Judge postpones Detroit’s plans to issue recreational marijuana licenses in latest setback

The city of Detroit’s controversial recreational marijuana ordinance has hit yet another snag.

Wayne County Circuit Court Judge Leslie Kim Smith on Monday issued a temporary restraining order to prevent the city from issuing licenses for dispensaries, microbusinesses, and consumption lounges.

Two lawsuits allege the city’s ordinance, approved by the Detroit City Council on April 15, violates state law by preventing medical cannabis dispensaries in the city from getting a recreational license until 2027. The city is also accused of breaking state law by using an unfair scoring system for choosing which companies receive a license, rather than providing a competitive application process. The scoring system, for example, gives preference to companies that hire Detroiters and donate to Detroit nonprofits.

The lawsuits were filed by House of Dank and JARS Cannabis.

The city began accepting applications for prospective recreational businesses on April 20.

Smith will soon began hearing oral arguments in the cases.

This is the latest setback for the city of Detroit. In June 2020, a federal judge issued a preliminary injunction that blocked the city from processing recreational marijuana business applications, saying the city’s original ordinance is “likely unconstitutional” because it gave licensing preferences to longtime Detroiters.

The city scrapped the ordinance and drafted a new one that offers two tracks for licenses so that "equity" and "non-equity" applicants aren’t competing with each other.

The city is late to entering the legal recreational marijuana market, and that could be a major problem for new businesses. The statewide market is now flooded with marijuana products, growers, and dispensaries, causing prices to hit all-time lows and forcing some businesses to sell cannabis at a loss.

In all, the city ordinance calls for awarding licenses to up to 100 dispensaries, 30 micro businesses, and 30 consumption lounges. Half of the licenses would go to social equity applicants, who must live in a city that was disproportionately impacted by the war on drugs.

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