A DISPENSARY SHUFFLE?

What Will Happen to the 41 Operating Medical Marijuana Dispensaries
in Lansing? A Draft Regulation Ordinance That Would Force Most of
Them to Move Surfaces, Raising Questions

The Lansing city attorney has presented a draft ordinance to regulate
medical marijuana dispensaries in the city that if enacted would
force 37 of them to move from their present location to stay in business.

The draft ordinance, written by City Attorney Brig Smith with input
from Lansing City Councilwoman Carol Wood, has raised the eyebrows of
some dispensary owners and local attorneys because it would restrict
new dispensaries to industrially zoned areas of the city and force
those not in those zones to move if they want to stay open.

The draft ordinance makes no provision for grandfathering existing
businesses in their current locations if they are outside of
industrially zoned areas.

"Those existing businesses in commercial areas who say they're
allowed to be open, this (ordinance) says, 'No, you aren't,'" Smith
said Thursday. "And that would be decided in court."

However, both Wood and Smith agree this aspect of the ordinance could
change as it is examined in the Council's Public Safety Committee,
which Wood chairs. But Wood said she is in favor of limiting new
businesses to industrially zoned areas.

Forty-seven addresses are grandfathered in with the city where
medical marijuana businesses may operate during the moratorium that
started in December and lasts until July or if a new ordinance
regulating them takes effect before July.

Of those, 41 are operating. Only four of them are in areas zoned for
industrial use: Victoria's Club Med-a-sin at 1039 N. Cedar St.,
Mid-Michigan Patient's Group at 821 E. Kalamazoo St., Grand River
Alternative Medicine at 711 E. Grand River Ave. and Buono's at 1419 Turner St.

So does the city really intend to force the other 37 businesses to
move? If not, why didn't the city attorney add a line to the
ordinance that says existing businesses not in industrial areas can
stay open? And why does this ordinance suggest dispensaries are legal
businesses but restricts them to industrially zoned areas?

"I think it's a starting point. I'm not saying it's the ending
point," Wood said, adding that putting them in industrial areas came
from neighborhood groups' concerns of the "proliferation" of
dispensaries, particularly on the east side. "I want people to
understand this is a first blush. I'm not saying I'm opposed to
looking at grandfathering in or doing something for those already
established as long as they meet with the licensing requirements."

But why not just include it in this draft?

"I don't know. That's a good question," Wood said. "We're talking
about a draft we've got out there. That's why you go through the process."

Aside from existing businesses, Wood said it would be "her
preference" that any future businesses would be in industrial areas.
"But I'm only one vote on the Council."

Industrially zoned areas dot the city and sometimes are adjacent to
commercially zoned properties.

Smith, who drafted the proposed legislation, said Monday that the
issue of forcing businesses to move is "one of a number of issues"
that needs to be addressed at the committee level.

"The nature of any legislation is that it's worked out in the
committee process. I would cite you to 'Schoolhouse Rock!'" he said,
referring to a children's cartoon series that did an episode on how
laws are made.

One dispensary owner - Shekina Pena of Your Healthy Choice Clinic at
628 E. Michigan Ave. - said "this doesn't look like Brig's work at
all," suggesting the ordinance goes too far by restricting commercial
entities to industrial zones. Smith's response: "I have worked in
conjunction with Council member Wood's vision. I have done my best to
effectuate that vision with the understanding from 'Schoolhouse
Rock!' that going through committee (and getting reworked) is how a
bill becomes a law. If there is concern in the community, the
committee should address that."

Smith said that the city faces "tension" at the county level from two
prosecutors who disagree on whether dispensaries are legal. Ingham
County Prosecutor Stuart Dunnings III thinks they're illegal, Eaton
County Prosecutor Jeff Sauter thinks they're legal, Smith said.

The city is in both counties.

"If Eaton County feels one way and Ingham County feels the other way,
that's a tension the city must face," he said.

Mayor Virg Bernero weighed in on the proposed ordinance Monday. He's
against it and would like to see a more "progressive" regulatory
approach from Council, allowing storefronts throughout the city but
not in neighborhoods.

"I think it's the wrong way to go," Bernero said. "We need to
facilitate what the voters voted for. I want to keep them
(dispensaries) out of neighborhoods. What I envision is a regulated
storefront."

Bernero said East Lansing's commercial medical marijuana ordinance -
which was adopted in March and limits businesses to
professional-office zoned areas - is "decent" but creates "marijuana ghettos."

Bernero said he's "disappointed" with the first draft of Lansing's
ordinance. "I haven't seen the progressive leadership of Council step
up. There are progressive voices on Council - they need to step up."

Two Components

The proposed ordinance regulates dispensaries in two ways: through
zoning restrictions and licensing requirements. In order to open, a
business must first obtain a license from the City Clerk's Office,
which would last a year. The Council would determine prices of those
for medical marijuana dispensaries. One of the license requirements
is that a dispensary cannot violate any portion of the ordinance,
which ties into the requirement of being in an industrially zoned area.

The draft ordinance would regulate dispensaries and cultivation
businesses. A dispensary is defined as "a nonresidential land use
where marihuana is distributed by one or more primary caregivers but
is not grown or cultivated." A cultivation business is defined as "a
nonresidential land use where marihuana is grown or cultivated in an
enclosed, locked facility by one or more primary caregivers but is
not distributed." Both types of businesses would be restricted to
industrial areas.

A "stakeholder" in either of these businesses includes "a partner, a
member, an officer, a director, an employee, or any person with an
ownership interest of 10 percent or more." Their identities would
have to be disclosed.

A Zoning Dilemma

By limiting businesses to industrially zoned areas, the proposed
ordinance creates a "nonconforming use" situation for those 37
existing businesses not in industrially zoned areas.

Two local attorneys said that if the city forces the 37 dispensaries
in Lansing to move in order to stay in business and owners decide to
challenge the ordinance in court, the question won't be about whether
they are allowed to stay, but if the dispensary itself is a legal business.

Matt Newburg, a local attorney who specializes in medical marijuana
law, said case law throughout the state is clear on nonconforming
uses. If a municipality drafts a zoning ordinance that forces a
business into non-compliance, that business is allowed to continue
operating. However, if you apply this concept to dispensaries, whose
legality is being questioned in the state Court of Appeals, this
issue isn't so clear.

An Isabella County circuit judge ruled this winter that a dispensary
in Mount Pleasant is operating legally under the state Medical Marihuana Act.

That case, the state v. McQueen, is being appealed to the state Court
of Appeals.

By allowing them in industrial zones, though, Newburg said the city
is implying that they're legal businesses and are a "legal
nonconforming use" and should be allowed to stay put.

Mary Chartier, of the Lansing-based firm Alane and Chartier, agrees
with Newburg. Chartier questions the motives of limiting dispensaries
to industrial zones.

"Either it's a legitimate business that's going to be allowed in the
city or it's not. If it is, pushing them into a dark corner doesn't
seem to be the best action," she said. "The city can't have it both
ways. It can't recognize them as a legitimate business and then push
them into a corner and still want their tax revenue. This (ordinance)
seems to be an assault on legitimate businesses for legitimate
patients. They should be treated like any other business."

Mark Wyckoff, director of the Planning and Zoning Center at Michigan
State University, said that because businesses opened before the city
specifically authorized them, the city could argue that dispensaries
are therefore prohibited. If a dispensary challenges a forced move in
court, Wyckoff said that even though the city is attempting to
regulate them, they weren't recognized as permitted uses before the
ordinance and would not have non-conforming-use protection. All of
this leaves a lot of open-ended questions for Lansing dispensary
owners, he said.

"The court would have to decide. This is not a unilateral thing," he
said. "If you were going to invest in one of these businesses, I'd
pick the five that are in the zone that are in place. They may
suddenly increase their market share."

When asked if regulating zoning for dispensaries is in a league of
its own, Wyckoff said, "Oh, yeah. You have a new set of legal
arguments: Is the use itself even lawful? Whatever sense you make of
(regulating dispensaries) is ephemeral. This is a moving target and
it's going to continue to move for quite some time."

A Similar Situation in Ann Arbor

Lansing is not the only city that is attempting to regulate
commercial medical marijuana businesses after some have already opened.

In Ann Arbor, between two and 15 dispensaries opened before the Ann
Arbor City Council adopted a moratorium in August on new ones. Ann
Arbor City Councilwoman Sabra Briere said that "nobody had a clear
grasp of how many medical marijuana dispensaries were in operation"
at the time of the moratorium and still don't. She said that's
creating a problem at this point because the licensing portion of the
proposed ordinance grants licenses in proportion to how many are open.

As for zoning, Ann Arbor's proposed ordinance is similar in that it
would regulate nonresidential grow operations and dispensaries.
However, Ann Arbor is considering allowing new dispensaries in the
downtown, unlike Lansing.

"We focused always on not treating medical marijuana as if it were
different from any other activity. It's just a business," Briere said.

But when Briere told dispensary owners they may have to move
locations based on where the city ultimately allows dispensaries, she
said they were receptive to the idea.

"I empathize with the business owners who may find themselves in the
wrong zone but I don't feel any unit of government owes them an
apology that they're in the wrong zone," she said. "They were very
grateful anyone bothered to care about their financial well-being," she said.

Robin Schneider, president of the Capitol City Compassion Club, a
nonprofit dispensary at 2010 E. Michigan Ave., called Lansing's
proposed ordinance "not acceptable" and "a joke" if it forces people
to move. She said she doesn't have a problem with it in "its entirety
other than the fact it doesn't say existing businesses are grandfathered in."

"As long as they do that I won't have much of a problem with it," she said.

Leo Jerome owns two properties listed in Lansing's moratorium - 3165
E. Michigan Ave. and 6420 S. Cedar St. - but no businesses are
operating there. Jerome has attended several Public Safety Committees
over the past few months when medical marijuana was on the agenda. He
was at the Public Safety Committee meeting Thursday because he's
considering potential investors who may want to open a business at
his properties.

He's hoping the city thinks twice about forcing businesses to move
and limiting them to industrial areas.

"We filled up a bunch of empty stores on the main drags. Now you're
going to take these stores and make them empty again?" he said. "And
does it have to be in an industrial zone? Why put them in the side alleys?"