Can Detroit’s marijuana plan create social equity?

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Half of Detroit’s marijuana licenses must be owned and operated by city residents (Shutterstock photo)

Last fall, the Detroit City Council unanimously approved an ordinance to allow recreational marijuana sales in Detroit while also giving longtime Detroiters and residents with previous drug charges incentives to enter this potentially lucrative sector.

The ordinance, crafted by City Councilman James Tate, is a longtime coming for some, and is intended to create equitable opportunity within Detroit’s cannabis industry. Tate says the expansion from medical marijuana to adult-use in Detroit could generate close to $8 million within four years. Mayor Mike Duggan included the state-shared excise tax from adult-use marijuana as a potential upside to the City’s economy in his proposed 2022 Budget.

The ordinance has a built-in requirement that half of the 10 types of licensed cannabis businesses in the City must be owned and operated by Detroit residents. The City also adopted a “Legacy Detroiter” program for longtime Detroiters, or residents who have lived in the city the past 15 years, or shorter amounts of time depending on their criminal history. Legacy Detroiters were eligible for an early license application period from mid-January to March 12 to get ahead of non- or short-term Detroit residents. On March 3, the City announced 180 Legacy Detroiter certifications had already been issued.

Tate introduced the City’s medical marijuana ordinance in 2015 to address licensing requirements and zoning issues. Tate says there have been about 240 illegal dispensaries throughout Detroit operated by non-Detroiters. News reports show over 150 Detroit dispensaries were shut down in 2018 alone due to state licensing issues.

“So, that was troubling,” Tate said.

Tate, with the help of a team of residents, wrote the ordinance after Michigan voters approved the sale of recreational marijuana in 2018, with the caveat that cities determine how cannabis is sold.

Neighboring cities already have recreational marijuana businesses up and running and are fairly popular. LIV Ferndale, which offers medical and recreational marijuana products, is known for its frilly décor and overall customer experience. However, the cannabis company came under fire through social media earlier this year due to its lack of Black employees.

Michael DiLaura, chief of corporate operations and general counsel of House of Dank Cannabis, has seven retail locations in Michigan and five in Detroit. DiLaura is outspoken about the City’s social equity ordinances.

“The target demographic of the legacy application is economically disadvantaged,” DiLaura said, but “you aren’t putting (economically disadvantaged people) on equal footing, let alone giving them a head start.

“While recognizing the importance of getting diverse people into this industry, I don’t think this legislation accomplishes that.”

The irony of the now-booming and predominantly non-Black-owned marijuana industry given America’s long and troubled history of incarcerating people of color for marijuana-related charges is not lost on Tate.

“Detroit voted 68% in favor of recreational marijuana so that meant there was certainly an appetite for recreational cannabis,” Tate said. “Part of it, after speaking with residents, was also the angle that maybe we can decriminalize marijuana, which has caused so much trauma in our neighborhoods and our families in our community, the fact that we had so many of our brothers, sisters, cousins, uncles, mothers, fathers who were arrested and incarcerated as a result of cannabis.”

In a recent Michigan Regulatory Agency report, it was shared that about 60 percent of people in state prison for drug offenses are Black or Latino. As a response, social equity programs have been created in several states across the country, including Michigan. The report says that by December 2020, of those who had shown ownership interest in a licensed adult-use, or recreational, marijuana business in Michigan, less than 4% were Black and less than 2% were Hispanic or Latino.

The perceived lack of interest may also be due to the high fees and ongoing regulations associated with cannabis-related businesses. Tate said there is a “lot of optimism” in Detroit, paired with worry.

“I continue to remind will-be entrepreneurs and those who are already entrepreneurs, this is a highly regulated industry with many, many, many trap doors that you can fall through,” Tate said. “So, you have to know your stuff, and that’s why it was important to me that we didn’t just drop an ordinance on the table, have people go in a frenzy spending what little money they may have, and then end up losing their opportunity and their money.”

DiLaura shares that worry, knowing the initial costs of building a cannabis business. He said entrepreneurs will need $1 million to $1.5 million to build a dispensary and money to purchase the property. 

“The barriers to entry are far higher than people need them to be, and the wealth that is generated is far less than most people expect,” said DiLaura, who doesn’t think the City should issue this type of legislation without also offering grant opportunities.

In May 2020, Michigan’s Marijuana Regulatory Agency announced an expansion to the social equity program allowing residents within 184 “disproportionately impacted” communities, including Detroit, to be eligible for reduced license fees. 

A Racial Equity Advisory Workgroup was created at the state level to establish several subcommittees, including social justice, business development, local equity, process and pathways, and resource development and strategic partnerships.

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Though the State’s and City of Detroit’s social equity components are rather new, Detroit’s interest in finding career pathways within the cannabis industry is not. Jamaine Dickens, former communications director for former Mayor Kwame Kilpatrick, said the Kilpatrick administration discussed the issues years ago.

Dickens, currently a principal at Compass Strategies, said the Kilpatrick administration was on the front end of Detroit’s returning citizens conversation and the desire to implement changes to support future employment.

“What Mayor Kilpatrick did try to do was address these convictions that kept Detroiters away from job opportunities, particularly marijuana convictions,” Dickens said. 

“It was the beginning of the conversation then, and I think it was because of Kilpatrick,” Dickens said. “His age, where he came from, the folks who really responded to him as mayor and talked to him about the challenges that they were dealing with.”

Dickens said the Legacy Detroiter program creates an opportunity to ensure the city is doing the “right thing” to create opportunity for those previously convicted. 

“If we’re legalizing marijuana all over the country, then these people went to prison for something that local and state governments (can now) benefit from at a tax perspective,” Dickens said. “So how is it that everybody is getting paid for the same thing that someone was convicted for?”

Even though voters approved the sale of adult-use recreational marijuana, there are groups who oppose cannabis and believe local government time should be spent elsewhere — specifically on policy issues regarding housing, employment and transportation.

“I tell those individuals that marijuana policy is not the priority, but it is a priority,” Tate said. “You have to spin multiple plates at the same time and keep them spinning. So, while we’re talking about housing, what we’re talking about is water and food security. We also have to look at entrepreneurship and opportunity.”

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