You are here
Home > News > New Lawsuit Challenges Adult-Use Ordinance in Detroit

New Lawsuit Challenges Adult-Use Ordinance in Detroit

A lawsuit filed on Sept. 28 in the U.S. District Court for the Eastern District of Michigan claims that the city’s adult-use cannabis ordinance is unfair to longstanding city residents. Plaintiffs Arden Kazsab (who owns several medical cannabis dispensaries located in Detroit) and PharmaCo.

In June 2021, a lawsuit concluded with an opinion from U.S. District Judge Bernard Friedman stating that the city of Detroit’s process of obtaining an adult-use cannabis license was “unconstitutional” and “gives an unfair, irrational and likely unconstitutional advantage to long-term Detroit residents over all other applicants.” The most recent lawsuit claims that “…Detroit has essentially rebranded the ‘legacy’ program’ as a ‘social equity’ program.”

It was the result of this case that caused delays in processing applications for recreational cannabis. In November 2021, the city changed the rules.

The newest suit claims the amended ordinance didn’t solve the problem. “While Detroit alleges that its new cannabis ordinance cures the constitutional deficiencies found by Judge Friedman, the … (ordinance) remains ‘far more protectionist than it is equitable,’” the new lawsuit states, quoting Judge Friedman’s original statement from 2021.

According to Detroit Free PressTo illustrate issues in the current ordinance, one illustration was given. Plaintiff Arden Kassab lived in Pontiac for “many years,” which is an area that is both negatively affected by the War on Drugs, and they also have a cannabis conviction. Kassab is now out of Pontiac. He no longer meets the requirements under the current rules.

Similarly, plaintiff PharmaCo (a subsidiary of Red White & Bloom) can’t currently obtain a recreational license because “it must divest itself of substantial real property or business ownership interests in order to obtain social-equity points needed to compete,” the Detroit Free Press states.

The revised ordinance set aside half of the licenses to be reserved for “equity applicants,” such as those who are current residents in the city, as well as those who live in specific areas of Michigan that have higher cannabis convictions, and also where 20% of the population lives below the poverty line, according to federal standards. Previously, the ordinance reserved half of the licenses for “legacy Detroiters,” or people who have been residents in Detroit for a specific amount of time.

Although Michigan legalized recreational cannabis in November 2018, the city of Detroit didn’t approve adult-use sales until November 2020. One year later, the first lawsuit came in June. This was followed by the revision in November 2021. Although the ordinance became effective in April 2022 (the revision release was in November 2021), a second suit, from House of Dank, emerged in May in order to address issues with state law. JARS Cannabis filed a lawsuit in June alleging that the ordinance was contrary to state law.

Both lawsuits had been dismissed by August. Wayne County Judge Leslie Kim Smith issued an opinion on Aug. 30 stating that the ordinance had been fair. “Although the city’s 2022 marijuana ordinance is a complicated scheme, it is unambiguous and provides a fair licensing process, which comports with the mandates of the MRTMA [Michigan Regulation and Taxation of Marihuana Act],” Smith wrote.

Adult-use license applications opened Sept. 1, 2022, and close Oct. 8. Detroit Mayor Mike Duggan made a statement expressing his satisfaction with the ordinance. “We are going to make sure there is equity in this process for Detroiters.”

Additionally, James Tate, City Council President Pro-Tem, told CBS Detroit’s CBS News Detroit early September that although the process had been long, the ordinance was fair. “Getting to this point has been an overly protracted process dating back to 2020 when the first ordinance was unanimously approved by Detroit City Council,” said Tate. “Now with the lawsuits and the failed ballot initiatives seeking to overturn our ordinance behind us, Detroiters and other equity applicants will have a fair opportunity to compete for adult-use licenses in a city that welcomes all to participate in the multi-million-dollar adult-use cannabis industry.”