After extensive research and community consultation, the City of Charlotte is opening its doors to cannabis dispensaries. This Monday marks the inauguration of the city's first cannabis provisioning center.
The idea of cannabis retail in Charlotte has been under consideration for several years, sparking both interest and controversy. Following approval by the local government last August, the city anticipates the arrival of multiple cannabis stores in the near future.
Mayor Pro-Tem Mike Duweck explained that the city has taken cues from other Michigan cities that host cannabis shops.
"Some residents are concerned about the potential increase in traffic these centers might bring. However, our police chief has conducted thorough research by reaching out to cities statewide to understand their experiences. The reality is that there have been virtually no issues," Duweck stated.
While the city has opted not to permit cannabis grow facilities, three provisioning centers have applied to open. One of these is Hollywood Jacks, founded by a local couple from Charlotte, aiming to open this summer.
"It's exciting. I've had to overcome the stigma and educate myself, much like many others," said Keisha Howe, Co-Owner of Hollywood Jacks.
Nearby, Harbor Farmz is preparing for a soft opening on June 10th, with a grand opening celebration scheduled for Saturday, June 15th.
"We are thrilled to be the first to open in Eaton County and the City of Charlotte. The community support, especially on social media, has been tremendous," said Mitchell Maltz, General Manager of Harbor Farmz.
For Charlotte, the addition of cannabis dispensaries is a strategic move to boost local revenue. Duweck anticipates significant financial benefits from the sales and property taxes generated by these businesses.
"Based on last year's data, each center could contribute approximately $65,000 annually to the city. For a town of our size, that's a substantial amount," Duweck noted.
High Society is the third facility to apply for a license in Charlotte, adding to the growing interest in cannabis retail within the community.
An established cannabis business in Niles unveiled its new retail space to the community on Friday. After over five years of cultivating cannabis, Native Michigan Remedies (NMR) opened the doors to its Class A cannabis microbusiness at 2112 Industrial Dr., Niles, much to the delight of owner William Haas. The business marked the occasion with a ribbon-cutting ceremony on Thursday afternoon. NMR operates from 10 a.m. to 8 p.m., Wednesday through Monday.
"It feels good," Haas remarked. "It's a tough industry; it's not for the light-hearted or people with shallow pockets, so to finally have this open is great." The Class A microbusiness showcases a diverse range of "seed to shelf" NMR products alongside items from other growers. In Michigan, a Class A microbusiness license allows the holder to cultivate up to 300 cannabis plants, acquire mature plants from other licensed growers, and utilize external processors.
Haas co-founded NMR in 2019 with Brian Crespo, who now manages the NMR 2 processing lab with Haas' son, Skyler. NMR initially began as a cultivation facility before expanding to include the processing lab. The decision to pursue a microbusiness license was a strategic move to remain competitive in Michigan's dynamic cannabis industry.
"We're still small-town guys from Niles," Crespo said. "We know we have great products, and we understand the public demands our quality. To continue providing for our community and offering good jobs, we needed to pivot to a Class A microbusiness."
Both Haas and Crespo believe that their smaller operation enables them to produce high-quality products with meticulous attention to detail.
Since Michigan's 2018 ballot initiative legalized recreational cannabis, the possibility of dispensaries opening in Bad Axe has been a topic of ongoing discussion. Recently, this issue reached a pivotal point with the drafting of a proposed ordinance.
The proposed ordinance has already undergone two public hearings with the Bad Axe City Council and the Bad Axe Planning Commission, awaiting a final vote.
Though the ordinance was not on the June 3rd city council meeting agenda, it was a focal point during the public comment segment.
Resident Kim Rosenthal voiced a common sentiment: "I think we've all heard the pros and cons on the marijuana ordinance. I think we are at the point where you should consider putting it on the ballot. Either way, people are going to be upset if you guys make the decision. I think the people in Bad Axe should make up their mind whether they want it or not."
Luke Deming, a vocal opponent from nearby Sheridan Township, reiterated his stance. "We need to look at the people, not the dollar amount. If you guys plan on trying to pass it, I would try to encourage the people of the city to write a referendum to force you guys on the ballot. I suggest you guys put it out for the people, otherwise, we will have to file a referendum and collect signatures to get it on the ballot."
Despite not being a Bad Axe resident and thus unable to sign a petition, Deming emphasized the importance of local residents having a say in the matter.
Concerns about the proposed dispensary also came from educators and religious leaders. Former educator Tim Laity and Faithway Church pastor Mike Beeler, both Bad Axe residents, expressed their opposition.
"I'm here to add my voice to those who are opposed to the idea of having a marijuana dispensary," Laity stated, citing issues with cannabis edibles among students as a significant concern. "As a former educator myself and someone who raised a couple of kids in this community, I would very strongly be opposed to the idea of a marijuana dispensary in this town."
Pastor Beeler echoed these sentiments, focusing on community and family values. "Everything about the business I'm in is about caring for people. We all understand that pot usage is legal and is coming into Bad Axe. It's available. We're not wanting a warehouse, we're not wanting a store and we're not wanting it in Bad Axe. I'm coming from the faith community and everything about my life has been about family. I raised three daughters here and I wouldn't want that. No one is struggling to get the product. I urge you to consider and re-evaluate the purpose for which this has become a priority in Bad Axe."
Members of the Bad Axe City Council appreciated the robust community involvement. Council Member Joel Harrison and Mayor Kathleen Particka both acknowledged the importance of public participation.
"I just want to say to the public thanks for coming to the last few meetings to share their opinion both good and bad," Harrison said. "I'm pretty sure everyone up here on the council loves hearing what you all think. It's really nice that the public is getting involved. We used to have meetings where all of the chairs in here were empty."
"It's amazing and I can't say it enough," Particka added. "It's nice to have people in the gallery."
Ryan Richmond, the owner of the Warren-based medical cannabis dispensary Relief Choices LLC, has been sentenced to 24 months in prison for tax evasion and obstructing an IRS investigation, according to the U.S. Department of Justice.
Federal authorities revealed that Richmond engaged in extensive tax evasion practices. He reportedly paid operating expenses in cash and routed credit card payments through an unrelated third-party bank account to hide the company's gross receipts. This scheme allowed him to avoid paying approximately $1.1 million in taxes between 2011 and 2014.
Richmond was convicted in federal court in September. The case highlights the complexities and legal ambiguities surrounding the cannabis industry in Michigan during the early years of its medical cannabis law.
Michigan voters approved the state's medical cannabis law in 2008. However, due to ongoing court battles, the first medical cannabis operating licenses were not issued until 2018. Relief Choices operated in this legal gray area, technically outside the state's formal regulatory framework, yet did not face enforcement from state authorities amid the ongoing legal disputes.
Federal prosecutors noted that Richmond's business primarily used cash, a common practice among cannabis businesses at the time due to their exclusion from the traditional banking market. While most cannabis businesses now bank with credit unions willing to accept the associated risks, cash operations remain prevalent.
Despite the legal ambiguities, cannabis businesses are still obligated to pay federal income taxes on all income, including from illegal sources, under Section 61(a)(2) of the Internal Revenue Code. This precedent was set in 1961 in the case of James v. United States, involving union official Eugene James, who faced restitution but not criminal charges for tax evasion.
Richmond's case is particularly severe. In addition to his 24-month prison sentence, he must pay $2.8 million in restitution to the IRS, which is more than twice the amount of taxes he owed. Richmond failed to file a personal tax return in 2014 despite Relief Choices generating $1.8 million in revenue, prompting an IRS audit that revealed further discrepancies.
The effective tax rate for cannabis businesses can be as high as 75% due to Section 280E of the IRS Tax Code, which disallows the deduction of business expenses for income from controlled substances listed under Schedule I, including cannabis. This section was established after Jeffrey Edmondson, a drug dealer, successfully claimed business expense deductions in 1981, leading Congress to close this loophole by enacting Section 280E in 1982.
Efforts are underway to reclassify cannabis as a Schedule II drug, which would eliminate Section 280E and potentially improve cash flow for dispensaries. This change could also encourage more cannabis business operators to comply with tax regulations, altering the cost-benefit analysis currently influenced by high tax rates.
House of Dank is set to open its latest recreational cannabis retail store on June 14th in Kalamazoo. The new store, located at 1986 S Sprinkle Rd, MI 48906, will operate daily from 9 am to 10 pm, welcoming adults 21 and over with a valid photo ID.
This new location marks the eleventh addition to House of Dank's expanding network of cannabis retail stores in Michigan. The store will offer both in-store and online shopping options, featuring a secure, well-lit parking area, an ATM, and plans to introduce a delivery service soon.
Customers can expect excellent customer service, knowledgeable staff, a welcoming environment, competitive pricing, and the popular Clubhouse Rewards program that House of Dank's other locations are known for. The Kalamazoo store will carry products from well-regarded industry brands such as North Coast, Pressure Pack, STIIIZY, Mitten Extracts, and more. Additionally, House of Dank's exclusive CBD line and apparel collections will be available for purchase both in-store and online.
Marvin Jamo, the owner, shared his appreciation for the company's journey, stating, "We're really proud of where we started and how far we've come in the last nine years. Expanding into new markets allows us to provide every Michigan customer with a more personalized and better shopping experience."
In addition to the Kalamazoo opening, House of Dank is preparing to launch another store in Ann Arbor in the coming months.
California has long been heralded as the largest legal cannabis market globally, with Governor Gavin Newsom reinforcing this claim as recently as the past two months. However, recent data suggests that Michigan has now surpassed California in legal cannabis sales volume, challenging the Golden State's longstanding dominance.
According to BDSA, a cannabis analytics firm, Michigan sold 22 million cannabis products in March, edging out California, which sold 21.3 million products. This data is significant as it marks the first time another state has outsold California in terms of unit sales. The firm's analysis relies on point-of-sale data from both states, though the exact timing of Michigan's market overtaking remains unclear.
Despite Michigan's lead in unit sales, California still leads in revenue. California's cannabis sales reached $1 billion in the first quarter of 2024, compared to Michigan's $786 million. The revenue disparity is largely due to Michigan's lower cannabis prices, making legal cannabis more accessible and affordable than in California.
The discrepancy between unit sales and revenue highlights differing market dynamics. Michigan's success in outselling California by units, despite having a smaller population, underscores significant challenges within California's cannabis market. According to Hirsh Jain, a cannabis consultant, California has failed to capitalize on its market potential, resulting in a robust illicit market that undermines legal sales.
Jain attributes California's struggles to high taxes and stringent regulations that inflate legal cannabis prices. Conversely, Michigan's approach includes low cannabis taxes and stringent enforcement against illegal sales, driving consumers to the legal market. This policy environment ensures affordability and convenience, key factors in Michigan's market success.
Moreover, Michigan benefits from neighboring states lacking legal recreational cannabis sales, attracting out-of-state customers. While this cross-border shopping contributes modestly to Michigan's sales, Jain estimates it accounts for only 5% to 10% of the state's total cannabis sales.
California's legal market continues to grapple with challenges. High taxes and regulatory costs push prices up, while insufficient enforcement against illegal operations allows untaxed, cheaper cannabis to thrive. Consequently, California has seen a decline in expected tax revenues from cannabis legalization, with the first quarter of 2024 recording the lowest legal sales in nearly four years. This decline impacts business sustainability and reduces government funding from cannabis taxes.
In contrast, Michigan's strategic approach, characterized by low taxation and strong enforcement, has created a flourishing legal market. The state's cannabis products are affordable for a broad demographic, driving robust legal sales.
The contrasting cannabis market landscapes between California and Michigan highlight differing regulatory approaches and market outcomes. Michigan's recent surge in cannabis sales volume reflects effective market strategies and poses critical lessons for other states aiming to balance regulation, taxation, and market health.
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