Detroit’s New Recreational Marijuana Market Brings Both Relief And Worry!

Detroit can now legally consume marijuana. The city’s first two retail locations for recreational products opened earlier this month, and there are already dozens more dispensaries and consumption lounges in the works. The market’s opening in the biggest city in Michigan came after a protracted legal dispute over licensing guidelines meant to ensure that those damaged by decades of drug prohibition may benefit from legalization.

The Motor City has now finally gained access thanks to a pair of recent legal victories in state and federal courts. James Tate, president pro tem of the Detroit City Council, who oversaw the creation of an adult-use law, stated in an interview that “what we see here is the result of a lot of hard work.”

“Not just hard work from the City of Detroit, but hard work on the hands of the entrepreneurs who did what was required to retain the faith amidst all of the litigation, rumors, and negative attitudes that some people were trying to instill into our process,” the entrepreneur said.

Detroit is not alone in its struggle to create a market for recreational marijuana that would help communities that experienced disproportionate enforcement, particularly among Black citizens. Similar plans have failed to owe to litigation, poor implementation, or both in states and cities as diverse as Los Angeles, Illinois, and Denver.

The success of the city’s nascent marijuana entrepreneurs is far from certain, even with the opening of the Detroit market. They’ll be entering a very competitive recreational market where the recent decline in marijuana pricing has put numerous firms in jeopardy. However, the long-suffering cannabis company owners in the city said they are up for the challenge.

As one of 33 candidates for an adult-use retail license in the city’s initial round of allocations, Mark Snipes, co-owner of West Coast Meds, declared, “It’s time to put all those people on notice: Detroit is here.” Although they have been well-fed while we have been [waiting] for them, it is now our turn.

Legal Morass

It’s true that Detroit has struggled for years to open its adult-use market. In November 2020, the city council first approved an ordinance allowing for the operation of recreational companies. That plan would reserve half of the licenses for lifelong Detroit residents. In a city where approximately 80% of the population is Black, it was important to make sure that the adult-use market reflected that demographic.

However, a would-be marijuana businessman filed a lawsuit in response to the ordinance, questioning the legitimacy of the residence requirements. The licensing procedure was put on hold in June 2021 by a federal judge who found that the ordinance “gives an unfair, illogical, and probably unconstitutional advantage to long-term Detroit residents over all other applicants.”

In April 2022, the city amended its code, changing the guidelines for who qualifies for preferential treatment during the licensing procedure. In both state and federal courts, that led to at least three other cases. But up to this point, Detroit’s new ordinance has held up in court.

The most significant development is that the same federal judge who halted the prior licensing procedure in December decided not to issue a temporary restraining order preventing the city from implementing the new laws.

That essentially opened the door for Detroit to begin approving recreational marijuana businesses and consumption lounges. Just one day following the decision, Detroit granted the first 33 permits, 20 of which went to applicants who met the criteria for social equity status. As of Wednesday, 13 of them also got state licenses, but it’s unclear exactly how many of those stores are currently accepting recreational sales.

The city intends to give 160 adult-use permits for retail establishments, consumption lounges, and micro-businesses after a second round of licensing is likely to be issued by the end of the first quarter of this year. The initial wave of licensing, according to Tate, “we do notice that it is more reflective of the City of Detroit.”

“We want to be sure that we accurately assess and analyze what this industry can and will achieve for the city of Detroit,” the statement continued. Legal disputes over the city are still ongoing. A state court case is currently undergoing an appeal, while federal litigation is still active. However, a lot of legal experts think the city will probably win given its prior successes in comparable lawsuits.

Weed Glut

Because they are relatively new, Detroit’s budding marijuana firms will face a challenging competitive environment. Since Detroit began trying to establish its market, the suburbs around the city have seen the emergence of dozens of marijuana stores, several of which provide delivery to the Motor City. For instance, the 28,000-person community of Hamtramck, which is totally encircled by Detroit, has four authorized recreational dispensaries.

The price of an ounce of cannabis flower has decreased from about $400 to less than $100 over the last two years, which has made it particularly difficult for businesses to generate a profit. As a result, Michigan’s cannabis firms are confronting a glut of products. But proponents of the market believe that making the state’s largest city accessible to all adults will broaden the overall market and help to reduce the unlawful sales that still flourish in Michigan.

Just then 10% of the municipalities in the state already let adult-use companies operate, however, these are disproportionately small towns and cities. The Michigan Cannabis Manufacturers Association head, Shelly Edgerton, said, “Anytime we can have an expanded municipality placement, whether it’s Detroit or any of these other towns that are starting to come up in the state, it’s a plus for Michigan.”

That will aid in both saturation and growth, she said. On the city’s West Side, Jay Snipes and her husband Mark established West Coast Meds in October 2021, although they have only ever catered to medical clientele. The city has granted an adult-use retail license to their company, one of the applicants. Although they haven’t received official authorization from state authorities, they have provisionally scheduled the start of recreational sales for February 3.

When the city granted them an adult-use license, Jay remarked, “It felt like we got over a tremendous obstacle that we have been working for.” “I realize there are definitely still a lot of obstacles to overcome, but that felt like the largest one so far. Therefore, it was a great victory. Another of the original retail licensees for recreational products is House of Dank.

Four medical dispensaries were operated by the corporation at one time in Detroit. However, just two of those stores are still operating as a result of the nearby recreational businesses’ revenues being devastated. According to Michael DiLaura, chief corporate officer of House of Dank, even those stores have witnessed a roughly 70% increase in revenue.

It’s been awful, DiLaura remarked, “just awful.” “We consider it a blessing that two of our establishments were able to remain open.” These two establishments are now permitted to sell to anyone who is at least 21 years old. According to DiLaura, the firm took time to ramp up initially, but it now seems to be slowly expanding.

The House of Dank location on the east side of the city was where DiLaura spoke on Friday afternoon. “There’s no doubt that today is probably the busiest day we’ve had since beginning rec only a week ago,” she said. “I’m glancing up at my security cameras when I notice, for the first time in a very long time, a filled lobby of a Detroit store. So it feels fantastic.