana Facilities Licensing Act, records state.


First Class Inc. was previously denied for two dispensary licenses by the City of Lansing and it withdrew another application for a growing facility on Grand River Avenue. Records, however, indicate the company received local approval for a processing facility and operates a “significant number” of other facilities across the state.


“These facilities will be forced to close their doors without any good reason, and they face the very real risk that they will not be able to reopen at all, even if their applications are approved by (LARA) at some point in the future,” according to the recently filed complaint by multiple attorneys representing First Class Inc.


“Perhaps even more importantly, those Michigan residents who rely on these temporarily operating facilities for their medical marihuana needs will suffer greatly as well, because the supply of safe medical marihuana will be significantly curtailed if (LARA’s) arbitrary rules are allowed to take effect.”


LARA officials set a Halloween deadline for dispensary applicants to either get licensed or close up shop. On Monday, The Medical Marihuana Licensing Board approved their last batch of licenses before the deadline, and the eight remaining shops in Lansing were notably absent from the list.


Schor chalked it up to a regulatory stalemate.


Dispensaries ultimately need licensing approval from both the state and their local municipalities to remain in business. State officials, accordingly, won’t grant licenses until cities also give the go-ahead. But Lansing officials haven’t issued a single license as dozens of business owners look to reverse their previously denied applications.


“We live with the ordinance that we have,” Schor said previously. “We have to provide due process under the ordinance and under the law. It’s going to take until at least the end of the year in order to give out approvals to the first 20 dispensaries. Unfortunately, that’s not enough time for the process set by the state.”


City Clerk Chris Swope is essentially prohibited from granting approval to any of the pending dispensaries within city limits until each of the ongoing appeals have finished. Officials have urged the City Council to expand the limit on dispensaries, but until then, successful appeals need to be able to find space in the market.


The bureaucratic complications, for months, have essentially frozen the expansion of the medical marijuana industry in Lansing. Only eight dispensaries remained in operation on Wednesday. The rules, before they were nixed by Borello, would have forced them to close this week or or risk never being able to receive a license at all.


Any temporary business past today was to be considered “unlicensed activity” and could have also been referred to the Michigan State Police or the Attorney General’s Office, according to a statewide bulletin issued this month. An MSP spokesman declined to comment on any potential enforcement plans earlier this week.


But the city’s lawsuit requested a judge intervene and quash the rules or else allow the city to deprive hundreds of patients of their medical marijuana prescriptions. And Borello, at least for now, saw merits in the litigation.


“The (deadline) creates an absurd result whereby many temporarily operating facilities are forced to close, despite complying with all administrative requirements with which they can possibly comply,” according to the city’s complaint. The lawsuit also noted that local patients “will be essentially forced into the black market.”


The complaint also contends the recent deadline “runs counter to the legislative intent” by reducing patient access and diminishing the immediate operation of local pot shops. The date was set without regard to the consequences and LARA has established a recent history of sudden and drastic regulatory changes, it reads.


Lansing could have also lost its regional footing in a lucrative statewide industry. Schor recognized that neighboring cities would have siphoned patient dollars that would have otherwise landed closer to home, but he was confident business would return to Lansing regardless of whether Borello considered the recent complaints.


Schor said a previously established Dec. 15 deadline would likely provide enough time for city officials to wrap up the appeals process and dole out its first batch of operating licenses. It’ll just take “a lot of work,” Schor said.


Three dispensaries have since been licensed in Jackson as of this week. State board members voted Monday to approve a license for Greenhouse Cannabis Provisioning Center on Page Avenue. A total of 37 dispensaries — including others in Flint, Ann Arbor and Kalamazoo — now have a formal green light from state regulators.


Local resident Debbie Rile stocked up last week at Greenwave Provisioning Center along Oakland Avenue, whose owners had previously planned to close this week. Her bag filled with bud is the only medication that effectively treats her “jacked-up” back. And she was prepared to drive an hour to Jackson to fill her prescription.


“They’re playing these silly little games with these dispensaries, and it’s messing me over,” Rile added. “I have to hope I have enough here to last until they decide they want to change the rules again. I’m just staying within my limits and hoping like hell I don’t need any more than that. I’ll be going to Jackson or wherever I need to go.”


The parking lots outside local pot shops remained crowded in recent days as patients filled up, should their local dispensary have closed. Sam Welch, assistant manager at Greenwave, said his store stopped ordering fresh products a while ago. His fingers were crossed but he knew his job, at least temporarily, could still be on the line.


Greenwave, in addition to its inability to receive a state license by Halloween, was also unanimously denied this week for prequalification status — a requirement to eventually receiving a full-fledged operating license. Officials cited inadequate “personal and business probity” without further details. The business can appeal the decision.


“Obviously a lot of people are worried about where they’re going to get their stuff,” Welch added. “We’re worried too. We’re just hoping (state regulators) can get this together soon so people can get their medicine in a timely manner. There are a lot of elderly people out there that just can’t make the drive to Detroit or Bay City.”


Rile joked about following an elderly woman as she left Greenwave with four bags of various products. But then she quickly realized the woman was only hoarding edible marijuana products to assist with her cancer treatments. These aren’t kids looking to get high, she emphasized. They’re patients searching for comfort.


“It’s just ridiculous,” Rile said. “These people are playing with our lives. I don’t think they realize that.”


Swope previously labeled the Oct. 31 deadline as “problematic” and suggested state officials should reconsider the mandate. Schor said the timeline — which was first introduced earlier this month — was “disappointing” and simply didn’t provide enough time for Lansing to keep up the tumultuous pace outlined by LARA.


Attorney Denise Policella, with Cannabis Attorneys of Michigan, also filed a lawsuit aimed at the adjusted deadline. The rules were overly rushed and unfair to entrepreneurs both in Lansing and across the state, she said. She also said a state judge initially planned to kick the deadline back to December but quickly reversed course.


Policella said 11th-hour litigation from Attorney General Bill Schuette ultimately stalled the plans. A “lengthy” conference call between both parties followed but they have since been unable to reach an equitable solution. That case has since been dropped after her client was granted an operating license earlier this week.


If the temporary restraining order is lifted on Nov. 9, then unlicensed dispensaries — in addition to ceasing sales — will likely be asked to either destroy or sell their remaining products to other licensed provisioning centers.


However, Board Chairman Rick Johnson said he will not specifically deny licenses to dispensaries that remove products from their shelves and keep them locked away. At least one other board member disagreed.


Officials at LARA declined to elaborate on the ruling — or Lansing’s complaints — as they reviewed the decision. Additional calls placed to the Attorney General’s office were not immediately returned for this story.


Visit lansingcitypulse.com for continued coverage as the ongoing litigation continues at the Court of Claims.