Recreational Marijuana Sales May Come Soon to East Lansing. But What About Social Equity?

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Raymond Holt for ELi

Dana Watson speaking at the Planning Commission meeting, July 24, 2019.

East Lansing Planning Commissioner Dana Watson tried again last week to push for Social Equity in marijuana licensing. Now, for the first time, a majority of City Council members tell ELi they are seriously interested in moving forward with such a program.

If they do, we might eventually see someone other than big marijuana corporations growing, processing, and selling pot in East Lansing’s city limits. We might even see operations run by long-time area locals, including possibly people of color – what Michigan’s marijuana Social Equity program was set up (late in the regulatory game) to try to achieve.

Watson, the only person of color on East Lansing’s Planning Commission, told her fellow commissioners last week that she wants the City to take seriously what East Lansing could do under Michigan’s Social Equity marijuana licensing program, “especially during this time when we are taking hard looks at dismantling systemic racism.”

“Are we doing anything to ensure that those disproportionately affected [by the way marijuana was historically handled by the criminal justice system] are able to come into this business?” Watson asked.

She noted that big out-of-town marijuana businesses are quickly eating up the market here.

“I’m concerned,” she said, “because this is my community.”

What is “Social Equity” in the Michigan marijuana world?

The Social Equity Program, built out of Michigan’s Regulation and Taxation of Marihuana Act (MRTMA), was designed “to promote and encourage participation in the marijuana industry by people from communities that have been disproportionately impacted by marijuana prohibition and enforcement and to positively impact those communities.”

The program was specifically crafted to right some of the perceived wrongs of the War on Drugs, which disproportionately incarcerated Black Americans and poorer Americans.

Under the program, which was rolled out in mid-2019, applicants for marijuana licenses could get big discounts if they live in a target community (East Lansing has qualified from the start), have had a marijuana-related conviction, and have been a “registered primary caregiver” helping a patient use prescribed marijuana.

Michigan’s Marijuana Regulatory Agency now has a whole office set up to promote and assist with Social Equity. The Social Equity team offers not only help with the complex licensing process, but also provides connections to helpful service providers – including lawyers and accountants – and helps business owners understand how to handle money in an industry that is still federally illegal.

The Social Equity team presenting at the East Lansing Public Library in October 2019. (Raymond Holt for ELi.)

The state’s Social Equity team came to the East Lansing Public Library for a special outreach event in late October 2019. A handful of people – mostly Black men – came to that event to learn more about how they could get these discounted licenses and a lot of help breaking into this lucrative field.

The Social Equity road tour came to East Lansing because ours was one of 19 cities identified in the state’s first Social Equity round as eligible, in the summer of 2019. Eligibility was based on the area’s marijuana conviction rate and the city’s average income.

When the 19 eligible cities were first announced, many (including then-Mayor Mark Meadows) expressed skepticism that East Lansing should have been in that list, believing the supposedly high conviction rate in East Lansing really was about what happened in nearby communities, and the low income level was really about MSU students.

But the fact is that East Lansing was identified as eligible for these license discounts and substantial help from a state program aimed at promoting locally-owned and Black-owned marijuana businesses.

And for the last year, East Lansing’s Councils have made no moves to enable use of this program here. In fact, Council has yet to take up any formal public discussion of the program.

But now, Council may take it up.

Asked by ELi this week via email to respond to Watson’s latest remarks on East Lansing’s lack of engagement on Social Equity, Mayor Pro Tem Aaron Stephens replied, “I think we have a council now that would be very open to this conversation.”

Stephens said he hadn’t dealt with it earlier because his marijuana-related efforts had been aimed at things like stopping Council from outlawing sale of smokable products or attempting to re-criminalize marijuana use.

Council member Jessy Gregg said she was “frankly surprised that the social equity licenses were dismissed so casually when marijuana licensing was being debated last year,” before she was elected. (At the time, she was a reporter for ELi.)

Gregg added that she thinks “Commissioner Watson’s point about all the dispensaries in town being operated by big out-of-town businesses definitely needs to be acknowledged, especially since Michigan still has non-violent marijuana offenders locked up in jail for something that is now being sold legally.”

Raymond Holt for ELi

East Lansing’s current City Council. From left: Aaron Stephens, Ruth Beier, Jessy Gregg, Mark Meadows, and Lisa Babcock.

Council member Mark Meadows replied to ELi, “I have been working on language and hope to have a discussion of it at our next [discussion-only] meeting” of Council.

Council member Lisa Babcock indicated that since the issue has not yet come up on an agenda in her tenure (which started in November 2019), she has not looked into it, but plans now to do so.

Mayor Ruth Beier, the fifth member of Council, did not respond.

How East Lansing became a “Big Marijuana” town

As Watson alluded to in her remarks last week, the way the State of Michigan and East Lansing’s former City Councils set up marijuana permitting, the licensing scene in East Lansing has steadily favored Big Marijuana – big-dollar corporations that are rapidly setting up operations all over Michigan (and in some cases over the Midwest or around the nation).

The Councils that set up marijuana business regulation in East Lansing included Meadows, Beier, Erik Altmann, Shanna Draheim, and Susan Woods from 2015-2017, with Aaron Stephens replacing Susan Woods from 2017-2019. These Councils were to a large degree constrained by how the state set up the system – for a long time, favoring people with deep pockets and no marijuana convictions.

East Lansing’s Councils could have set up a system of competitive licensing for sales in East Lansing, and they could have allowed dispensaries anywhere retail is permitted in East Lansing. They could have also simply opted out of allowing marijuana businesses to operate here.

As it turned out, a majority of members of the Council wanted marijuana businesses but didn’t like the idea of having to pick and choose licensing competitors based on ranking.

They really didn’t like the thought of pot shops near neighborhoods. Meanwhile, MSU didn’t want marijuana sales near the university, and a majority of the Downtown Development Authority didn’t want them downtown.

One operator wanted to put a provisioning center in the old Cosi location at 301 E. Grand River Ave., but that didn’t fly with the DDA or the condo owners upstairs.

East Lansing’s Council consequently decided to take what is primarily a zoning approach to permitting marijuana sales, ultimately specifying only four small zones where it could be sold. Most of the zones were purposefully chosen because they are on the edges of town, away from single-family residential neighborhoods.

Against the general recommendations of the Planning Commission, the Council also added “separation” rules to stop more than one or two dispensaries from existing in any zone.

The result of the State regulation plus this local pinpoint zoning approach was that, for a long time, anyone who wanted to apply to sell marijuana in East Lansing had to have deep pockets and no marijuana convictions and had to move fast and pay big bucks to snap up a property that would allow them to apply for a Special Use Permit (SUP) – a permit from the City to sell medical marijuana.

This led to something of a land grab.

In the case of the one zone along the City’s main corridor – probably the most lucrative opportunity – several applicants came forward wanting to sell in the same zone. Because of the separation requirements, Council could only pick one winner. It chose Compassionate Associates at 1234 East Grand River Ave. That outfit still hasn’t opened to sell medical marijuana, and now they’re asking to sell recreational marijuana, too.

Raymond Holt for ELi

1234 East Grand River Ave., a site approved for medical marijuana sales.

The infamous eBay land sale was part of the goldrush scene created by Council’s decision to approach marijuana sales via zoning. In that case, the winning bidders – lucky enough to learn about the sale while it was happening – went through the process of getting site plan and SUP approval from Council. But it appears they only did this to try to increase the property’s value before trying to flip it – a gamble that so far hasn’t worked out.

Council’s approach to medical marijuana sales – using highly constrained zoning instead of a limited number of competitive licenses – effectively closed the door to many potential applicants who might have been able to use more locations at a lower cost to their potential businesses.

Now the state and East Lansing are rolling-out recreational sale licensing by limiting “adult use” licenses and permits to companies already approved to sell medical marijuana.

That means the Big Marijuana companies already approved in East Lansing for medical sales are in the front of the line to sell recreational marijuana.

Again, Big Marijuana wins.

Pleasantrees is set to open soon at 1950 Merritt Road, near Haslett Road.

Responding to Watson’s comments last week, Planning Commissioner Chris Wolf called this a “very unfortunate situation created by the MRA” – the state’s Marijuana Regulatory Agency.

But while it’s true that the MRA constrained what East Lansing could do, the fact is that this situation is partly the result of how East Lansing’s Councils have chosen to regulate marijuana.

Is Jeff Hank the reason for “exclusionary zoning”?

Jeff Hank uses a fairly simple phrase to describe the way Council has approached licensing marijuana sales: “exclusionary zoning.”

Hank is a local attorney who is now in the marijuana business. He told ELi earlier this week that he sees East Lansing’s Council’s failure to quickly embrace the Social Equity program – and open zoning for marijuana more generally – as “the epitome of white privilege” because Council has seen equity as “a problem for another day.”

In our interview, Hank wondered aloud if the Council’s resistance to Social Equity is “partially personal with me.”

He may not be wrong. Hank has long irritated the City Attorney and other high-up officials in East Lansing.

He is the person who organized an East Lansing City Charter amendment ballot proposal that decriminalized marijuana – a move overwhelmingly supported by the voters. In that case, Hank sued when the City wouldn’t put the issue on the ballot.

Says Hank, “We won that case, and won the election, albeit delayed from November to the next year in May.”

Hank also unsuccessfully sued the City for blocking his attempt to change the position of East Lansing’s City Attorney from contract work to in-house. And he’s had other run-ins with the City.

If the Social Equity program were put in place here by City officials, Hank would seem to be well-qualified for a competitive license. He’s a long-time resident, has a marijuana conviction, and has been a registered caregiver. Although Hank is white, it appears the City Council would have a hard time saying Hank is unqualified under the Social Equity program.

Jeff Hank at the Social Equity team’s meeting last October. (Photo by Raymond Holt for ELi)

That said, Hank tells ELi, “I don’t want people to think I’m advocating for social equity because it’s personal to me. As a matter of public interest I was one of the drafting attorneys for MRTMA and advocated for the inclusion of social equity because it was the right thing to do, and I did participate in MRA work sessions in Detroit to help craft the rules. I want to see the program work generally statewide for everyone.”

Now, Hank tells ELi, it’s more than high time for East Lansing’s Council to deal with Social Equity. He says that while the reduction in licensing fees would mean “a little less money in the City’s pocket,” it would also mean “more jobs and more tax revenue in the City’s pocket.”

But, again, it might be getting late to make choices based on Social Equity.

Michigan’s and East Lansing’s processes, which are both limiting state “adult use” (recreational) sale licenses to companies that are already approved for medical marijuana sales, means the businesses already approved in East Lansing are likely to be the ones that get the first round of recreational sale permits from Council.

And because the people of East Lansing (and the administration at MSU) have a limited tolerance for the sale of pot, the market may simply be full by the time any Social Equity licenses come around.

Gary Caldwell for ELi

Skymint’s building along Coolidge Road this past winter, under construction. It’s expected to open soon and the owners have applied to sell recreational pot.

Council could, of course, decide to hold off on giving recreational sale licenses until they have a Social Equity licensing system in place. That would be likely to delay the sale of recreational marijuana in East Lansing, which would have its own economic and political implications.

The big corporate players are already asking to sell recreational marijuana here.

At last week’s meeting, one reason Watson brought up social equity in marijuana sales was that at that meeting, East Lansing’s Planning Commission formally began consideration of three sets of applications to sell “adult use” (recreational) marijuana.

The applications are all from corporations that have already been granted permission by East Lansing’s City Council to sell medical marijuana here.

These are the operations getting ready to sell at 1950 Merritt Road under the name Pleasentrees, at 3315 Coolidge Road under the name Skymint, and at 1234 E. Grand River Avenue through Compassionate Associates.

Following its normal procedures, Planning Commission took no action on the first round of discussion of these applications. But it may well take action at the next meeting.

Based on history, it seems likely the Commission will vote to recommend Council approve the applications. Planning Commission has generally taken a more permissive, less restrictive approach to marijuana regulation than City Council.

What this City Council will do at that point is much harder to predict.

It’s a new Council on this issue. And it is also an unusual moment in America where discussions of racial justice are concerned.

Note: When originally published, this article incorrectly said there are five zones where marijuana can be sold. There are four. We also changed the term “setback” to “separation” in regard to spacing required within the zones. These corrections were made on June 30 at 9:15 p.m.

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