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Sunday, 29 October 2017 12:07

'On the map': Municipalities, real estate investors explore state’s new pot opportunities

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Harvest Park Development LLC plans to develop a 130-acre site in Windsor Township, west of Lansing, for companies licensed to operate in the medical marijuana industry.  Harvest Park Development LLC plans to develop a 130-acre site in Windsor Township, west of Lansing, for companies licensed to operate in the medical marijuana industry. Courtesy Photo

As Michigan prepares to begin licensing medical marijuana businesses at the end of this year, the industry hopes for a windfall of new business and development opportunities, at least for communities willing to take advantage of them.

Around the state –– and to a limited extent in West Michigan –– real estate developers and various companies affiliated with growing, testing, processing and selling medical marijuana have started flocking to municipalities that have expressed a willingness to have the burgeoning industry within their borders.

The state Department of Licensing and Regulatory Affairs (LARA) begins taking applications on Dec. 15 and then will start licensing legitimate medical marijuana-focused businesses shortly thereafter.

Across the state, smaller, often rural communities could stand to gain the most by welcoming medical marijuana and ancillary businesses, according to sources in the industry.

“A lot of small communities have these industrial parks that haven’t been used in decades and now they’re being developed for cannabis,” said James Barr, president of Strata Business Services LLC, a Lansing-based medical marijuana consulting firm. “This is a direct result of the (change in) cannabis laws. This is the initial investment push. Depending on what happens in the future with growth in patients on the medical side or the adoption of a recreational law, that should continue.”

Case in point: Windsor Township located near the I-96 and I-69 interchange west of Lansing has already become a target for companies seeking to enter the medical pot space.

Harvest Park Development LLC plans to develop a vacant 130-acre site in Windsor Township into a full-scale industrial park with 10 parcels available for sale. The firm plans to target licensed cultivators, processors, secure transporters, testing labs, and ancillary suppliers to the medical marijuana industry. The developers say they’ve seen strong demand in advance of the formal launch of the plans, with two lots already under contract and additional offers pending, according to Jeff Donahue, a Lansing native and the managing partner of the company.

“With Michigan getting ready to launch medical marijuana under the new program, we felt there would be a huge need for locations for good operators to come in and establish their businesses and get operational,” Donahue said. “We felt this location was ideal and the municipality was outstanding to work with.”

Windsor Township Supervisor Marcus Braman noted the municipality’s location at the intersection of two major freeways in the state as well as available land for industrial uses make it ideal for businesses in the budding marijuana industry.

“We’ve had a great location with great linkage for a long time, but nobody really knows where it’s at,” he said. “(Harvest Park) puts us on a map.”

FINDING LEGITIMACY

Legalized medical marijuana has existed in Michigan since 2008, but the law never provided specifics as to how the substance could be distributed or sold, creating a patchwork of regulations around the state.

But with the state’s new policy creating a uniform set of regulations that municipalities can opt in to at any time, entrepreneurs in the marijuana industry hope that the Medical Marihuana Licensing Facilities Act will alleviate some of the uncertainty associated with the sector.

“(The licensing) certainly legitimizes those operators because they will have secured licenses from the state,” Donahue with Harvest Park Development told MiBiz. “(It’s) why we went to Windsor. The municipality opting in to allow those types of businesses is kind of a pre-cursor to your state license. It’s kind of a two-pronged process. You have to find a place to operate.”

Strata’s Barr said his consulting firm currently is working with between 15 and 20 municipalities around the state that are weighing their options over whether or not to opt in.

Municipalities such as Egelston Township in Muskegon County and the city of Newaygo are both exploring opting in, he said, adding that the city of Muskegon likely will take action as well.

However, Barr notes that many municipalities –– including Windsor Township –– are more inclined to permit manufacturing and industrial-oriented marijuana companies than the retail dispensary businesses.

“I think there’s some fear there that these dispensaries will look like the ones that they see in Detroit, or the less professional ones scattered across the state,” Barr said. “There’s some fear there and I think with time they might reconsider that.”

GETTING ON THE MAP

On a more statewide level, municipalities are somewhat “all over the place” when it comes to allowing medical marijuana-focused businesses, according to Jennifer Rigterink, a legislative associate at the Michigan Municipal League (MML), an Ann Arbor-based organization that lobbies on behalf of the state’s municipalities.

The MML has no official position on medical marijuana policy, Rigterink said. Many member communities have already announced plans to opt out of the state policy, largely citing that it’s just not right for their individual municipalities at this time, she said.

Others are taking a “wait and see” approach, Rigterink said, adding that at the very least, those communities that opt in will likely see some new tax revenue.

“I think our cities and villages that are choosing to opt in, it’s a great opportunity to put vacant properties back on the tax rolls and have some rehabilitation to obsolete buildings or things that have been sitting vacant for years,” she said.

What’s less clear is to what extent the various licensing fees, taxes and other revenues will amount to a windfall for state or local coffers.

Rigterink pointed to Kalamazoo, where the city attorney calculated the municipality would likely generate no more than $75,000 annually, based on gross retail sales of $1 million. At that revenue projection, the city likely would not be able to cover the various added costs for enforcement and other services.

Still, Braman remains hopeful that Windsor Township’s openness to aspects of the medical marijuana industry will pay off for the community.

“If this fails, at least we’re on the map and maybe there’s another investment opportunity, another development, down the road,” Braman said. “(We’re now known as a) place that’s open to new business, that wants to give its residents a shot.”

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Nick Manes

Staff writer

nmanes@mibiz.com