Michigan: Adult use cannabis firms fail in lawsuit against city of Royal Oak over refusal to grant them licenses

The Royal Oak Tribune reports

Six recreational marijuana business applicants that sued Royal Oak after the city refused to grant them licenses to operate recently had their lawsuit dismissed in Oakland County Circuit Court.

Circuit Court Judge Rae Lee Chabot granted Royal Oak’s request for a summary disposition of the case Dec. 16, just over two weeks before she retired from the bench. However, it is unclear yet whether any of the six firms will try to take their case to the Michigan Court of Appeals.

Still, Royal Oak City Manager Paul Brake said city officials are pleased with the ruling.

Dismissal of the lawsuit shows that the city’s marijuana ordinance is in compliance with the state’s mandate that the cannabis retail license selection is done through a competitive process, Brake said.

“There is nothing in the state law that limits a municipality from developing its own criteria and selection process for awarding licenses” to operate a marijuana business, he said.

Royal Oak officials in April 2022 said they would not settle the lawsuits, which were combined, from the six cannabis firms that included Quality Roots Inc., Green Theory, LLC, Green Square Holdings, LLC, Exclusive Capital Partners, BDE Warren, LLC, and Attitude Wellness, LLC. 

Royal Oak officials last spring granted licenses to three marijuana businesses to open after winnowing through 37 applications.

The three chosen are Royal Treatment at 408 to 424 E. Harrison, Best Lyfe, a microbusiness on Woodward Avenue just south of 14 Mile Road, and Gatsby Cannabis in an industrial zone at 5130 Meijer Dr.

None of three of the facilities have opened yet. Best Lyfe has gotten a building permit, Gatsby Cannabis has applied for one, but Royal Treatment has yet to seek a permit..

In 2018, Michigan voters approved recreational cannabis with businesses to be licensed for testing, transporting, processing, growing and retail sales.

Vote tallies in Royal Oak showed 69 percent of votes in the city in the statewide election supported the new cannabis law while 31 percent opposed it. 

Under the law, municipalities were allowed to choose whether they wanted to allow cannabis businesses in their communities and set rules for licensing the businesses.

There has been a thicket of lawsuits against communities statewide that chose to allow the businesses and set standards for their location and operations, among other criteria.

Nearby Berkley was also sued by a number of marijuana businesses after they weren’t picked for a city license to operate. The Michigan Court of Appeals last month issued a written opinion by a three-judge panel on the dismissal of a lawsuit against Berkley that went to trial a couple years ago in county Circuit Court.

The appeals court judges upheld a trial court finding that Berkley’s marijuana ordinance did not conflict with the state recreational marijuana law, which allows municipalities to enact ordinances regulating the number of marijuana businesses, and the criteria Berkley used to conform with the state law.

“The trial court did, however, err when it determined that the City had violated the (Open Meetings Act) by not holding the city manager’s scoring process open to the public, because the city ordinance provided the city manager with the authority to review the applications before making recommendations to the City council,” the judge’s wrote in their opinion.

The state recreational marijuana law “was drafted in such a way as to have a competitive process in place with reasonable criteria,” said Christopher Johnson, head lawyer for the Michigan Municipal League, an nonprofit advocacy group for over 520 member communities, including most Michigan cities, villages, and a few urban townships. 

Having the word “reasonable” in the law gives lawyers “a wide open shot at saying those criteria aren’t reasonable,” Johnson said.

The number of lawsuits against cities that allow cannabis facilities is unlikely to abate until the state Supreme Court rules on some of the issues in the state recreational marijuana law, officially called the Michigan Regulation and Taxation of Marihuana Act, Johnson said.

“The reason we have so much litigation is because of confusion on the law itself,” he said.

Source:  https://www.dailytribune.com/2023/01/04/cannabis-firms-fail-in-lawsuit-against-royal-oak/

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