The city of Menominee finds itself caught in a web of legal challenges, as it grapples with recent lawsuits involving newly established marijuana dispensaries. These legal skirmishes shed light on the complexities of marijuana business licensing and its impact on local communities.
In 2021, amidst a competitive bid, Menominee approved recreational marijuana permits solely for two dispensaries: Rize and the Fire Station. This decision drew criticism from several applicants, including the parent entities of dispensaries Lume, Higher Love, and the Nirvana Center. These companies subsequently sued the city, leading to a prolonged legal battle.
The crux of the issue stemmed from the claim that Menominee had not been transparent in its selection process. To the surprise of many, especially after the courts backed Menominee's actions, the city chose to settle the lawsuit with the aggrieved companies earlier this year. Mayor Stegeman expressed his perplexity over the settlement decision after a 6-3 council vote on May 24th, noting, "I cannot explain settling a lawsuit we won."
Following the settlement, Lume, Higher Love, and the Nirvana Center received licenses, with plans to establish their dispensaries in close proximity to Rize and the Fire Station.
However, in a twist, Rize and the Fire Station hit back with a lawsuit of their own in August. They accused the city of contravening the Open Meetings Act during several discussions centered around the marijuana ordinance. As a result, an injunction was ordered to halt the city from progressing with the new ordinance.
The subsequent ambiguity surrounding this order led to lawyers seeking clearer instructions. On October 17th, Judge Barglind weighed in, specifying that any dispensary which was not operational by 1 p.m. on September 26th should remain closed. This directive was given on the grounds that opening any further dispensaries would necessitate the city continuing its role in the new ordinance.
However, there's a hitch. An email from a lawyer representing Rize to the city clerk on September 27th revealed that upon the city manager's request, the city building inspector had checked Lume, Higher Love, and Nirvana and found none to be operational. Despite this observation, these companies have countered by asserting that they were indeed open prior to the specified date.
Judge Barglind has since made it clear that the court will not undertake any fact verification, leaving the city to discern the truth.
Following the September injunction, Higher Love expressed its intention to join the city's side in the lawsuit. Nirvana echoed this move after the October clarification.
The present state of affairs has left many seeking answers. James Martone, who represents the Fire Station, confirmed that he reached out to City Manager Brett Botbyl to understand if Menominee plans to enforce the injunction against the newly licensed dispensaries. However, his queries remain unanswered.
This evolving situation underscores the intricate dynamics of the marijuana business in Menominee. As stakeholders await clarity, the broader implications of these legal battles on the future of the marijuana industry in the city hang in the balance.
Michigan's marijuana industry is witnessing a legal storm as Michael Doherty, a prominent cannabis business entrepreneur, is currently held in Ingham County Jail. Doherty was recently arraigned on 10 felony counts related to cyberstalking, targeting Lansing Mayor Andy Schor and several other unidentified individuals.
According to Lansing Assistant Police Chief Robert Backus, the authorities took Doherty into custody last Friday. The charges include aggravated cyberstalking and utilizing a computer for unlawful purposes. Doherty's arraignment saw 54-A District Judge Cynthia Ward setting a bail amount of $125,000. Further conditions for his release comprise wearing a GPS tether, undergoing a psychological evaluation, and strictly avoiding any contact with the victims mentioned in the complaint. While Backus refrained from disclosing all victims' identities, Mayor Schor confirmed he was one of them. Reports indicate that the victims received an overwhelming number of text messages, running into the thousands.
Doherty, owner of marijuana manufacturing firms MD Industries LLC and Rehbel Industries LLC, faced business hurdles as both companies crumbled under a massive $12.5 million debt. As a consequence, they were put under receivership in the previous year.
This isn't Doherty's first brush with the law. Last April, during a court hearing presided over by 30th Circuit Judge Draganchuk, he was handed a 93-day sentence for criminal contempt. This followed an outburst in which he accused the judge of engaging in "corrupt and unacceptable actions." The hearing centered on a motion put forth by attorney John Polderman, the court-appointed receiver. Polderman's motion accused Doherty of multiple misdemeanors, including harassing a title agent managing the transfer of MD Industries property, making veiled threats via email, and sending inappropriate messages to individuals connected to the case.
Post his release from Ingham County Jail, Doherty's controversial actions continued. He resumed emailing earlier contacts, extending his list of recipients. One notable target was Berl Schwartz, the editor and publisher of City Pulse. Disturbing messages from Doherty to Schwartz included an image of the editor with a caption reading, "These idiots will get theirs too." In a subsequent email, Doherty conveyed to Schwartz that his "entire Firm is going down over this... Can't perform Domestic Terrorism and get away with it in the Court of Law."
At the core of Doherty's grievances against City Pulse and Schwartz was the perceived lack of reporting on alleged "corruption" involving Polderman, Draganchuk, and others. It's worth noting that City Pulse had previously covered Doherty in 2020, documenting his purchase of the old John Bean factory and his subsequent establishment of a marijuana manufacturing venture. The media outlet has since published multiple stories on him, including an exclusive video capturing his contempt court hearing:
Doherty's legal journey continues, with his next court appearance slated for November 2nd before Judge Ward, as informed by Backus.
In the complex realm of social equity programs intended to benefit marginalized communities by providing cannabis business opportunities, a concerning development has surfaced. Participants unknowingly find themselves ensnared in contracts that not only strip them of their rights but also unknowingly expose them to financial risks. While the program promises prosperity for the marginalized, some unscrupulous entities appear to exploit it for their gain. This report delves into this alarming situation, the individuals involved, and the implications for those unwittingly caught in the web.
Michigan's cannabis industry is constantly evolving, and with a dynamic market, businesses must adapt and stay informed. With this in mind, Rehmann, a professional advisory firm, collaborated with A&K Research to release their 2023 Michigan Cannabis CFO Outlook Report. This report, offering a second-year perspective, sheds light on the financial challenges and opportunities that cannabis businesses encounter.
Chris Rosmarin, CPA and principal at Rehmann, remarked, "Our aim is to present pivotal data in an accessible and understandable format for cannabis business leaders. The 2023 edition not only offers a contemporary view of the financial landscape but also forecasts the trajectory of the industry."
But what does the Michigan marijuana landscape look like now compared to a year ago?
Stability in Ownership: 66% of the surveyed companies have no plans or are not in the process of selling their business. However, 17% are currently in the process, while the same percentage are contemplating the idea.
Capital Intentions: 42% of the businesses are considering raising capital in the upcoming year.
Business Valuation Range: Companies eyeing a sale predominantly (67%) fall within the $11 million to $100 million revenue bracket, and similarly, 67% of those actively selling also fall within the $26 million to $100 million revenue spectrum.
Tax Allocations under Section 280E: A diverse range was observed in inventory overhead allocation, with 23% of respondents allocating over 25%.
State and Local Tax Exemptions: Over half (53%) of the participating entities are not utilizing any state or local tax exemptions.
EBITDA Multiples in M&A: A shift from 2022's 44% expecting an EBITDA multiple of 4-5x in merger and acquisition deals to just 11% in 2023. Now, 50% anticipate a multiple range of 2-4x.
Interest Rates on Debt: 2023 witnesses a broader spectrum of interest rates. While 24% are subjected to rates of 16% or higher, another 24% are benefiting from pre-2023 rates of under 7%. Interestingly, 18% operate with zero debt.
Revenue Estimations: 47% of the surveyed individuals estimate that an average cannabis store in Michigan generates revenue between $1 million to $3 million annually.
Wholesale Operations: 42% believe that a significant portion (51-75%) of wholesalers are not profitable at the current pricing structures.
Regulatory Approval Ratings: Faith in the Cannabis Regulatory Agency seems to be growing, with 47% feeling they're doing an efficient job, marking a considerable increase from 25% in the previous year.
Erik Schumacher, CPA and principal at Rehmann, emphasized the report's significance by stating, "The burgeoning Michigan cannabis sector presents both growth and challenges. Our intent with this report is to arm businesses with the necessary information to navigate their journey and make informed decisions."
This report serves as a beacon for current and aspiring cannabis entrepreneurs in Michigan, ensuring they are well-equipped to face the challenges and seize the opportunities the market presents.
In a significant move underscoring its remarkable growth trajectory, Michigan-based Puff Cannabis has announced the relocation of its corporate headquarters. The cannabis giant is shifting from its existing base in Madison Heights to a revamped 20,000-square-foot facility in Troy. This move is strategically aimed at supporting the company's rapid expansion.
Situated at 1017 Naughton Dr., this new building is poised to be the most expansive cannabis company headquarters in the entire U.S., as stated by the company representatives.
Since its inception in 2019, Puff Cannabis has made notable strides in the marijuana sector. Currently, the company boasts 12 dispensaries spread across Michigan in areas such as Hamtramck, Madison Heights, Utica, River Rouge, Centerline, Bay City, Kalamazoo, Oscoda, Traverse City, New Buffalo, and Sturgis. Demonstrating a commendable financial journey, the company's revenue surged from $7.3 million during its initial year to a staggering forecasted $150 million in 2023. Moreover, they have ambitious plans on the horizon with the intention to inaugurate an additional five to ten outlets within this year.
Expressing his vision for the new headquarters, Justin Elias, the President and founder of Puff Cannabis, articulated, "Our aim is to craft a distinctive and awe-inspiring environment for our workforce, setting a benchmark in the Cannabis realm. The ambience of this new space will resonate with the contemporary and vibrant aura synonymous with the Puff brand, evident in all our retail outlets. Its strategic location in Troy, with proximity to key freeways, empowers us to seamlessly cater to our 12 existing Michigan dispensaries and the ones envisaged for the future."
Aligning with this growth, the company plans to double its corporate team at the new site. The headquarters will also encompass an 8,000-square-foot distribution center, dedicated to the company's apparel collection and assorted promotional merchandise.
The renovation of the single-story building represents a substantial investment for Puff Cannabis, with costs surpassing $1 million. The company anticipates the facility to be operational by January 2024.
Emphasizing its commitment to sustainability, Puff Cannabis is ensuring that the renovation adheres to eco-friendly principles. The company is leveraging green construction materials, integrating energy-efficient lighting solutions, and incorporating solar panels to power the facility. This green initiative is spearheaded by the JV Design Group, based in Bloomfield Hills.
With these changes, Puff Cannabis reinforces its presence in the Michigan marijuana sector while also emphasizing sustainability and growth.
In the aftermath of marijuana legalization in Michigan, a local hospital has reported a notable surge in cases of a scarcely diagnosed cannabis-related condition, according to a recent study.
The condition, named cannabinoid hyperemesis syndrome (CHS), is primarily seen among long-term cannabis users. CHS manifests with acute symptoms such as intense vomiting, nausea, significant weight loss, and severe abdominal pain. One of the challenges in studying CHS is the absence of a specific International Classification of Diseases, Tenth Revision (ICD-10) code, making its tracking especially intricate. This was shared by Dr. Brittany Tayler, FAAP, the Alice Hamilton Public Health Scholar at Michigan State University-Hurley Children's Hospital, during her presentation at the AAP National Conference & Exhibition.
Working alongside Jenny LaChance, MS, the research director at Hurley Medical Center in Flint, Michigan, Dr. Tayler delved into a comparative analysis of CHS cases among adolescents and young adults, assessing the frequency before and after the state's 2018 marijuana legalization.
Post-legalization, Dr. Tayler noted a more open dialogue from patients about their cannabis consumption. "Following legalization, it became evident that patients weren't receiving the care they deserved. The challenge lies in the perception that since it's cannabis-induced, patients are somehow at fault for their condition," Tayler shared in an interview with Healio.
The research involved a thorough chart review spanning from 2017 to 2022. By searching the electronic medical records for the ICD-10 code R11, linked to "nausea with vomiting, unspecified," and the broader term "cannabis-related disorders", the duo pinpointed 275 CHS cases among patients aged 13 to 26. The data revealed that out of these, only 30 were diagnosed before marijuana legalization, while a staggering 245 were identified post-legalization.
In terms of demographic data, approximately half of each group were identified as African American or Black. Interestingly, the researchers did not uncover any significant variation in documented marijuana use, both pre- (90%) and post-legalization (81.2%). Moreover, the reported alcohol consumption remained relatively consistent, with 37.9% pre-legalization and 28.9% post-legalization. However, a striking discrepancy emerged when it came to tobacco or e-cigarette usage. Before legalization, every participant identified as a smoker, which sharply decreased to 2.4% post-legalization. Dr. Tayler hypothesizes that this could be an indirect indication of their cannabis use prior to legalization, suggesting, "People might have been more transparent about their cannabis use, previously alluding to it through vaping or e-cigarette documentation."
The findings have bolstered the call for ICD-10 to allocate a unique diagnostic code to CHS. Dr. Tayler stressed the importance of shedding light on the potential side effects of cannabis, especially with prolonged and heavy consumption. "The prevailing notion is that marijuana is harmless. However, this isn't the case," Tayler remarked. "With the evolving societal norms placing cannabis alongside alcohol and tobacco, it's crucial that as medical professionals, we stay informed about potential harms and ensure our patients are well-aware too."
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