DETROIT — When Michigan legalized recreational marijuana, Detroit’s leaders set out to ensure that the city’s residents could share in the profits.
They passed one of the nation’s most ambitious “social equity” laws, intended to help the Black and Hispanic communities that paid the steepest price from the war on drugs participate in the lucrative industry.
But more than two years after legalization in Michigan, even as marijuana entrepreneurs are thriving in Detroit’s suburbs, the city itself has become a cannabis dead zone. Its first recreational marijuana law was blocked last year by a federal judge over a provision that set aside licenses for longtime Detroiters. A second law, enacted last month, was hit this week by another lawsuit, throwing its future into question.
The resulting delay has meant that Detroit’s would-be cannabis entrepreneurs — the very people the city set out to help — are left watching and waiting as their suburban competitors get an edge.
Those who are affected include Black owners of licensed medical dispensaries who have been waiting for years to expand into recreational marijuana. Many lack the resources to weather the ongoing legal turmoil, said Kimberly Scott, who grew up in Detroit and leads the 10-member Black Cannabis Licensed Business Owners Association of Detroit.
“The majority of current owners are struggling to stay afloat,” Scott said.
Last year, she opened Chronic City, a medical dispensary on Detroit’s east side, which is licensed to sell cannabis to people with documented medical conditions. She struggled to compete with recreational dispensaries outside the city that can sell to anyone over the age of 21. The shop closed after six months and is now sitting empty and dark, waiting until recreational sales are legal in Detroit.
“It impacts everyone,” Scott said. “And for those of us that are social equity and that have been in Detroit our whole lives and have been impacted by the war on drugs, it definitely impacts us.”
The problems in Detroit reflect the difficulty that lawmakers around the country have encountered as they’ve tried to level the playing field in an industry long controlled by white men.
While 15 of the 36 legal cannabis states have social equity programs, and many cities, including Los Angeles and Oakland, California, have tried to support local entrepreneurs, many of those efforts fall short of what experts and advocates say is needed. Black and Hispanic business owners may need additional support in making contacts and securing funding to compete in an industry that’s illegal under federal law and ineligible for traditional loans.
Some efforts, like Detroit’s, that aim to help a particular group of entrepreneurs have been hit with lawsuits and challenges.
Others, said John Hudak, a senior fellow at the Brookings Institution who studies state and federal marijuana policy, are simply not enough to counter generations of segregation and inequity.
“Handing out a social equity license doesn’t make all the racism go away,” Hudak said. “It just gives someone a license and sets them afloat in American commerce, which is rife with racism and discrimination and bias.”
‘Uneven playing field’
Detroit City Council President Pro Tem James Tate said he knew Detroit would need a robust marijuana social equity law back in 2014 when he led a city effort to regulate the medical dispensaries that had proliferated.
At the time, he said, he was focused on changing the fact that the medical dispensaries existed in a legal gray area — people could be licensed as “caregivers’’ to provide marijuana to a limited number of patients with medical conditions, but businesses weren’t formally permitted by the city or state. Tate noticed that of the roughly 240 semi-legal dispensaries the city counted then, only a handful were owned by Detroiters.
“It was a concern,” he said. “Many of the establishments were making pretty good money,” but the proceeds weren’t staying in the community.
The ambiguous status of medical dispensaries scared off many Detroit entrepreneurs, Scott said. Most of the city’s residents are Black, and given a long history of over-policing in Black neighborhoods, some feared the consequences of opening less-than-legal businesses.
Scott, 41, a former history teacher and nurse who was registered as a cannabis caregiver, considered opening a medical dispensary in 2015, but worried about the legal risks. She also worried about her safety selling marijuana alone, so she decided to use her rented space on the city’s west side to grow cannabis rather than sell it directly to consumers. She used roughly $20,000 of her savings to buy seeds, lights and other equipment — a venture that failed when the building’s faulty heating and cooling system and its rusty water destroyed the crop.
By the second time Scott tried to open a business, in 2017, dispensaries were more legitimate, but new rules from the city and state complicated her efforts.
At the city level, strict new zoning laws that barred dispensaries within 1,000 feet of schools, churches and liquor stores made it difficult for her to find a building since investors with deeper pockets had quickly bought up the best properties in Detroit’s “green zone.”
At the state level, applicants seeking a “provisioning center” license needed to submit lengthy site plans and financial projections. They needed clean criminal records and to show they had enough money to succeed — hurdles that left many on the sidelines.
“Society created an uneven playing field even before any sort of legalization occurred,” said Andrew Brisbo, the executive director of the state’s Cannabis Regulatory Agency, who helped streamline the application process to make it less onerous. “And then, with legalization and commercialization, it tilted it even a little more out of the favor of disadvantaged communities.”
All of those factors, Scott said, help explain why of the 75 licensed medical dispensaries in Detroit today, only about 10 have Black owners — in a city where 4 out of 5 residents are Black.
Across Michigan, where 14 percent of residents are Black, a recent state survey found that just around 3 percent of cannabis businesses have Black owners.
‘Correcting wrongs’
When Michigan legalized recreational marijuana after a 2018 ballot referendum, Tate was determined to address Black underrepresentation in the industry in Detroit. But the state’s initial statute gave an advantage to existing medical dispensaries, requiring businesses to have a medical license for two years before they could get a recreational license.
“It wasn’t fair,” Tate said.
He urged the city to block recreational licenses until 2020, as the state prepared to drop that requirement. Then, he set out to ensure that city residents would have access to the industry. In late 2020, he proposed the “Legacy Detroiter” law, which set aside 50 percent of retail licenses for people who’d lived in the city for at least 15 of the previous 30 years. Detroiters with low incomes or marijuana convictions in their families could qualify with fewer years of residency.
The new law — enacted unanimously by the City Council — was “powerful,” said Maurice Morton, the Black owner of a medical dispensary called Motor City Kush.
As an attorney who had worked in the drug division of the county prosecutor’s office in the 1990s and 2000s, Morton had seen how drug convictions had destroyed Detroiters’ lives, harming their prospects for jobs and housing.
He believed the new law could help change their fortunes. “It’s kind of correcting wrongs,” he said.
In February 2021, as the law was going into effect, Scott finally opened her medical dispensary, Chronic City, after clearing the regulatory hurdles.
“It was an amazing feeling,” she said. “I knew I had reached a point of completion of something that I had started.”
But business was slow. The tiny city of Hamtramck — so close to Scott’s dispensary that some internet searches list her business there — already had multiple legal recreational shops. People coming into Chronic City were upset to learn they couldn’t buy from her without a medical card.
She figured her struggles were only temporary, until she was able to get a recreational license. But in March, Crystal Lowe, a Detroit resident who didn’t qualify as a legacy applicant, sued to block the new law. A federal judge ruled in Lowe’s favor in June, calling the Legacy Detroiter law “likely unconstitutional.”
Scott’s short wait for recreational became a longer one. Then, last August, burglars struck her business, clearing out her inventory. She decided to close her doors and wait.
More trouble
Morton, who opened Motor City Kush on 8 Mile Road, Detroit’s northern border, in 2018, made the same tough choice in 2020 as he watched his customers leaving for recreational dispensaries in the nearby suburb of Hazel Park.
He hopes that the city’s new recreational law, passed last month, will enable him to reopen. The law allows residents of 184 Michigan communities that have been identified by the state as disproportionately affected by marijuana convictions — not just Detroiters — to qualify for social equity licenses in Detroit.
Tate, the city councilman, said he believes the new law will hold up better to legal challenges than his first law did, but a lawsuit filed on Wednesday presents its first test. The suit comes from four Detroit medical dispensary owners who believe the new law places them at a disadvantage. A city spokesman declined to comment.
Regardless of what happens in court, Tate said the city will continue to help Detroiters, including by making publicly owned properties available to some local cannabis entrepreneurs. Tate has also talked with Scott and others about creating training programs to help Detroiters break into the industry.
He laments the difficulty faced by local entrepreneurs.
“It angers me as a Detroiter,” Tate said. “When Detroit tries to do things that benefit Detroiters in a way that helps rectify some of the wrongs of the past, we’re often struck by litigation or agitation, you name it.”
But the industry is still new in Michigan, he said. He believes there’s time for Detroiters to catch up.