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.
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
- 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
- Obtaining
Tax Clearance
○
In addition to any business
clearances, applicants must obtain tax clearance through the Michigan
Department of Treasury
- Detroit
Legacy Certification
○
This step is not required, but
this certification grants greater benefits and resources. More information can be found here
- 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
- 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