Published in Economic Development
GR cannabis operators ‘cautiously optimistic’ as city officials amend social equity requirements COURTESY OF TERRAPIN CARE STATION

GR cannabis operators ‘cautiously optimistic’ as city officials amend social equity requirements

BY Tuesday, August 09, 2022 09:35pm

GRAND RAPIDS — City commissioners narrowly approved a resolution Tuesday to amend Grand Rapids’ cannabis social equity program and hold off on enforcement until the beginning of 2023.

The extension commissioners approved today will delay enforcement of the city’s Marijuana Industry Development Agreement (MIVEDA) program, which was created in 2019. Eight out of 11 cannabis dispensaries in MIVEDA are not fulfilling their social equity promises, which were made voluntarily and initially allowed operators a better chance of getting their zoning and licensing approved by the city, as MiBiz previously reported

City officials also said Tuesday that they do not expect any operators to be in compliance with the city’s Cannabis Industry Social Equity Voluntary Agreement (CISEVA) program, a similar program to MIVEDA that applies to recreational operators. 

Pharmhouse Wellness, Joyology of Grand Rapids and Terrapin Care Station are the three businesses that are in full compliance with the MIVEDA program.

In the next 30 days, city staff will present an administrative policy to City Manager Mark Washington that detail changes to the city’s MIVEDA and CISEVA programs. Changes are expected to include options for operators to transfer social equity points or make a donation to the city’s cannabis nonprofit — referred to as the Community Reinvestment Fund — as a way to achieve social equity compliance. 

Industry leaders in Grand Rapids are “cautiously optimistic” that Tuesday’s vote will mean a resolution is reached soon on operators’ confusion with the city’s social equity program, but more questions remain. 

Commissioners disagree

The vote Tuesday was split 4-3, with commissioners Nathaniel Moody, Senita Lenear and Milinda Ysasi voting against the resolution. 

The main debate among commissioners and operators over the past couple of years about the social equity program is whether the city should hold operators to the social equity commitments they initially made. The voluntary MIVEDA and CISEVA programs allowed operators to earn points for local ownership, supplier diversity and local hiring, which made it more likely for the city to approve their zoning and licensing locally.

Officials and operators in favor of looking for ways to allow non-complying operators to keep their licenses have typically argued that businesses are making good faith efforts to meet social equity agreements. 

“Between now and the end of the year, we will be educating on compliance and we will do our best and make sure people will be aware so they are as prepared as they can be between now and Jan. 1,” Washington said during a committee meeting Tuesday morning. “Enforceable activity” will begin on Jan. 1, he added.

City staff told commissioners during the meeting that they would meet with every cannabis operator to explain the social equity policy and make sure they understand how to comply.

Commissioner Lenear has said repeatedly during city meetings that the city should hold operators to their initial social equity promises. Other people who hoped to get into the industry were shut out by larger operators that got a leg up by making social equity commitments they are not keeping, she said. 

“Paying for equity, in my opinion, is the equivalent of slavery, modern day slavery, where people can treat the oppressed in whatever way they see fit if they have the financial resources to do so,” Lenear said during the meeting.

Commissioner Kurt Reppart told MiBiz that the administrative policy could allow operators to transfer social equity points from an area where they are exceeding their commitment to another area where they are noncompliant. Non-complying operators will also have an option to donate to the city’s cannabis nonprofit to help them meet their social equity promises.

“This is a compromise,” Reppart said. “There is a five-month period where people could — but they probably won’t — come into full compliance, but they could plan to do it over time and invest money to potentially have a greater impact, depending on who is on the nonprofit board and what they want to use the money for.”

Licenses in jeopardy

Fluresh LLC was in danger of shutting down because it did not meet its supplier diversity MIVEDA commitment, said Shoran Reid Williams, the company’s general legal counsel and chief regulatory officer. 

The city reported all of the dispensaries that were not complying with MIVEDA to the Michigan Cannabis Regulatory Agency, Reid Williams said. In response, the state stopped issuing license renewals, even though the city later issued a 90-day moratorium on enforcing MIVEDA, leaving Fluresh in limbo as they worked to stay open, Reid Williams said.

“The amount of legal fees we have spent on this one issue are astronomical,” Reid Williams said. “It did not have to be this way if there had just been more open discussion. We filed an administrative appeal and that created a stay of us not having a license and we were operating under the cover of our previously issued license while the administrative process was ongoing.”

Two weeks ago, the state renewed Fluresh’s licenses for its dispensary and grow operation from the state, Reid Williams said.

“I will be actively engaged with city staff from now until December so we don’t have to do this whole process again in January,” she said.

Reid Williams and Landon Bartley, interim president of the West Michigan Cannabis Guild and a former Grand Rapids city planner, both stressed that the key issue with the city’s process is that it placed the burden of creating social equity within the cannabis industry on the backs of cannabis operators.

“There are licenses on the line, and businesses that are very concerned and want to be in compliance,” Bartley said.

Everyone wants to achieve social equity in Grand Rapids’ cannabis industry, there have just been disagreements on how to get there, Bartley added.

“My frustrations are that it was the government’s actions in the war on drugs that put us in this position and the government is now putting this on the cannabis industry, saying you make these commitments and do this social equity work for us,” Bartley added.

The way city staff discussed the Community Reinvestment Fund on Tuesday sounds like it could fund ways to help Black and brown communities outside of a focus on ownership in cannabis businesses, Reid Williams said. 

“I am cautiously optimistic,” Reid Williams said. “Even though the commission was divided, there seemed to be more talk about a greater impact with the nonprofit than just getting people in the cannabis space.”

She hopes that the funding can go toward improving parks and green spaces in Grand Rapids’ 49507 ZIP code, which is where Fluresh is located.

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