Michigan voters legalized marijuana sales in 2018 with the understanding that the state would establish a program to rehabilitate members of the communities which were disproportionately affected by cannabis laws.
Applicants to these social equity programs had to be living in one of these impacted communities, or have had a marijuana conviction, or should have been a medical marijuana caregiver between the years 2008 and 2017.
But these social equity programs have been slow to take off in many parts of Michigan, including cities like Detroit, Flint, Kalamazoo, and Ypsilanti, due to financial hurdles and other implementation problems. Since the program was launched in 2019, the Michigan Marijuana Regulatory Agency has received 1,800 applications but has granted only 90 licenses.
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Jeff Guyton is among the few who received such a license, and he was granted permission to convert a 99-year-old former Farm Bureau building into a recreational dispensary. He managed to do it by entering into a partnership with Quality Roots, a Birmingham-based premier cannabis company, by giving it 49% ownership, because social equity applicants have to hold at least a 51% stake in the company’s ownership.
Quality Roots owner Aric Klar said that in addition to the 51% ownership stake, the company was supporting Guyton with $1 million for inventory, marketing help, legal assistance, and operational systems at their other locations. Guyton’s Ypsilanti store is expected to open in the summer of 2022.
Financial expert Anquenette Sarfoh, a board member of the Michigan Cannabis Industry Association, is of the opinion that for the program to be successful, ways must be found to provide capital to the impacted community and help must be provided in ways other than direct ownership.
Sarfoh got into the medical marijuana business in 2015 after being diagnosed with multiple sclerosis.
Michigan is one of 18 states, besides the District of Columbia, to legalize recreational marijuana, although it’s still against federal law. Canada also allows the recreational use of marijuana. There are 36 states that allow medical use. From January to November, medical sales reached $448 million and recreational sales reached $1.17 billion.
According to Andrew Brisbo, executive director of MRA, more can be done to encourage entrepreneurs, even though social equity licensees receive thousands of dollars in state fee reductions, other types of assistance, educational opportunities, and direct guidance for business operation.
The MRA hosted four workgroups in 2019 and surveyed more than 700 industry members, users and caregivers to improve the crafting of the program The program initially identified 19 communities in 2019, which later increased to 184 communities.
However, though there were many individual participants who qualified, all the cities to which they belonged did not have ordinances authorizing marijuana businesses.
MRA has also launched the Joint Ventures Pathway Program, a networking opportunity for business owners interested in partnering together. Common Citizen, one of the state’s fastest-growing marijuana companies, recently announced its social equity platform with the launch of its product line called ‘Principle’, agreeing to give the net proceeds from the strain to the communities they serve.
The company cultivates cannabis at a hybrid greenhouse in Marshall and sells it at its flagship store in Flint and to dispensaries around the state.
Companies like Troy-based Gage are accepting applications to receive up to a $50,000 grant with public relations and marketing support. Since December 2019, Gage has had three social equity recipients, including one cannabis research company.
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Detroit, Michigan’s largest city, opted into marijuana taxation, but it has yet to certify a recreational dispensary because authorities want to prioritize long-time residents who hold at least 51% ownership. The plan became controversial and the city is temporarily blocked from processing applications for recreational marijuana licenses.
Mayor Mike Duggan said that people who lived outside the city were benefitting from more than 90% of the medical marijuana shops and that he and the City Council did not want that to happen with recreational marijuana outlets also.
Kimberly Scott, the founder of Detroit’s medical marijuana provisioning center, Chronic City, said that most of them had gone through a lot of hardship in relation to the cannabis industry and that they would like to be the next leaders to help those who were coming on board and make their lives easier.