In Lapeer, Michigan, a debate is intensifying over the proliferation of marijuana facilities in the city. Currently, Lapeer hosts six licensed dispensaries offering both medical and recreational marijuana to those 21 and older. However, there is no cap on the number of marijuana cultivation and processing facilities in the city, which has led to growing concerns among local residents and officials.
The Lapeer Planning Commission recently chose to postpone a decision on a special land use application by a Livonia entrepreneur aiming to construct an 11,480-square-foot recreational marijuana cultivation facility on W. Genesee Street. The location's suitability for a major commercial corridor and the applicant's ability to control marijuana odors were key points of contention.
Commissioner Anne Schenck suggested that the Commission should consider advising the Lapeer City Commission to limit the number of grow facilities in the area, highlighting the issue's impact on local residents. The City Commission holds the authority to establish such limits and regulations.
The decision to allow up to six recreational dispensaries followed Michigan's 2018 referendum, but no restrictions were placed on cultivation and processing operations. Currently, approximately ten facilities grow both medical and recreational marijuana, with around half a dozen processing facilities in Lapeer.
Local concerns were voiced during the meeting's public comment period. Resident Jose Gonzales noted the high concentration of marijuana facilities along Imlay City Road, expressing surprise at the city's direction. Lapeer attorney Tim Denney also raised concerns about odor issues, suggesting the city was becoming overwhelmed by marijuana fumes.
Richard Swaine, the applicant for the new grow facility, assured that his proposed building would adhere to all regulations. However, his plans have been delayed due to complications in securing a utility easement, causing his permit and site plan applications to expire.
Jennell RaCosta, Chairwoman of the Lapeer Planning Commission, noted that previous operators also promised odor control, yet the issue persists. The Commission deferred the special land use request for further review and to allow Swaine to provide evidence of effective odor mitigation.
City Manager Mike Womack acknowledged the odor complaints, particularly from three grow facilities, and is working with various city departments to address the issue. He emphasized that a resolution would likely involve ordinance adjustments.
The Lapeer Planning Commission meets monthly, and the situation remains a significant topic for local governance and community discussion.
In Menominee, Michigan, the incoming mayor, Casey Hoffman, has initiated a bold move against two local cannabis dispensaries, Rize and The Fire Station. These dispensaries are currently embroiled in a legal battle with the city over its marijuana business regulations. Hoffman, who is poised to take office shortly, has publicly urged these establishments to withdraw their lawsuits aimed at reinstating the city's original marijuana ordinance.
Hoffman's letter sharply criticizes the ongoing legal actions of Rize and The Fire Station, with one lawsuit seeking to revert to the limited-permit ordinance and another alleging corruption and conspiracy by city officials and other companies in modifying the rules. Hoffman's blunt message to these companies: "This conduct is beneath the dignity of Rize and The Fire Station. Kindly knock it off."
Responding to these remarks, Mike Cox, the attorney for Rize, defended their stance. Cox conveyed that Rize is not opposed to competition, provided the rules are equitable for all. He criticized the city council for allegedly diluting ethics rules to benefit their associates, bypassing the citizens' right to vote on marijuana policy, and creating biased regulations to favor certain companies, thereby violating state law.
Hoffman labeled the dispensaries' claims as politically motivated. He criticized the involvement of external cannabis companies in local politics and their accusations of unethical behavior among city council members without substantial evidence. He also mentioned the use of outside protestors by these companies to spread misinformation in Menominee.
The recent marijuana ordinance, which prevented a ballot initiative regarding the permit limit from reaching voters, was another point of contention. Hoffman expressed regret that Menominee citizens were not given a chance to vote on the number of dispensaries they desired, leading to an unregulated market with a potential influx of dispensaries.
The Menominee city council will soon see new faces, with Cheryl Haupt and Steve Fifarek defeating incumbents in their respective wards. Haupt, in response to Hoffman's comments about campaign funding by a company connected to The Fire Station, clarified that she was unaware of such efforts until she received a campaign mailer. Haupt also shared her view that the city should compromise on the number of dispensaries, based on a nearly evenly split public vote from three years ago regarding the presence of marijuana businesses in Menominee.
Hoffman, concerned about potential future lawsuits from other companies like Lume, Higher Love, and Nirvana, emphasized that while these companies are no different from Rize and The Fire Station, they are presently bound by a settlement agreement reached earlier this year.
With Hoffman, Fifarek, and Haupt set to assume office soon, Menominee awaits the outcomes of these contentious issues, with legal hearings for the lawsuits involving Rize and The Fire Station scheduled into the next year.
In a significant enforcement action by Michigan's Cannabis Regulatory Agency (CRA), Anthony Czuchra, the owner of The Reef dispensary in Detroit, along with Clark Street Investment Group Inc., has been officially prohibited from holding a business license in the state's cannabis industry. This decision follows the discovery that The Reef was engaging in the sale of cannabis to individuals without a medical marijuana card.
The CRA's Exclusion List, which documents entities barred from participating in Michigan's cannabis market, now includes Czuchra and his business. This move comes after a complaint filed in October 2022 alleged that The Reef was conducting unauthorized sales of marijuana. Subsequent to this complaint, CRA officials conducted an unannounced inspection in November, where they uncovered a series of regulatory infractions.
These violations were extensive and varied. The Reef was found to be inaccurately tracking transactions, selling unrecorded marijuana products not registered with the state, and improperly consuming food and beverages in areas designated for storing and processing marijuana products.
Clark Street Investment Group Inc. and The Reef join other entities like Candid Labs, Klean Herbal Solutions, and Pharmaco on the CRA's voluntary exclusion list, highlighting the strict regulatory environment in Michigan's cannabis industry.
During the CRA's visit to The Reef, officials discovered several concerning practices in the dispensary's storage room. These included improperly labeled products, loose cannabis flower on trays, and instances of product contamination by the owner himself while rolling pre-rolled joints. Notably, Czuchra admitted to altering the strain names of certain cannabis products, changing 'Banana Runtz' to 'Grinch Mints' for the holiday season, a clear violation of state policy.
This incident underscores the rigorous standards set by Michigan's regulatory bodies for cannabis businesses and serves as a cautionary tale for other operators in the industry.
In November, Michigan's cannabis market saw a marginal decline in sales, totaling $260.5 million, a slight decrease of less than 1 percent from October. Despite this dip, November marked a significant 28 percent increase in sales compared to the same month in 2022, signaling robust growth year-over-year.
Adult-use cannabis sales demonstrated a notable increase, rising 35.2 percent compared to November of the previous year, reaching $256.7 million. This figure, however, reflects a marginal 0.7 percent decrease from October 2023. In stark contrast, medical cannabis sales experienced a dramatic downturn, totaling just $3.8 million. This represents a substantial 72 percent decrease from November 2022 and a 14 percent decline from October 2023, indicating a continued decline in the medical sector.
The pricing for adult-use cannabis flower averaged at $1,560 per pound, marking a 2.5 percent increase from the previous year. In terms of product categories, combined sales of medical and adult-use flower led the market with $117.5 million. Vape cartridges, encompassing both medical and adult-use products, followed with sales of $50.3 million. Concentrates also performed well, with sales reaching $28.5 million.
Looking at the broader picture of 2023, the cannabis market in Michigan has seen a 34 percent increase in sales over the first 11 months compared to the same period in 2022. This trend suggests that the state is on track to achieve approximately $3.3 billion in combined medical and adult-use cannabis sales for the entire year of 2023.
The recent developments in Michigan's cannabis industry, marked by the financial and operational challenges of Skymint, present a complex landscape with both setbacks and opportunities. While our previous report detailed Skymint's closure of its Harvest Park cultivation facility, the broader implications of this event offer insights into the evolving dynamics of the state's marijuana market.
Skymint's ambitious growth targets were not met, as evidenced by their significant shortfall from the projected $263 million in sales for 2022. This misalignment between expectations and market realities highlights the difficulties faced by companies in accurately predicting market trends in the rapidly shifting cannabis sector. Despite holding a small share of the state's total retail licenses and an even smaller percentage of growing capacity, Skymint's aspirations did not align with the competitive and fluctuating nature of the marijuana industry.
The acquisition of Skymint by Tropics, two months prior to the closure announcement, has positioned the company to continue its operations in the retail segment. Skymint's shift in focus reflects a strategic adaptation to the current market conditions and underscores the importance of flexibility and responsiveness in the cannabis industry.
The cessation of Skymint's growing operations, while significant, does not necessarily predict a broader downturn in the industry. In fact, the situation has been perceived as an opportunity by other market players. Mike Elias, CEO of Common Citizen, and Andrew Sereno, CEO of Glacial Farms, both recognize the potential benefits for smaller growers and the overall market stability.
"I think the entire market is benefiting," said Mike Elias. "It's especially good for smaller operators trying to get a foothold. Keep in mind they're still operating a fairly large portfolio with a third party now taking the cultivation risk."
The fate of Skymint's Harvest Park facility, owned by Innovative Industrial Properties, remains uncertain. However, its impact on the market, considering Skymint's modest production capacity, is expected to be limited. Lance Boldrey, a cannabis attorney, notes that Skymint's contribution to the state's overall cultivation was relatively minor.
Despite these industry challenges, Michigan's cannabis market has shown remarkable resilience. Consumer demand has remained strong, driving significant sales growth. The state recorded $258.5 million in marijuana sales in October, with projections indicating a rise to nearly $3 billion for the year, surpassing the previous year's figures.
Furthermore, the potential federal reclassification of marijuana from Schedule I to Schedule III holds promise for the industry. This change could alleviate the heavy tax burden currently faced by cannabis businesses, potentially leading to more robust growth and stability in the Michigan market.
In conclusion, Skymint's recent challenges and strategic shifts are emblematic of the broader trends in Michigan's cannabis industry. The sector continues to navigate the complexities of market supply and demand, regulatory landscapes, and competitive pressures, demonstrating both the risks and opportunities inherent in this evolving industry.
The Clark Street Investment Group Inc., operating under the name The Reef, has been subject to a formal complaint filed by the Cannabis Regulatory Agency (CRA) of Michigan. The complaint alleges multiple violations of the Medical Marihuana Facilities Licensing Act (MMFLA) and associated administrative rules by The Reef, a licensed medical marijuana provisioning center in Detroit, Michigan.
According to the CRA's investigation, The Reef was found to have engaged in several compliance breaches. These include selling marijuana products to individuals without medical marijuana cards and multiple instances of improper handling and labeling of marijuana products. During unannounced site visits, CRA investigators discovered numerous discrepancies in product tracking and inventory management. They found pre-rolled marijuana products without the required Metrc tags, which are vital for ensuring compliance with state tracking systems. In addition, the investigators uncovered instances of mishandling of marijuana products, including an employee licking his fingers while hand-rolling pre-rolls, leading to potential contamination.
The complaint also highlights the center's failure to securely lock areas containing marijuana products, a breach of state regulations requiring commercial-grade locks for security. Surveillance footage revealed employees consuming food and beverages in areas where marijuana products were stored, processed, or packaged, further violating state rules.
The CRA's complaint outlines numerous counts of violations, each pointing to a specific aspect of regulatory non-compliance, ranging from inaccurate inventory management to improper labeling and packaging of marijuana products. The Reef faces potential fines, license suspension, revocation, restriction, or non-renewal if these violations are confirmed.
The Reef has been given the opportunity to respond to these allegations and can request a hearing to contest the CRA's findings. This case underscores the importance of stringent compliance with state cannabis regulations and the ongoing oversight role of agencies like the CRA in ensuring safe and legal cannabis operations.
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