Nov. 15 2018 10:21 AM

Judge ponders arguments over potential shutdown


The uncertain future of Lansing’s eight operating but unlicensed dispensaries continued Tuesday while a judge mulled arguments on a potential statewide shutdown.

After a four-hour hearing on Friday, Michigan Court of Claims Judge Stephen L. Borrello left in place his temporary restraining order against a state-mandated shutdown of more than 200 unlicensed dispensaries across Michigan. He said he hopes to finalize a more permanent ruling “soon.”

“I just need to think about it a little longer,” Borrello explained.

The hearing was scheduled in response to a lawsuit against the Michigan Department of Licensing and Regulatory Affairs by First Class Inc., a company with medical marijuana interests in Jackson County. The city of Lansing also pitched in a few attorneys after Borrello merged its similar lawsuit with that of First Class Inc.

The affected dispensaries are those that are waiting for decisions on their applications by the state Medical Marihuana Licensing Board or are appealing after being turned down.

That previous court order arrived just hours before all unlicensed dispensaries were previously ordered to close by Oct. 31. Attorneys with First Class Inc. argued the deadline was arbitrary, capricious and in “direct contravention” of the purposes of the Medical Marihuana Facilities Licensing Act.

Borrello’s order suggested the state was likely to lose the case. Last week, the burden of explaining otherwise fell entirely on officials from LARA, which imposed the deadline. State attorneys suggested the date was designed to transition the industry into a fully regulated system and ensure the integrity of the licensing process.

They also argued the deadline was set, at least in part, because Medical Marihuana Bureau Director Andrew Brisbo felt there were enough licensed businesses to ensure adequate medicinal access to patients. But First Class Inc.’s president, Eric Kanaia, in sworn testimony solicited on Friday afternoon, strongly suggested otherwise.

Kanaia contended about 300,000 Michigan medical marijuana cardholders will each blow through, on average, about one pound of marijuana every year. That equates to about 1.25 grams — or about two moderately sized joints — for each cardholder every single day of the year.

He suggested the 12 licensed marijuana–growing facilities throughout the state can only collectively produce about 12,000 pounds each year. That means the statewide market, if every growing facility is able to keep up with Kanaia’s estimations, is only capable of providing an adequate supply for about 4 percent of patients.

Attorneys argued that imposing an operational deadline, while the industry remains in its infancy, would drastically curb patient access and pose an undue burden on temporarily operating dispensaries that haven’t yet had time to make it through the state’s licensing process.

Jim Smiertka, attorney for the city of Lansing, argued somewhat similar concerns.

Lansing simply can’t keep up with the rapidly changing state deadlines, Smiertka said. No local dispensaries have been able to receive a license because applicants who have been denied need to be able to find space in the limited, 25-dispensary economy — the cap imposed by the City Council — should they win on an appeal.

He said Lansing had come to depend on a previously established Dec. 15 deadline. Mayor Andy Schor has said the city should be able to dole out licenses by that date. It’ll just take “a lot” of work.

The curbed deadline still shocked city officials, who were only made aware of the change through a press release, explained Deputy City Attorney Heather Sumner. Smiertka also noted that every dispensary in the city would have been forced to close if they were required to abide by the previously established Oct. 31 deadline.

Borrello’s order still remains the only mechanism allowing Lansing dispensaries to remain operational. Meanwhile, City Clerk Chris Swope is gearing up to accept a second round of applications for five additional dispensaries that will eventually open within city limits, as outlined in the city’s ordinance on medical marijuana.

A 30-day, written public comment period will continue through Dec. 15 and is designed to solicit feedback on the application process. The next application acceptance period will commence Feb. 13 and continue through March 15. By the end of the process, city officials hope to have licensed a total of 25 dispensaries.

“There are lots of lessons that we have learned from doing this the first time in how the checklist and application is laid out,” Swope said. “By receiving input from the public, especially past applicants, we can improve the process so that it can be done more efficiently and meet patient needs.”

The city of East Lansing also took steps last week to regulate a medical marijuana market of its own. The City Council — by a 5-0 vote — agreed to permit dispensaries in designated districts, primarily around the outskirts of the city limits. There’s no precise limit, but officials estimate only four or five will be able to open.

Officials there said they hope to learn from the “headaches” the local licensing process has created in Lansing. East Lansing’s licensing structure creates a first-come, first-serve style application process designed to both curb concerns surrounding discretionary selection and to help the city avoid any potential lawsuits.

Visit lansingcitypulse.com for prior coverage and continued updates as they become available.

kyle@lansingcitypulse.com