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Published in Economic Development
Fluresh dispensary in Grand Rapids. Fluresh dispensary in Grand Rapids. COURTESY PHOTO

Grand Rapids approves 90-day grace period for non-complying cannabis operators; licensing dispute attracts state attention

BY Wednesday, May 11, 2022 12:25pm

GRAND RAPIDS — A divided Grand Rapids City Commission is granting a 90-day grace period to cannabis operators that are failing to meet social equity goals they promised three years ago while city staff determine a path forward.

City commissioners voted 4-3 at two separate meetings Tuesday to approve a resolution permitting the 90-day grace period. The votes followed a debate among commissioners about how to proceed with cannabis operators that are failing to meet social equity promises made in 2019 to gain an advantage in a competitive licensing process. 

Commissioners Milindi Ysasi, Senita Lenear and Joseph Jones voted against the resolution. 

The city’s voluntary Marijuana Industry Voluntary Development Agreement (MIVEDA) program in 2019 allowed cannabis business applicants to earn points for promising measures such as local ownership, supplier diversity and local hiring. In turn, MIVEDA applicants were more likely to get their zoning and licensing approved by the city.

As MiBiz reported last week, eight out of 11 cannabis operators — some operate more than one dispensary — are not fully complying with their MIVEDA commitments. 

The city also has 31 recreational cannabis operators, 23 of which have made commitments under the city’s Cannabis Industry Social Equity Voluntary Agreement (CISEVA), a similar program to MIVEDA that applies to recreational operators. 

Some operators have made commitments under both programs. Based on self-reporting, the city expects most operators will not meet their CISEVA commitments when it comes time to make the first annual inspections.

The three-month grace period passed Tuesday extends the city’s non-enforcement position as it considers the non-compliant operators. The grace period is in place through Aug. 10.

Not renewing local licenses

Meanwhile, the situation has attracted the attention of the state Cannabis Regulatory Agency, a division of the Michigan Department of Licensing and Regulatory Affairs, according to city officials.

In recent months, the city stopped renewing local operating licenses for operators that are not complying with their social equity pledges while allowing these businesses to have their state licenses renewed.

According to Al Romero-Gibu, the city’s cannabis manager, the state recently started issuing its own non-renewal notices to these operators.

“Recently we have received word that while we continue to (debate about noncompliance), the state has begun to issue notices of non-renewals,” Romero-Gibu said Tuesday. “This is the first time we’ve noticed this in 2022, but previously the state has continued to renew on a state level.”

A spokesperson from the Department of Licensing and Regulatory Affairs declined to comment on pending license decisions.

Lenear proposed an unsuccessful amendment to the resolution to extend every cannabis operator’s license for six months while the city commission settled its social equity policy for cannabis. 

City Attorney Anita Hitchcock said the city is unable to “extend” a license — officials would either have to approve it or deny it when it came up for annual renewal. 

In the next six months, 24 licenses are expected to come up for renewal, Romero-Gibu said. Licenses for six to eight facilities would come up for renewal during the 90-day period that commissioners approved.

“We’ve been doing something other than what the state is doing,” Lenear said. “That’s how we have licenses that have been renewed by the state and haven’t (been renewed) by the city of Grand Rapids. Whoever found that loophole, I’m saying keep doing the same thing through Nov. 15.”

Lenear called the 90-day window “ambitious” for staff to develop with a resolution for the city commission to resolve differing opinions on how and whether to enforce its social equity program.

“We’re not resolving this issue well, we simply are not,” Lenear said. “This tip-toeing around specific business owners and things of that nature is part of the problem.”

Commissioner Jon O’Connor said the state’s recent move to not renew licenses changes the discussion.

“We can sit up here all day long and postulate what we think would be best, but if we don’t create an earnest path of approval, the state could come in tomorrow and shut them all down,” O’Connor said. “The path we need to create is to figure out how to create a path to ensure they can renew their license at the local level to get it at the state level. That’s the only path.”

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