Detroit Cannabis Companies Seek Court Relief to Open $15 Million Facility

February 20th, 2024 Legal & Crime
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Four cannabis businesses have initiated legal action against the city of Detroit in federal court, seeking to halt any measures that could delay the launch of their $15 million marijuana processing facility. The companies argue that without the ability to operate as intended, they face imminent financial disaster.

The legal challenge stems from the city's retraction of previously granted approval for the facility, located close to a school, which the businesses contend violates their due process rights under the Fourteenth Amendment. This action followed substantial investments made by the companies, based on city assurances and the issuance of special land use permits for marijuana processing and transportation.

In their court filing, the companies—Cannabis Professional Design LLC, MB City Transportation LLC, HZ Detroit Holdings 1 LLC, and HZ Detroit Holdings 2—request a preliminary injunction to permit the opening and operation of their facility. They disclose investments nearing $1.89 million, part of the facility's estimated $15 million construction value, arguing this amount could lead to their financial collapse if the facility remains closed.

The motion emphasizes the critical nature of the injunction, suggesting even temporary operation could significantly improve their financial standing. The companies have yet to generate revenue from the facility, highlighting the potential for a single month's production to cover a substantial portion of their expenses.

In response, the city of Detroit has urged the court to reject the injunction, arguing the companies have not demonstrated a risk of "irreparable injury" and suggesting that the facility's proximity to a school could harm students.

However, the companies counter this by referencing approval letters from the city that confirmed the facility's operation would not negatively impact the community. They also noted investments in infrastructure improvements, including a second-floor construction and the installation of specialized machinery.

The legal battle began with a state court lawsuit in November, later escalated to federal court, over the city's revocation of permits granted over two years. These permits were essential for the facility's operation but were invalidated in October when the city reclassified the land as a "drug-free zone" due to its proximity to a nearby school.

The city's later filings revealed that the revocation occurred after it recognized the school's proximity to the proposed facility—a detail missed during initial reviews due to the school's industrial-looking appearance and location in a zone typically not permitting educational institutions.

This dispute highlights the complex interplay between cannabis business operations, municipal regulations, and community safety concerns, particularly regarding proximity to schools and the enforcement of "drug-free zones."

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