Judge Upholds Milan's Marijuana Permitting Procedures

December 19th, 2023 Business & Industry
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In a significant legal development, Milan, Michigan's administration has upheld its marijuana dispensary permit awarding process in court. The Washtenaw County Trial Court, under Judge Julia Owdziej, ruled in favor of the city, resolving a dispute initiated by a cannabis company, HQP Retail II, LLC, which operates as Hayat. The company had contested the allocation of the city's exclusive two dispensary permits, alleging procedural discrepancies.

On December 8th, Judge Owdziej endorsed the city's approach by granting Milan's motion for summary disposition. This decision effectively dismissed the legal challenge brought forth by Birmingham-based HQP Retail II, LLC, in July. The contention revolved around the company's claim that the permit allocation process, as conducted by Milan City Council on July 5th, was flawed, particularly in the scoring of applications.

City Administrator Jim Lancaster, addressing the ordinance's goals, emphasized that the selection process was strategically designed to integrate the best-fit models into Milan's economic development plans. The city, opening its doors to the marijuana industry in 2022 for the first time, introduced a point system to objectively assess and select two proposals that best aligned with the city's criteria.

Under these regulations, preference was given to proposals targeting development of vacant or blighted properties and those suggesting mixed-use structures combining commercial or residential spaces. Lancaster noted, "We received four commendable proposals, but the ordinance limited us to select only two based on our point system."

The permits were ultimately awarded to Oz Cannabis and Green Ink 420. Oz Cannabis proposed to renovate a coin-operated laundromat and car wash at 1132 Dexter Street. Green Ink 420 planned a strip mall-style development with commercial spaces and apartments adjacent to Love's Travel Stop on Plank Road.

HQP, which ranked third in the scoring process, proposed a new building on 800 Dexter Street near Dollar General, featuring a cannabis shop with an additional drive-thru style restaurant. Despite their proposal, HQP alleged irregularities in the review process and accused the city of violating Michigan's marijuana regulations and the state Open Meetings Act through undisclosed meetings that allegedly skewed the scoring in favor of their competitors. The city refuted these claims, stating the scoring process was individually handled by the city administrator, and as such, the Open Meetings Act did not apply.

Judge Owdziej's ruling dismissed HQP's motions and closed the case, validating the city's procedural integrity. Looking ahead, Lancaster shared that both Oz and Green Ink are advancing through the necessary approvals to commence their projects. Oz Cannabis has already received planning commission approval and is progressing towards construction. Green Ink is expected to present its plans to the commission soon, with significant progress anticipated on both sites during the 2024 construction season.

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