Medical Marijuana Board Straw Poll: Yes

Ann Arbor licensing board reviews 7 of 10 applications, votes on 1

On Wednesday, Nov. 30, 2011, the medical marijuana licensing board in Ann Arbor, Mich., took something like a straw poll on a recommendation that the city award its first dispensary license – to MedMarx at Arborside Compassion, located at 1818 Packard St.

The form of the poll strongly resembled a vote by the board to recommend the dispensary for a license, leading some observers to conclude that the recommendation had been made. But a subsequent email from board member Sabra Briere indicated the board had voted that it “would have recommended MedMarx for a license, if they were making recommendations at that meeting.” Once the board takes a formal vote on the recommendations that it wants to make to the city council, the city council will still need to vote as well, in order for the license to be awarded.

Rosevear, Ragland, Kenyon

Ann Arbor medical marijuana licensing board members (left to right): John Rosevear, Gene Ragland and James Kenyon. They're perusing a letter from MedMarx at Arborside Compassion to the city of Ann Arbor, stating the dispensary's position on its compliance with the Michigan Medical Marijuana Act. (Photos by the writer.)

Ann Arbor’s medical marijuana licensing board was established as part of an ordinance regulating licenses for medical marijuana dispensaries, enacted by the city council on June 20, 2011.

The licensing ordinance was enacted at the same time as a zoning ordinance, which regulates where such businesses can be located in the city. The two pieces of legislation were enacted after more than a year of consideration and deliberations by members of the city council.

On Wednesday, the board considered seven out of a total of 10 license applications that had been submitted to the city. The remaining three are for businesses located in areas not zoned for medical marijuana businesses. However, at least two of those intend to ask for a review of the city’s decision to deny a zoning compliance permit (required as part of the license application) by the city’s zoning board of appeals (ZBA).

Besides the one application on which the board voted, four of the other six applications were determined to have met the requirement demonstrating that they were in operation before the council enacted a moratorium. That moratorium was established on Aug. 5, 2010 and prohibited establishment of any additional medical marijuana businesses in the city.

The board’s work on Nov. 30 came as attitudes on medical marijuana nationally, at the state level and locally are in flux. Nov. 30 was the same day that governors from the states of Washington and Rhode Island signed a petition appealing to the federal Drug Enforcement Administration to reclassify marijuana has a drug having medical uses.

And the licensing board meeting came at the conclusion of a series of day-long seminars in different Michigan cities given on Nov. 16, 17, 29, and 30 by staff of Michigan State Attorney General Bill Schuette on how to enforce the Michigan Medical Marijuana Act. The seminars included the case law that has evolved – including the McQueen case, in which a Michigan court of appeals found that at least one business model for operating a dispensary is not consistent with the MMMA.

According to a report from The Saginaw News, Schuette’s “Clearing the Air” seminars were closed to the press. The materials provided at the seminars include a range of legal tools the attorney general believes can be used to prevent medical marijuana dispensaries from doing business. One of those tools is to apply laws on public nuisances to such businesses.

The city of Ann Arbor has sent cease-and-desist letters to medical marijuana dispensaries in the city threatening to take action against them as public nuisances. Cease-and-desist letters were received by a business as recently as Nov. 8. [.pdf of letter to zoning-non-conformant business][.pdf of letter to zoning-conformant business]

During public commentary at the licensing board meeting, local attorney Dennis Hayes noted a disconnect between (1) letters sent by Ann Arbor city attorney Stephen Postema to businesses threatening to shut them down, and (2) a licensing board that is implementing the new city ordinance on allocating licenses to medical marijuana businesses. Hayes described the situation as the “right hand doing something very different from the left hand.” Hayes encouraged the licensing board to move its “right foot to drag the left foot along.”

The board’s next scheduled meeting is Dec. 14 at 4 p.m.

Brief Background

The Michigan Medical Marijuana Act was enacted by statewide voter referendum in 2008.

The Ann Arbor city council enacted zoning and licensing requirements for medical marijuana businesses on June 20, 2011. That came after more than a year’s consideration of the issue by city councilmembers. That consideration included a moratorium on the future use of property inside the city for cultivation facilities or dispensaries, which was imposed on Aug. 5, 2010, for a period of 120 days. The moratorium was extended several times in the course of the council’s work.

On Aug. 23, 2011, two months after the enactment of Ann Arbor’s local legislation, a Michigan court of appeals ruled on the McQueen case in a way that has been interpreted by many authorities to mean that medical marijuana dispensaries are not legal. [.pdf of the McQueen case ruling]

Undeterred by the court ruling, at its Sept. 6, 2011 meeting, the Ann Arbor city council confirmed appointments to the city’s medical marijuana licensing board.

But the McQueen case still had an impact in Ann Arbor. Wendy Rampson – head of the city’s planning staff – told city planning commissioners at their Sept. 8, 2011 meeting that applicants for licenses were welcome to submit information to the city in connection with license applications, but that staff had ceased their review activity pending further direction.

Already on July 1, the city had sent a letter to known dispensaries demanding that they provide proof of operation before the Aug. 5, 2010 moratorium. [.pdf of July 1 letter] The issue is important because the licensing ordinance distinguishes between businesses in operation before the moratorium (and allowed to continue operations during the moratorium) and those not in operation before the moratorium. The ordinance gives priority to those dispensaries that had pre-moratorium operations. The number of licenses to be issued by the city is also contingent on the number of applications submitted to the city by pre-moratorium businesses.

An affidavit was not considered adequate proof of pre-moratorium operations, and the city sent follow-up letters asking for “specific proof” of operation before the moratorium. [.pdf of follow-up to July 1 letter]

By Sept. 30, the city staff’s position had evolved to include a requirement that license applicants would need to provide a statement explaining how their business conformed with the Michigan Medical Marijuana Act, including the McQueen case, as part of an application for a zoning compliance permit. A zoning compliance permit is a requirement for a license. [.pdf of Sept. 30 letter]

By Oct. 18, the city had made explicit on its webpage on medical marijuana that an application for a medical marijuana dispensary license needed only to include an application for a zoning compliance permit and an application for a re-occupation permit, not the permits themselves.

Dating from mid-August 2011, an apparent point of tension between the city staff and the licensing board concerned whose purview it was to determine the completeness of an application with respect to specific pieces of information. Based on the Nov. 30 meeting of the licensing board, weighing the evidence of pre-moratorium operations became an issue determined by the board, not city staff. But applications from dispensaries in areas of the city not zoned for medical marijuana dispensaries were not put before the board for its review.

Much of the board’s Nov. 30 discussion was framed by the specific points of application requirements as listed out in the ordinance:

7:504. Application requirements for new annual license or renewal of existing license; license requirements for new license and for renewed license.

2. Application Requirements for New Licensee. An application for a new annual license for a medical marijuana dispensary shall be submitted to the City Clerk on a form provided by the City for preliminary review by City staff to confirm that the applicant has submitted a complete application, which shall fulfill all of the requirements indicated on the form, including but not limited to:
(a) If the medical marijuana dispensary commenced operation prior to passage of the moratorium by City Council on August 5, 2010, then proof of the date on which the medical marijuana dispensary commenced operation shall be provided.
(b) The name and address of the medical marijuana dispensary and any other contact information requested on the application form.
(c) The name and address of all owners of the real property where the medical marijuana dispensary is located.
(d) Name, street address, and other contact information of all owners of the medical marijuana dispensary and, if the owner is a corporation, limited liability company, partnership, or sole proprietor with an assumed name, of all directors, officers, members, partners, and individuals, all of whom are considered collectively to be the applicant for the license.
(e) Name and address of all business managers.
(f) A statement with respect to each person named on the application whether the person has:
(i) Ever been convicted of a felony involving controlled substances as defined under the Michigan Public Health Code, MCL 333.1101, et seq., the federal law, or the law of any other state and, if so, the date of the conviction and the law under which the person was convicted;
(ii) Ever been convicted of any other type of felony under the law of Michigan, the United States, or another state, and, if so, the date of the conviction and the law under which the person was convicted.
(g) Proof of applicant’s ownership or legal possession of the premises.
(h) A zoning compliance permit that shows the proposed medical marijuana dispensary is located in a zoning district that would permit its operation.
(i) A temporary certificate of occupancy that shows the structure for the proposed medical marijuana dispensary meets the requirements of the applicable use group under the Michigan Building Code.
(j) Payment of a non-refundable application fee, which shall be determined by resolution of the City Council. Fees for zoning compliance permits and certificates of occupancy shall be separate from the application fee, but shall be the same amount and shall be paid pursuant to the same procedures as applied to applications for zoning compliance permits and certificates of occupancy for other uses. [.pdf of complete Ann Arbor medical marijuana licensing ordinance]


Public Commentary

The Nov. 30 meeting began with an opportunity for public participation.

Local attorney Dennis Hayes indicated that a number of dispensaries have applications on file with the city’s zoning board of appeals (ZBA) because they’ve been turned down by the planning department for a zoning compliance permit. Part of the procedures for filing an appeal with the ZBA is a meeting with city staff, he said.

(Left to right) Dennis Hayes (standing), Mark Passarini, Chuck Ream

Left to right: Dennis Hayes (standing), Mark Passerini, and Chuck Ream.

So far, Hayes contended, the city has been reluctant to set up meetings.

Later during the licensing board meeting, in response to a question from board member Gene Ragland, city planning manager Wendy Rampson said that of the three excluded applications, two were located in office (O) zoning districts, one was in a planned unit development (PUD) zoning district – in a building where retail was not allowed, according to the PUD. She said that of the seven applications being reviewed by the board, all meet the zoning requirements. One doesn’t have adequate parking. The standard is one off-street parking space per 310 square feet, Rampson said, noting that parking requirements are not a function of zoning, but of a property’s use. If the business is in the Ann Arbor Downtown Development Authority district, it’s exempt from parking requirements, she said.

During his public commentary, Hayes said all the people whose businesses are in areas not zoned for medical marijuana dispensaries believe they have claims to a non-conforming use. The procedure to appeal the city’s decision not to grant a zoning compliance permit is through the ZBA. Hayes said he feared substantial additional delays, because the ZBA meets only once a month.

Hayes asked the licensing board to move its “right foot to drag the left foot along.” People currently serving patients are in “ZBA limbo” for the time being, he said. If the ZBA were to accept the non-conforming use, then those dispensaries would be “back in the licensing line.”

Hayes noted that there have been a number of letters sent to cease and desist from doing business – on the assumption that those businesses are in violation of the McQueen decision, even to businesses that are appropriately zoned. A lot of effort on the city’s part has been put into preventing people from applying for licensing, Hayes said. He characterized it as the right hand doing something very different from the left hand.

Rhory Gould reported that the city staff member responsible for issuing certificates of occupancy (COO) said he’s not allowed to issue a certificate to any dispensary. Yet Gould observed that having a COO is a requirement for applying for a license. Licensing board member Patricia O’Rorke assured him: “We get it.” [The city's position is that an application for the COO, not the COO itself, is what's required for the dispensary license application.]

Preliminary Board Discussion

Sabra Briere is the city councilmember representative to the five-member licensing board. She acknowledged the difficulty of the task for evaluating the applications by saying, “I’d like to drag us into what we’re going to try to accomplish today.” There are problems in trying to move forward smoothly, she allowed, but said, “We’re going to move forward.”

Briere noted that there were seven applications present in the room, but board members had before them just a staff summary of each application. [Three city staff attended the meeting: City planning manager Wendy Rampson, city planner Jill Thacher, and assistant city attorney Kristen Larcom.] That was an effort to honor the confidentiality of information included in the applications, Briere said. She noted that board members could ask questions and get clarification from staff.

Asked if city staff could tell the board if staff would have recommended approval of an application, Rampson answered no. To create the staff report, she said, staff went through the applications and indicated whether the applications met the requirements for completeness. Thacher put together the staff summary – but here’s no recommendation on approval, Rampson said.

Assistant city attorney Kristen Larcom and medical marijuana licensing board member John Rosevear share a light moment before the meeting started.

Assistant city attorney Kristen Larcom and medical marijuana licensing board member John Rosevear share a light moment before the Nov. 30 meeting started.

Thacher clarified that there were a total of 10 applications – seven are summarized and evaluated with respect to zoning. The other three were turned down, because the zoning compliance certification was turned down. Thacher said she’d talked to representatives for two of the three rejected applications, and they’d indicated they were going to appeal through the ZBA.

Briere drew out the fact that the cost to appeal is $500. Board member John Rosevear asked what the basis is for the $500 fee. Briere noted that this is the standard ZBA filing fee. Rampson explained that the fee covers the city’s costs in processing the appeal, which includes a mailing to nearby property owners notifying them of the appeal.

Licensing board member James Kenyon clarified with Thacher that just because the staff report indicates the requested information has been provided in an application doesn’t mean it’s passed muster, just that there’s enough information to decide.

Briere asked why staff didn’t evaluate whether an application passed muster on a particular point, if everything was complete? Thacher told Briere that Thacher’s understanding was that planning staff members were not doing that evaluation on their own and that staff would not express their opinion. Briere ventured that it was a matter of fact, not opinion. Thacher indicated it was not as straightforward as that. For example, on the issue of determining whether a dispensary was in operation before the Aug. 5, 2010 moratorium, Thacher said, a variety of different kinds of proof were presented by applicants that they were in business before Aug. 5.

MedMarx at Arborside Compassion

The board considered MedMarx at Arborside Compassion first, because licensing board member James Kenyon asked if there might be one application that would give the board a “smooth first look.” Thacher indicated that two applications were more complete than others. First up was MedMarx at Arborside Compassion – known as Arborside, and located at 1818 Packard just south of Stadium Boulevard. The site is zoned commercial (C1) and the business is not proposed to be a cultivation facility, Thacher noted. Cultivation facilities are not a part of the licensing program – that’s a zoning issue, provided only as background, Thacher said.

MedMarx at Arborside Compassion: Pre-Moratorium Status

The board first considered the ordinance requirement under Section 7:504(2)(a): proof of operation before the council established the moratorium on Aug. 5, 2010.

Thacher said it’s the one item that applicants in general had submitted the most information on, and that of those applications, Arborside was one of the most voluminous, she said.

City planner Jill Thacher shows licensing board members what some of the supporting application materials looked like.

City planner Jill Thacher shows licensing board members what some of the supporting application materials looked like.

Licensing board member Patricia O’Rorke asked if each piece of evidence submitted was to be considered adequate on its own. Thacher indicated that, no, they’re all “pieces of puzzle.” Asked if there were guidelines, Thacher said there were not. She told licensing board members that they would see that some pieces of documentation offered as evidence of being in business before the moratorium date were supportive, but others were not.

Kenyon ventured that the board was not faced with a situation as straightforward as the criteria for the I-9 Employment Eligibility Form. [That form includes three lists of specific kinds of supporting documents (A, B, and C) and a complete form must include a document from list A, or else two documents – one from list B and one from list C. ]

Thacher agreed with Kenyon’s assessment, saying the board would see a range of different documents, from the minimal – affidavits – to more robust information. Thacher indicated she’d asked for additional clarification from four dispensaries over the last two weeks about information they’d submitted.

Arborside had submitted an affidavit from its president and director, Thacher said. She drew the distinction between an affidavit – a signed sworn statement that’s notarized – and a written statement. Also included were statements from four Arborside employees indicating pre-moratorium dates of employment. Some payroll records had also been submitted.

Sabra Briere focused on the affidavits. Is that not considered sufficient by itself? Thacher told Briere the city had asked for more proof than that. Thacher said the city had asked for an affidavit and had sent out a sample affidavit for people to use.

Thacher then reviewed a timeline of city communications to dispensaries, dating from the approval of the medical marijuana licensing ordinance on June 20, 2011. The first step, she said, was to try to figure out who was in operation before the Aug. 5, 2010 moratorium. The city sent letters to those it knew were in operation, and asked for evidence they were in operation before Aug. 5. That’s because there are two application processes – one for pre-moratorium businesses, and one for post-moratorium businesses. Later, on Sept. 30, an additional letter was sent saying that in light of the McQueen case, the city requested a statement from dispensaries explaining how the dispensary complied with the Michigan Medical Marijuana Act. Letters were sent to seven dispensaries, but the city received a response only from one, she said.

The statements from employees of Arborside on Packard, Thacher said, were on letterhead and stated that they were employees before the moratorium.

Assistant city attorney Kristen Larcom and Chuck Ream

Assistant city attorney Kristen Larcom and Chuck Ream talk after the licensing board meeting.

The payroll records, Thacher said, were hard to evaluate – yes, they looked like payroll records. O’Rorke asked what would constitute proof. Briere noted that after this first year, it won’t even matter – the issue of pre- and post-moratorium is relevant only to the first year’s licensing cycle.

Kenyon wondered what any other businesses would use to demonstrate they were in operation – quarterly tax filings? Briere observed that taxes could be filed without having a payroll. From the audience, Chuck Ream ventured that a lease would be evidence. Briere told Ream that a lease just shows access to a building – it doesn’t show you’re in business.

Continuing with information submitted by Arborside, Thacher ticked through other documentation meant to establish that Arborside was in operation before Aug. 5, 2010: a waiver from a contractor; a Chase checking account statement from July 13, 2010; an undated application for workers compensation insurance; an email from a commercial broker about a lease term; an April 22, 2010 lease agreement; a building inspection notice and building permit for work on the building; articles of incorporation dated June 18, 2010; and an IRS tax ID number.

Kenyon asked if there were more applicants than fit the slots for pre-moratorium businesses. Briere said that if there were only seven applications, then no. Kenyon ventured that the issue of pre-moratorium operation was moot. Thacher told Kenyon she felt he wouldn’t think it’s moot, when the board considered some of the other applications.

Weighing the documentation Arborside had provided, Kenyon said it might not establish beyond a reasonable doubt in a court of law that it was in operation as a medical marijuana dispensary before the moratorium – the business could have been selling matchbox cars versus dispensing. But he concluded that “it sure looks like it was in business.” Thacher then indicated that Arborside had also submitted a handwritten ledger of dispensing.

Briere noted that Kenyon’s question about the pre- versus post-moratorium status of businesses relates to the total number of licenses that would be granted by the city. The number of license applications from pre-moratorium businesses sets the number of total licenses available.

About Arborside, Kenyon asked: “So does this one look reasonable?” Thacher indicated yes, and it was somewhat easier to evaluate, because the city staff had known about this dispensary before the moratorium.

Briere indicated that she would accept the following as proof: the affidavits, the dispensing records, and at least one other piece of information. She said the board might discuss whether that third piece of information could be the payroll records. “Does that seem like a reasonable threshold?” she asked her board colleagues.

Gene Ragland wondered what the consequence is of signing a false affidavit. Assistant city attorney Kristen Larcom told Ragland: “Not much.” She allowed that the city could revoke the license. But the penalty for a false affidavit per se is not like making a false statement under oath in court. Larcom went on to state that it’s hard to say what proves anything – the city had created an affidavit template as a suggestion, but was not necessarily saying that’s enough. Larcom said that staff did not assume people are going to be dishonest, but staff would like to see more evidence beyond the affidavit. It’s up to the licensing board to decide whether the documentation is sufficient to make the recommendation for granting a license, Larcom said.

Kenyon ventured that if city staff knew about Arborside before the moratorium, that seemed reasonable. Briere noted that the goal was to find objective criteria.

O’Rorke wondered if the way they were discussing Arborside was an example of how the board would eventually discuss applications. Briere clarified: “We’re doing it now.”

Kenyon agreed with the three-point assertion Briere had made about why she felt Arborside had adequately documented it was in operation before the moratorium.

MedMarx at Arborside Compassion: Other Application Requirements

Thacher continued with other points of the application: Section 7:504(2)(b) name and address of dispensary and contact information – yes; Section 7:504(2)(c) name address of property owners – yes.

For Section 7:504(2)(d) – the names of all owners of the business including all directors and officers of an LLC, Thacher said, “This tripped up quite a few people.”

Based on board and staff discussion, the ownership of Arborside had apparently changed. Kenyon wanted to know if the pre-moratorium status of a business could be transfered to the new owners of a business? He also wanted to know if the sale was an administrative sale – with the same principals – or if there were new parties involved.

Briere asked Rampson to put it in the context of a proposed development: If someone were applying for a zoning or building permit, would the transfer of ownership matter? Rampson ventured that a rough analogy might relate to the legal authority of someone to sign a development agreement being contingent on ownership or control of land. But Rampson brought the focus to the rationale for wanting names of all business owners. She noted that the reason for the requirement is to find out if someone who is associated with the business has a felony conviction.

Continuing through the list of items that Arborside had submitted, Thacher arrived at Section 7:504(2)(f), the statements from everyone named on the application – business owners and managers – that they did not have a disqualifying felony conviction. Ragland wanted to know if a background check had been run on each person. Larcom told him the best they could do is send a request to the Michigan State Police, because LEIN (the Law Enforcement Information Network) couldn’t be used.

Briere noted that licensing eligibility requirements are silent with respect to non-drug-related felonies like robbing a bank or committing a murder. Information on all felonies is required to be submitted as a part of the application, but it’s a discretionary decision by the board and the council as a whole for those felonies not involving drugs.

Later during the meeting, John Rosevear initiated a discussion on the merits of the drug-related felony exclusion – did it matter if a conviction had taken place in the early 1970s?

Speaking to the set of applications as a whole, Thacher said that some were missing a person or two for the set of statements about felonies. One had a record that would be forwarded, but had not yet been provided.

The set of application materials required in the licensing ordinance calls for a zoning compliance permit: Section 7:504(2)(h). Ragland ventured that the city had added a requirement that compliance with the Michigan Medical Marijuana Act be demonstrated, including the McQueen decision.

Rampson observed that compliance with the MMMA was in the ordinance language, and after the McQueen case, the city sent out letters requesting that dispensaries explain how they were in compliance with the MMMA, including the McQueen case. Briere asked if the decision had been made at the staff level not to grant a zoning compliance permit? Thacher responded by indicating that Arborside had sent a letter on that topic to the city and that it’s in the city attorney’s office. Thacher said that compliance with zoning is noted as staff comments. She noted that Arborside has a certificate of occupancy.

Briere then asked her board colleagues: “What would you like to know that you don’t see here?” She herself said she found the application compelling, but said she’d like to see the letter that’s in the city attorney’s office explaining how the business complies with the MMMA.

The letter from Arborside to the city stating how its business conformed to the MMMA, including the McQueen decision, was examined in turn by members of the licensing board.

After the letter was passed around from board member to board member, Briere ventured that maybe it would be good to have a shredder next time. Multiple copies could be created and then shredded at the conclusion of the meeting. It’d be a waste of paper, she allowed, but would be more convenient. Rampson noted that no copies had been made of the applications themselves but that Thacher had drafted the staff reports so as not to use any names. Rampson suggested that if multiple copies were created, they need not be shredded – staff could collect and store them.

Kenyon indicated that he wanted to get through at least one application that day. Given Briere’s comments about Section 7:504(2)(a), the application from Arborside looks complete, he said. Arborside would not go to this trouble to be dishonest, he said. Ticking through all the requirements in the application, Kenyon moved to recommend a license for Arborside. After getting a seconding motion from Rosevear, the board voted.

Outcome: The board voted unanimously that it would recommend that the city council award a medical marijuana dispensary license to MedMarx at Arborside Compassion. Once a year, the board is supposed to make its license recommendations and suggestions for ordinance changes – that will occur in January 2012.

OM of Medicine

The board began its deliberation on OM of Medicine with the issue of the pre-moratorium status of the business – Section 7:504(2)(a) of the ordinance.

OM of Medicine: Pre-Moratorium Status

Briere said she would consider the affidavits of the business owner, property owner and the receipts of membership applications as evidence of pre-moratorium operation.

Ragland said he felt there were a lot of parts of the elephant in the materials and if you put them all together, there’s an elephant. Briere responded by saying the board was trying to establish minimum standards for the requirement. Kenyon agreed with Briere’s set of evidence, but added the bank statements. Asked for clarification of the bank statements, Thacher indicated that the statements were records of deposits and debit card withdrawals. Kenyon said that receipts from purchases would be compelling – you don’t buy vaporizers if you’re not going into business, he said. Briere said that “inventory” would be an item she felt the board should count.

OM of Medicine: Other Application Requirements

Considering other elements of the application in more detail, Briere said it looked like there are essentially three partners who consider themselves the business owners. Thacher noted that some additional information – indicated as still requested on the staff report – now has been provided. The entity is a nonprofit, which in turn is managed by the LLC. The required information has been provided for the nonprofit entity, but not the LLC, Thacher said. Briere ventured that what the city now needed is a list of LLC members.

Thacher responded by saying that the additional information had just been received that day. Turning to Larcom, Thacher said she didn’t want to put Larcom on the spot, but she was not sure if the LLC members needed to be named in the application, given the arrangement between the nonprofit and the LLC. Larcom indicated that the city could not get all the owners’ names associated with the LLC from the state – that needed to come from the applicant.

In the board’s discussion of the application, it emerged that another missing piece in the application was under requirement Section 7:504(2)(h) for a zoning compliance permit. The city now expects an explanation of the conformance of the business with the Michigan Medical Marijuana Act, including the McQueen case, as part of an application for a zoning compliance permit.

Licensing board member Patricia O'Rorke and Mark Passerini of OM of Medicine talk after the Nov. 30 meeting.

In the audience, Mark Passarini Passerini of OM of Medicine indicated he wanted to address the board for clarification. He was told he was not required to do so, but volunteered to step forward. He told the board it appeared to him that in the board’s view, his application was missing two things: (1) a membership list in the LLC; and (2) a letter describing the dispensary’s conformance with the McQueen case.

He told the board that by Thursday morning the letter would have arrived in the mail to the city. As for the LLC, he said the LLC manages the nonprofit. In response to a question from Kenyon, Passerini stated that the nonprofit pays rent to the LLC. He felt that the names for the nonprofit owners was all that’s necessary, but that he didn’t have a problem providing the ownership information for the LLC as well.

Briere asked Larcom if receiving rent from the nonprofit counts as being involved in the dispensary operation. Passerini clarified further that the LLC doesn’t own the real property. Larcom ventured that if the LLC has some other role than being the real property owner, then as long as Passerini didn’t have a problem with it, she felt it was “better safe than sorry.”

Rosevear sought to summarize: “What does he have to do?” Passerini assured the board: “We can get you what you need.” Briere indicated that they needed the names of the LLC owners, plus a statement from each owner with respect to felony convictions. Larcom asked Passerini if that made sense to him – yes, he replied.

Outcome: The board did not vote on OM of Medicine’s application.

General Consideration of Pre-Moratorium Status

For the remaining five of the seven applications, the board then settled on a strategy of looking just at the requirement in Section 7:504(2)(a) – pre-moratorium status.

Ann Arbor Wellness Collective had submitted affidavits and articles of incorporation for a nonprofit dated May 11, 2010. It also submitted evidence of web hosting set up before the moratorium. Following the three-item guideline that Briere had floated earlier in the meeting, Rampson asked: “Which are the three items?” Briere said she was happy with the two affidavits, but would like to see transactions or receipts. O’Rorke indicated she was content with the two affidavits and the web hosting. Briere felt that establishing the web hosting might be too close to the moratorium date.

Ragland felt the two affidavits were fine. O’Rorke suggested that Rampson “throw in” web hosting as well.

For the Medical Grass Station at 325 W. Liberty, there were apparently no affidavits filed as a part of the application. Briere indicated she did not believe there was a business at that location before the moratorium.

From the audience, Dennis Hayes ventured that the Grass Station’s application had been stalled by the city’s historic district commission – the business is located in the Old West Side historic district. Briere stressed that the question the board was looking at was whether the business was open before the moratorium. Back and forth among Hayes, staff and Briere indicated that the Grass Station was meant to be a successor to a business at Fourth and Washington. Rampson confirmed that there were no affidavits included in the application and there were different names on the two businesses. Briere said she felt the Grass Station’s application could not be considered except as a post-moratorium applicant.

Kenyon wanted to know what the acceptable business transitions were. As an example, Kenyon gave Amazing Beans, which was previously roasting coffee beans in Ann Arbor. Mighty Good Coffee bought that business, Kenyon said. It was not the same business, he said. The consensus on the board was that the Grass Station application would need to be considered as a new business established after the moratorium.

For the Greenbee Collective, Keynon felt that having patient records is good, but not having them is not bad. Briere indicated that she would accept patient records and affidavits.

For People’s Choice, Rampson said the location for the application was new – it had started out originally on Main Street. Briere wanted to know if any of the ownership had changed. Rampson said that People’s Choice had not yet provided all information about its directors. It had provided articles of incorporation dated July 12, 2010 and patient sign-in sheets signed on Aug. 3, 2010.

For PR Center LLC, affidavits had been submitted, along with a client code of conduct and patient sign-in sheets. Kenyon asked what the significance of the affidavit of a former property owner was. Briere noted that the business had also moved.

The consensus of the board was that PR Center and Grass Station’s applications would be considered as applications from businesses that were not in operation before the moratorium.

Summary of Application Status on Nov. 30

Summarizing the board’s discussion, Briere said that of the seven applications, five were eligible to move forward and one of the five had received the board’s consensus for eventual recommendation for approval.

Licensing board members Patricia O'Rorke (left) and Sabra Briere (right) check their calendars to confirm the next meeting time. Briere is the city council representative to the medical marijuana licensing board.

For the other four, the city is in the process of getting a complete application for elements other than requirement in Section 7:504(2)(a), which the board had concluded the four applicants had satisfied – being in business before the moratorium.

Rampson would continue to work with applicants to get information, and Rampson confirmed that the board would receive revised staff reports for its next meeting.

Next Steps

The medical marijuana licensing board meets next on Dec. 14 at 4 p.m., when it will continue its review of the license applications. Board members discussed the fact that by the city’s ordinance, it will need to report to the council in January 2012 with its recommendations for licenses and recommendations on any revisions to the licensing ordinance.

Based on the cease-and-desist letters sent by the city and the city’s requirement that dispensaries explain – as part of their zoning compliance permit applications – how they comply with the Michigan Medical Marijuana Act, including the McQueen decision, the city’s implicit legal position may be that it’s not technically possible for a medical marijuana dispensary to conform with the state law.

That position would inform any legal advice that’s provided to the city council before it votes on any recommendations it receives formally from the medical marijuana licensing board.

Present: Patricia O’Rorke, James Kenyon, John Rosevear, Gene Ragland, Sabra Briere. Also: city planning manager Wendy Rampson, city planner Jill Thacher and assistant city attorney Kristen Larcom.

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  1. By Dan
    January 5, 2012 at 2:06 am | permalink

    The Ann Arbor city could make a significant statement in support of legal marijuana use, and acceptance of it (as the voters indicated they wanted), by taxing its sale in a similar fashion as tobacco products.

    The United States is at a turning point and an action to treat this other smokable substance in a similar manner would make great strides in removing the stigma that goes along with it, while generating revenue for the city!

  2. By Rod Johnson
    January 5, 2012 at 4:45 pm | permalink

    I was under the impression cities weren’t allowed to impose sales taxes in Michigan. Not so?

  3. January 5, 2012 at 5:40 pm | permalink

    Re: [2] and the ability of cities to impose sales tax

    Rod, you’re right. Cities are not able to levy local sales tax. It’s one of the reasons “state shared revenue” exists. If cities do not have the right to levy local sales tax, then the idea is that the state should share the state revenues from the statewide tax.