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Detroit's Cannabis Industry- A Pathway for Social Equity?

 How We Got Here

            Since the people of the state of Michigan voted in favor of the Michigan Regulation and Taxation of Marijuana Act (commonly known as Proposal 1) in 2018, possession of cannabis by individuals 21 years old and older has been legal. The law took effect in December of that year, and the first dispensaries opened less than a year later.

            Yet almost four years out, there is not a single recreational marijuana dispensary in the state’s largest city, Detroit, despite the fact that over 60% of Wayne County voters cast their ballots in favor of legalization- the third highest percentage of any county in the state. The reasons for this delay lay largely in the fact that recreational marijuana was not approved at the city level until 2020. However, there have been other forces at work to prevent the opening of dispensaries in Detroit.

 The Main Hurdle

One of the most notable sticking points has been language in the city’s ordinance which reserves half of the limited recreational marijuana licenses to “social equity applicants.” A federal judge temporarily suspended the law because of the social equity component (he has since reversed this decision), and a new lawsuit seeks to challenge the law for giving “unfair preference to longtime city residents.”

For now, the reservation of half of the licenses for social equity applications remains in effect, and will likely remain unless and until it is invalidated by the courts. With all of the legal challenges surrounding these reserved licenses, it is worth learning why the ordinance includes language that opened the city up to legal challenges. 

Why Include Social Equity Applicants in the First Place?

          To understand why the category of social equity applicants was included in the ordinance, one must look no further than the language of the municipal code itself. Below are but a few relevant excerpts: 

●      "...social equity in the marijuana industry is required to address the historical disproportionate impact of marijuana prohibition and enforcement on Detroiters..."

●      "...residents of disproportionately impacted communities have historically been excluded from ownership opportunities in the legal marijuana industry..."

●      "...Detroit has a marijuana-related criminal conviction rate that exceeds the average marijuana-related criminal conviction rate in the State of Michigan..." 

City Council President Pro Tem James Tate, who introduced the ordinance, has stated that the goal of the law was never to simply have recreational marijuana licensing in the city, but was instead, “...to create policy that works to address the inequities that so many Detroiters have experienced trying to pursue an opportunity in this industry.” Put another way: the communities that were punished the most by the government during marijuana criminalization should be assisted by the government now that marijuana is legalized. One of the tools the government has at its disposal to achieve this goal is through the licensing process.

As noted above, reserving licenses for social equity applicants has not been met without challenges. An earlier iteration of the law had to be rewritten, since the previously mentioned judge ruled that it unfavorably gave preference to longtime Detroit residents, as well as those with past marijuana convictions. While the amended language has softened enough for the judge to allow it to go forward, appeals are expected. On top of all of this, some in the cannabis industry feel it does not do enough to benefit historically disadvantaged communities.

Much has been taken out of the law throughout this winding process that previously aimed to help social equity applicants. Among the most notable revisions include the removal of  reductions in fees for these applicants amounting to thousands of dollars; resources and application training through the Detroit Cannabis Project no longer being exclusive to equity applicants; and expanding the definition of “social equity applicants” to include 183 other “disproportionately impacted communities” throughout Michigan, not just Detroit.

The dust certainly hasn’t settled on the debate over the program’s goals or effectiveness, but at least its reason for being included is clear. Now- what exactly are the requirements for being considered a social equity applicant, and how can one take advantage of them? 

Social Equity Application Requirements

            The City of Detroit’s Recreational Marijuana License application is broken into three Phases, the first of which began on September 1st and ended October 1st. For now, the dates for applying during Phases 2 and 3 are yet to be determined. Each phase will reserve half of their licenses for social equity applicants.

The requirements for social equity application that the municipal code chose mirrors the language in the statewide law. All of the details laying out the requirements for being considered a social equity applicant are laid out in the code itself- but to summarize, here are the main points: 

●      An equity applicant is an individual whose primary residence is located within a disproportionately impacted community

○      Applicant does not have to live in Detroit- can live in any of 184 communities in Michigan

●      Equity applicants must control 51% of the business

○      If less than 51% is controlled by equity applicants, they can apply for the non-equity licenses

             Do you meet these requirements? Then congratulations! You can apply as a social equity applicant. However, checking off these two boxes is just the starting point. To actually apply as a social equity applicant, there are many five steps that need to be taken: 

  1. Applying through the State

○      Applicants must be pre-approved by the state’s Cannabis Regulatory Agency. This pre-approval is good for two years, so be sure to begin the application process as soon as it is granted so it doesn’t expire

  1. Obtaining Tax Clearance

○      In addition to any business clearances, applicants must obtain tax clearance through the Michigan Department of Treasury

  1. Detroit Legacy Certification

○      This step is not required, but this certification grants greater benefits and resources. More information can be found here

  1. Secure a Location

○      Applications can only be submitted once a deed or lease is secured. Equity applicants are encouraged to participate in the land lottery if they need assistance in this step

  1. Gather Documents and Submit Application

○      A full checklist of the required documents to apply can be found here. Once all of the previous steps have been completed, and the next Phase of applications is open, the portal to apply will be posted on The Office of Marijuana Ventures and Entrepreneurship’s website


By: Justin McClarey

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