DETROIT — When Michigan legalized recreational marijuana, Detroit leaders decided to make sure city residents could share in the benefits.
They passed one of the nation’s most ambitious “social equity” laws, intended to help black and Hispanic communities who have paid the highest price in the war on drugs to participate in the lucrative industry.
But more than two years after legalization in Michigan, even as marijuana entrepreneurs thrive in suburban Detroit, the city itself has become a cannabis dead zone. His first recreational marijuana law was blocked last year by a federal judge over a provision that restricted licensing to longtime Detroiters. A second law, signed into law last month, was hit by another lawsuit this week, putting its future in question.
The resulting delay has meant that would-be Detroit cannabis entrepreneurs — the very people the city has decided to help — are forced to watch and wait for their suburban competitors to gain an advantage.
Those affected include black owners of licensed medical dispensaries who have been waiting years to expand into recreational marijuana. Many lack the resources to navigate ongoing legal turmoil, said Kimberly Scott, who grew up in Detroit and leads Detroit’s 10-member Black Cannabis Licensed Business Owners Association.
“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 that is licensed to sell cannabis to people with documented health conditions. It has struggled to compete with out-of-town recreational dispensaries that can sell to anyone over 21. The store closed after six months and is now empty and dark, waiting for recreational sales to be legal in Detroit.
“It impacts everyone,” Scott said. “And for those of us who are into social equity and have been in Detroit our whole lives and have been affected by the war on drugs, that definitely affects us.”
The problems in Detroit reflect the difficulties faced by lawmakers across the country as they tried to level the playing field in an industry long controlled by white men.
While 15 of the 36 cannabis-legal states have social equity programs, and many cities, including Los Angeles and Oakland, Calif., have tried to support local entrepreneurs, many of those efforts fall short of what experts and advocates consider it necessary. Black and Hispanic business owners may need additional support in making contacts and obtaining funds to compete in an industry that is illegal under federal law and ineligible for traditional lending.
Some efforts, like Detroit’s, that aim to help a particular group of entrepreneurs have been the subject of 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 inequality.
“Handing out a social equity license doesn’t make all racism go away,” Hudak said. “It just gives someone a license and floats them into American commerce, which is plagued by racism, discrimination and prejudice.”
“Uneven playing field”
Detroit City Council President Pro Tem James Tate said he knew Detroit needed a strong marijuana social equity law in 2014 when he led a city effort to regulate medical dispensaries which had proliferated.
At the time, he said, he was focused on changing the fact that medical dispensaries existed in a legal gray area – people could be licensed as “carers” to supply marijuana to a number limited number of patients with medical conditions, but businesses weren’t formally licensed by the city or state. Tate noted that of the approximately 240 semi-legal dispensaries in the city at the time, only a handful were owned by Detroit residents.
“It was a concern,” he said. “A lot of establishments were making enough money,” but the profits weren’t staying in the community.
The ambiguous status of medical dispensaries has spooked 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 registered nurse as a cannabis caregiver, planned to open a medical dispensary in 2015 but worried about the legal risks. She also worried about her safety selling marijuana on her own, so she decided to use her rented space on the west side of town to grow cannabis rather than selling it directly to consumers. She used about $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 rusty water destroyed the crop.
The second time Scott attempted to open a business, in 2017, dispensaries were more legit, but new city and state rules complicated his efforts.
At the city level, strict new zoning laws prohibiting dispensaries within 1,000 feet of schools, churches and liquor stores have made it difficult for him to find a building as investors with deeper pockets had quickly purchased the best properties in Detroit’s “green zone”.
At the state level, applicants seeking a “supply center” license had 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 kind of legalization,” said Andrew Brisbo, executive director of the state’s Cannabis Regulatory Agency, which helped streamline the application process to make it less expensive. “And then, with legalization and commercialization, it tilted it even more in favor of disadvantaged communities.”
All of these 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 in 5 residents are black.
Across Michigan, where 14% of residents are black, a recent state survey found that only about 3% of cannabis businesses have black owners.
“Righting the Wrongs”
When Michigan legalized recreational marijuana after a 2018 referendum, Tate was determined to address the underrepresentation of black people in the industry in Detroit. But the state’s original status gave existing medical dispensaries an advantage, requiring businesses to have a medical license for two years before they could obtain a recreational license.
“It wasn’t fair,” Tate said.
He urged the city to block recreational licensing through 2020 as the state prepares to drop that requirement. Next, he set out to ensure that the town’s residents would have access to industry. In late 2020, he proposed the “Legacy Detroiter” law, which reserved 50% of retail licenses for people who had lived in the city for at least 15 of the last 30 years. Detroiters with lower incomes or convicted of marijuana in their family could qualify with fewer years of residency.
The new law – passed unanimously by the city council – was “powerful,” said Maurice Morton, the black owner of a medical dispensary called Motor City Kush.