Ann Arbor city councilmembers Sabra Briere (Ward 1) and Tony Derezinski (Ward 2). (Photo by the writer.)

Part 1 of this meeting report focuses just on the medical marijuana-related items. In a separate article, The Chronicle has analyzed some of the key issues at stake: “Ann Arbor Marijuana Licenses: Who Decides?”

In front of the council for its consideration were three separate agenda items involving medical marijuana: (1) revisions to the city’s medical marijuana licensing ordinance as recommended by the licensing board; (2) direction to the city planning commission to make a recommendation on revisions to the city’s medical marijuana zoning ordinance; and (3) direction to the city attorney to delay enforcement action against dispensaries.

The council unanimously postponed consideration of the licensing ordinance revisions until June 18 – the council’s second meeting that month. During deliberations on the licensing ordinance, several councilmembers expressed concerns about the board-recommended revisions, in particular one that would allow the city council to waive requirements of the licensing ordinance for a dispensary.  In postponing, councilmembers wanted to give the planning commission enough time to act on its direction to review the medical marijuana zoning ordinance and give a recommendation to the city council. The intent is to bring forward any changes to the licensing and zoning at the same time.

The direction to the planning commission passed on a 9-1 vote, with dissent from the Tony Derezinski (Ward 2), who is the city council’s representative to the planning commission. [Marcia Higgins (Ward 4) was absent, leaving the 11-member council with 10 members present.]

The council tabled the resolution directing the city attorney to delay enforcement activities. The tabling was achieved on a 6-4 vote. Voting against the tabling were mayor John Hieftje, Sabra Briere (Ward 1), Margie Teall (Ward 4) and Mike Anglin (Ward 5). A tabled resolution will demise if it’s not brought back for consideration in six months.

The medical marijuana licensing board made recommendations on the award of licenses to 10 dispensaries at its  Jan. 31, 2012 meeting. Given remarks made at the council’s April 2 meeting by Sandi Smith (Ward 1), Carsten Hohnke (Ward 5) and Stephen Kunselman (Ward 3), there’s some sentiment in support of having the council go ahead and vote on those recommendations – before the council considers ordinance revisions in June. But it’s not clear whether the city attorney’s office would be prepared before June to provide advice on the license awards.

This report includes coverage of public commentary and council deliberations on the medical marijuana items, presented in detail. Other agenda items from the April 2 meeting will be included in a separate forthcoming report.

Medical Marijuana: Public Commentary

Luis Vazquez told the councilmembers he was standing before them as an Ann Arbor resident. He noted that he paid a lot of money in taxes. Of all the things the city attorney could and should be spending time and taxpayer money on, the recent actions of the city attorney on medical marijuana dispensaries are questionable – in light of the desire of Ann Arbor residents to have safe access points for medical marijuana, he said. He reminded the council that in 2004, three out of four Ann Arbor voters supported the city charter amendment on medical marijuana, which city attorney Stephen Postema claimed at the time was unenforceable. In 2008, around 4 out of 5 Ann Arbor voters supported the statewide ballot initiative on medical marijuana – it’s an overwhelming majority of Ann Arborites who are saying they prefer an end to the drug war, he contended.

The number of patients who legally use marijuana – and who applied for their patient cards – has outstripped the ability of the state of Michigan to process the paperwork in a timely fashion, Vazquez said. That may force some patients to use the black market to obtain their medicine until they can find a caregiver or find a way to grow their own. Vazquez said that in his view, Michigan attorney general Bill Schuette has vowed to thwart the will of the state’s voters by dragging patients and caregivers into court and proposing that the legislature change the Michigan Medical Marijuana Act to make it more difficult for patients to exercise their health care rights. To hear Schuette arguing for continued prohibition is like listening to Al Capone arguing for continued prohibition of alcohol, Vazquez said. Schuette’s actions have now prompted a ballot petition to legalize all uses of marijuana, he said.

Vazquez continued by saying that the city attorney should not be using his taxes to support the misguided and political actions of the state’s attorney general. He concluded by suggesting that the council consider three actions: (1) require that the city attorney’s office cease and desist action against dispensaries operating in Ann Arbor; (2) place on the ballot for the November 2012 election a measure similar to that passed by Kalamazoo voters – that the city charter be amended so that consumption or use of less than 1 ounce of marijuana by adults is the lowest priority for law enforcement personnel; and (3) appoint a marijuana regulatory commission, which would set quality standards, maximum prices, licenses and other fees, and an enforcement apparatus.

Jamie Lowell spoke on behalf of the Michigan Association of Compassion Centers (MACC). He thanked the council for being so steadfast on medical marijuana issues and working to resolve the challenges that have come up. He pointed out that the Michigan Supreme Court has decide to hear the appeal of the McQueen case. MACC has been invited to file an amicus brief in the case, he said. The court of appeals ruling on the McQueen case has served to cause more confusion and disagreement about how the state medical marijuana act impacts what a municipality may or may not do, he said.

MACC contends that the judges on the court of appeals lacked foundation and erred in their decision, Lowell said. He also indicated that MACC interprets the court of appeals ruling to be narrower than the interpretation by the attorney general and by some prosecutors and city attorneys. So MACC was not surprised when the supreme court decided to hear the case and take a closer look at it. Lowell said it would be appropriate for the council to set aside any implications that the McQueen case is thought to have had, until the supreme court rules.

Lowell also pointed out that state legislators are working on a “local option bill” entitled the Michigan Medical Marijuana Provisioning Center Act. Some legislators backing the bill are part of a bipartisan workgroup. The legislation would require a simple majority to pass (as opposed to the super-majority that would be required to change the voter-approved Michigan Medical Marijuana Act), so they believe it’s viable. During MACC’s discussions with state legislators, Lowell said, he’s repeatedly heard Ann Arbor cited as an example of a community that has embraced the opportunity to help citizens with their health care.

Nancy Wright Maxwell introduced herself as a 30-year Washtenaw County resident. She told the council that she was speaking in support of dispensaries. She said she’d been active her whole life, and she allowed that people might not think she looked like the face of the medical marijuana movement. She’s been a competitive athlete her whole life, she said, and has been playing national tournaments for the last 10-20 years. She’s had a lot of surgeries – three knee surgeries and two hip surgeries. She has chronic pain, she said.

Because she’s a senior executive for an insurance company and travels all over the world, she has limited options, Maxwell said. Vicodin isn’t a viable option, she said, citing the effects on the liver. She said that because she’s an athlete, she doesn’t want to smoke – so having safe, reliable dispensaries that she can trust is important. She doesn’t want to grow marijuana, she said, and did not want any part of that. She’d shown her 73-year-old conservative Grosse Pointe parents her registry card, and said it was a place of pride that she is legal. She said it’s important to be able to walk into a dispensary and get a little “medible,” that takes the edge off her pain so she doesn’t have to take Vicodin. She can no longer take the level of Advil that she’d been taking.

Maxwell allowed that she’d made the bed she was sleeping in with respect to her choice to engage in athletics. Ann Arbor is one of the most amazing places in the world to live – she wants Ann Arbor be a part of the cutting edge of having the model that will allow people to be helped. She allowed that some people will abuse it, and that’s unfortunate, but that’s a reality of every type of business.

Mitchell Elkiss began by saying he’d be offering a slightly different perspective – as a health care provider, a physician. So he had watched the emerging and evolving science of medical marijuana over the years, demonstrating its safety and efficacy. As a caregiver, he takes care of a lot of patients with chronic pain. He also suffers from chronic pain.

So with his doctor’s guidance, Elkiss had identified safe alternative therapeutic options that can be integrated into a whole complex of caregiving. With respect to dispensaries, if you’re going to write or fill a prescription, you need a quality source of whatever it is you’re going to use, he said. It needs to be a reliable source over time, each time you go. It has to be obtained in a safe and secure manner. So one of the things that distinguishes a dispensary from a single caregiver is that a dispensary can offer variety – different strains, medibles and tinctures. That’s not something a single caregiver can legally secure by himself. Elkiss told the council he’s a member of OM of Medicine, an Ann Arbor dispensary, and noted that the professionalism with which the dispensary conducts itself is part of the experience.

He reviewed the importance of finding a safe, effective alternative for the adjunctive use of medical marijuana, noting that it has to be done in a safe and reliable way, requiring special places where the products can be regularly of high quality.

Laurel Hufano introduced herself as a 33-year-old Ann Arborite, born and bred. She loves Ann Arbor and it’ll always be her home, she said. She felt very passionate about it being a safe, tolerant and welcoming place. She’s glad the University of Michigan and its hospital are located here.

Hufano had originally received her patient’s card in 2009 – she has arthritis and disc degeneration in her lumbar spine, along with a misaligned kneecap. She’s also suffered from migraines since she was 20 years old. So she has lived with chronic pain for some time. This year she was diagnosed with idiopathic inter-cranial hypertension. She’s had no positive response from various medications.

Having a medical marijuana patient card has made a world of difference in terms of making her daily pain livable, she reported. Dispensaries are important, because she needs a safe place that she can trust and access easily, and that is accountable to the city and that’s there to support patients. The center she visits has given her better care than many doctors, she said.

Drew Driver addressed the council from a wheelchair. He told the council he has a spinal cord injury. His primary care physician was barred from writing prescriptions for medical marijuana because of the hospital group he was with. So he recommended another doctor. Together they decided that medical marijuana was a good choice to deal with his muscle spasms, his pain and his lack of appetite.

Medical marijuana provides relief for him, Driver said. He said that although he visits Ann Arbor on a regular basis, he’s actually from Gaylord, about four hours north of Ann Arbor. After learning that medical marijuana helped him, he embarked on a mission to help others relieve their pain in a way so that they felt safe. He worked with his local city council, city police, county officials. They had a half dozen meetings about what they’d do – his goal was to have safe access and get dispensaries licensed and zoned properly. They’d come up with rules and regulations that worked for their town – they didn’t want a big marijuana leaf on the signs, for example. They didn’t want dispensaries within 500 feet of schools – that sort of thing, he said. It was a great experience for him, he said, because it got him involved in government and they all worked together and had a good outcome.

They had not actually written city ordinances, because at the time, Gaylord was worried they’d write an ordinance and they wouldn’t have control one way or another. His point, Driver said, was that a lot of other municipalities look to Ann Arbor for guidance – his own community had done that. There would be a lot of other cities who look to Ann Arbor as a leader on this issue. State legislators would also look to Ann Arbor as a leader.

Medical Marijuana Licensing Ordinance Revisions

The council was asked to consider a set of licensing ordinance revisions that had been recommended by the medical marijuana licensing board at its Jan. 31, 2012 meeting. Those recommended changes are included in the report that the licensing board subsequently submitted to the city council. [In the presentation below, the language recommended to be added is in italics, and language recommended for deletion is struck through.]

Licensing Revisions: Completeness, Conditions

The issue of completeness of applications is one that has been a chaffing point between the licensing board and the city staff. City staff were reluctant to present the board with license applications that they did not consider complete.

The licensing board agreed at its Jan. 31 meeting to recommend that the explicit role of city staff in determining completeness of applications be struck from two places in the ordinance [added language in italics; deleted language with strike-through]:

7:504 (4) Following official confirmation by staff that the applicant has submitted a complete application City Council approval of the issuance of a license, a new license shall not be issued to a medical marijuana dispensary until the applicant for the license complies with all of the following requirements…

7:505. If the applicant has successfully demonstrated compliance with all requirements for issuance of a license within 10 weeks (70 calendar days) after the date of City staff’s official confirmation that the application for a license was complete City Council’s approval of a license, the city administrator or designee shall grant renewal of an existing or issue a new license…

At the licensing board’s Jan. 18 meeting, the idea was entertained to remove staff from part of the process, by requiring that all the application materials be forwarded directly to the board, instead of to the city planning staff. Ultimately, the board weighed the volume of actual work it would take for board members to handle application materials, concluding it was more than a clerical task.

The board also agreed to a recommendation making explicit that there is flexibility in the kind of conditions that can be set.

7:502 (7) … The Board shall annually send to City Council a proposed resolution recommending either approval or rejection of each complete license application. A recommended resolution may set conditions for approval. The conditions may include a waiver by City Council of any provision or provisions of the licensing ordinance, and/or the imposition of a new provision or new provisions, if the public interest so requires.

Licensing Revisions: Entry for Inspection

The board agreed to recommend a change to make explicit that requests from the city to inspect a dispensary would be complaint-driven:

Pursuant to a complaint, an authorized person shall consent to the entry into a medical marijuana dispensary by the Building Official and zoning inspectors for the purpose of inspection to determine compliance with this chapter pursuant to a notice posted in a conspicuous place on the premises two (2) or more days before the date of the inspection or sent and by first class mail to the address of the premises four (4) or more calendar business days before the date of the inspection.

Licensing Revisions: Number of Licenses, Frequency of Recommendation

At its Jan. 31 meeting, the licensing board grappled with the tension between having a single annual recommendation on licenses (as the ordinance now specifies) versus a rolling recommendation as applications are submitted. The board agreed not to suggest changing from the process described in the ordinance as an annual recommendation for the award of licenses.

The board settled on capping the number of licenses at 20, which is the maximum number specified in the ordinance for the first year.

… but not more than 20 medical marijuana dispensary licenses shall be issued in the first year and shall be capped at that number.

Also recommended was a standardization of the timing requirements for applications – in some places there’s a 70-day condition but in others it’s a 90-day condition. The board agreed to recommend making that timing requirement uniformly 90 days.

Licensing Revisions: Council Deliberations

Sabra Briere (Ward 1) is the city council representative to the medical marijuana licensing board, so she led off the deliberations by reviewing how the licensing ordinance revisions had come to the council. She summarized them by saying that most of the changes were clarificational, but called her council colleagues’ attention two substantive changes – the cap at 20 licenses and the council’s ability, in the context of a license recommendation for a specific dispensary, to waive provisions of the licensing ordinance or add a new provision to the licensing ordinance.

Because only 10 dispensaries had applied in the first year, the board saw no reason to increase the number. With respect to the ability of the council to waive or add provisions to the licensing ordinance, Briere said it was not a recommendation about what provisions should be waived or added.

Sandi Smith (Ward 1) asked Briere what the impetus was for imposing a cap. Briere explained that the cap of 20 had been established by the council for the first year only. The board had been asked to recommend a number going forward. The recommendation to set the cap at 20 amounted to a recommendation to make no change, Briere said.

With respect to the other revision to allow waivers and additional requirements, Briere described how there was rigidity with respect to the way some people were attempting to apply the ordinance to existing conditions. Because those conditions weren’t being applied by the council (the governing body), she said, but by city staff just trying to figure out the right thing to do, the board didn’t want to say what new conditions might indicate making a waiver, but felt it should be within the council’s authority to do that without conflicting with the ordinance. What you run into, she said, is the licensing board’s sincere effort to anticipate things that can’t be anticipated.

Carsten Hohnke (Ward 5) asked Briere if she thought it would be useful to separate out the proposed actions into different motions. He identified the change that would make inspection “pursuant to a complaint” as one that some people might feel is substantive, as well as the two that Briere had identified. Briere responded by saying that one of the possibilities was not to vote on the changes that night. Her bias was to take up any changes to the zoning ordinance at the same time as the licensing ordinance.

Tony Derezinski (Ward 2) said he was somewhat troubled by the revision that would allow for the waiver or imposition of an additional requirement by the city council. He characterized it as amending an ordinance through a simple resolution. [By the city charter, ordinance revisions require votes by the council at two separate meetings and a public hearing before the second vote. A resolution can be passed by the council at a single meeting.] He said he had concerns about that. The licensing ordinance was, he said, to say the least hard fought and well thought out. There were a lot of compromises that were made, he said. He was troubled by the idea of altering an ordinance through a simple resolution and would not support it on that basis.

Jane Lumm (Ward 2) also expressed concerns about the idea of waiving provisions of the licensing ordinance. She wanted to understand what the change was meant to accomplish. She found it of concern to be routinely waiving ordinance provisions. Briere told Lumm that Lumm was understanding the ordinance “moderately correctly.” But Briere went on to clarify that she did not know if the licensing board felt very strongly about whether there should be a specific ordinance change associated with a waiver or a new provision. The board did feel that there were no criteria given for granting a license, and the lack of criteria of evaluating a license created a clear conflict “of the board.”

That is, Briere said, board members felt like all they could do, more or less, would be to see if all elements of the applications were present. There were not criteria offered by the council in the ordinance. And the board didn’t develop criteria, because the board didn’t have any guidance to develop criteria. As a result, she said, the board felt that if the council wants criteria, it should be able to say, for example, this dispensary would be too close to that dispensary, even though no criterion has been set that says dispensaries can’t be within 500 feet of each other.

Briere reiterated that her preference would be to introduce the revisions and then postpone them, to discuss zoning changes at the same time.

Lumm followed up with a question about the revisions that would strike language about the completeness of applications. She wondered why the change was needed. She felt that before council could act, it needs to know if the application is complete. Briere explained to Lumm that what the change does is ensure that the council has a consistent role. It’s the council that approves a license, not the staff, Briere said. The change clarifies what the final step is. The council won’t consider an application that hasn’t been through the licensing board, she said.

Mayor John Hieftje remarked that if the council were going to postpone the licensing ordinance revisions, he didn’t want to spend a lot of time discussing it that night.

Licensing Revisions: Council Deliberations – Postponement

Briere then made a formal motion to postpone the licensing ordinance revisions. She suggested that the postponement be to a date no later than the middle of June. The reason for the ambiguity was because of the subsequent resolution that the council would be considering, that asks the planning commission to evaluate the zoning ordinance for possible changes. She did not want to put pressure on the planning commission to act.

Christopher Taylor (Ward 3) wondered if a postponement to a date certain could be achieved with a “not later than” phrase. Hieftje suggested making it June 18 – the second meeting in June.

Derezinski said he supported the postponement. He wanted to see the issue he’d raised addressed [about the idea of essentially revising an ordinance through a resolution]. The ordinance language had gone through “a meat grinder, or a sausage grinder,” he said, so to amend it by a simple resolution in the context of a license approval gave him a lot of concern. That gives the council a lot of latitude to act in the “public interest,” he said. Derezinski expressed concern about the vagueness of that phrase, as well.

Stephen Kunselman (Ward 3) also supported postponement. He said he shared Derezinski’s concern over the waiver of a provision of the licensing ordinance. It struck him as far-reaching, he said.

Outcome: The council unanimously postponed the medical marijuana licensing ordinance revisions until June 18.

Direction to City Attorney on Enforcement

On the council’s agenda was a resolution to “delay all enforcement activities against medical marijuana dispensaries and cultivation facilities except for claims that they violate Section 5:50.1(3) of the City Code [zoning regulations], until the Council amends or rejects amendments to the zoning and licensing ordinances for medical marijuana.”

The resolution had been twice-previously postponed. On March 5, the council did not arrive at the agenda item until after midnight, due to lengthy deliberations on the four-party countywide transit agreement. So on that occasion the council opted to postpone until they were mentally fresher. And on March 19, three of 11 members were absent, and the prevailing sentiment on the council was that postponement would be appropriate, in order to allow those three absent members to vote.

Direction to City Attorney: Background

To evaluate compliance with the Michigan Medical Marijuana Act (MMMA), the city attorney’s office required that dispensaries submit with their license applications a clear statement of exactly how their business models would conform with the MMMA. [For analysis of the role of the city council compared with the role of the city attorney and the licensing board in the licensing process set up by the city council, see "Ann Arbor Marijuana Licenses: Who Decides?"]

For example, Cannabis Counsel, the attorney for MedMarx at Arborside, included a statement explaining its MMMA conformance in the wake of Michigan v. McQueen (Compassionate Apothecary). An Aug. 23, 2011 court of appeals ruling on the case has been interpreted by many authorities to mean that no medical marijuana dispensaries are legal. [.pdf of letter from Cannabis Counsel regarding Arborside's business model] The McQueen case has been accepted for review by the Michigan Supreme Court, which means that it’s not yet settled case law. And the broadest interpretation of the McQueen case – that it bans all dispensaries – is itself controversial.

The Cannabis Counsel letter lays out why the court of appeals in the McQueen case found that the Compassionate Apothecary business model was not in compliance with the MMMA: The problem was that Compassionate Apothecary did nothing to “assist” patients in administering or using marijuana, beyond exchanging marijuana for money. In contrast to Compassionate Apothecary, argues Cannabis Counsel, Arborside does assist patients in the manner described by the court – by assisting the patient “in preparing the marihuana to be consumed in any of the various ways that marihuana is commonly consumed.” Those ways include providing patients with “cleaned prepared de-stemmed cannabis including pre-rolled joints, medibles which have been inspected, tested, cleaned, grinded and rolled, or cooked in combination with foodstuff.”

The Ann Arbor dispensaries met the city’s request to submit with their applications an explanation of their compliance with the MMMA. And on Jan. 31, 2012, the city’s medical marijuana licensing board voted to recommend licenses to 10 dispensaries. Yet after that, when dispensary owners felt like they’d completed the application process with the final step to be a vote by the city council, the city attorney’s office sent out letters demanding additional data.

Among the questions posed to all dispensaries in the letters are the following: “Does any person or entity deliver marijuana to [Dispensary Name]? If so, does [Dispensary Name] ever pay, donate, or in any way give money to the person or entity who delivers the marijuana or to anyone else? If so, to whom is the money paid, donated, or given and how much?” [.pdf of set of letters]

Dispensaries have balked at the additional data request, arguing that the information is sensitive and the collection of such data by the city was explicitly removed by the city council during the legislative process that resulted in approval of the licensing and zoning ordinances. But the city is currently not granting Chapter 55 zoning compliance permits to license applicants – on the grounds that compliance with the MMAA cannot yet be verified.

The licensing board met on Feb. 24 in response to the new letters, and asked that the resolution, which the council was considering for the third time on April 2, be voted on by the council.

Direction to City Attorney: Deliberations

Sabra Briere (Ward 1) led off deliberations by sketching out the background of the licensing board’s meeting on Feb. 24, describing it as an unanticipated meeting. The board felt very strongly that the role of the city attorney’s office needed to be clarified, and the only body that can do that is the city council, Briere said. [The city attorney is one of two positions hired directly by the city council. The other position is city administrator.]

Sandi Smith (Ward 1) expressed sympathy with the intent of the resolution, but wanted to offer an additional resolved clause that would allow the resolution to be rescinded at any regular or special meeting called for that purpose. That amendment was accepted as a “friendly amendment,” which did not require a vote of the council.

Tony Derezinski (Ward 2) cited the same issue he’d raised earlier, in connection with the proposed licensing ordinance revisions – it’s a resolution that has the effect of changing an ordinance the council has passed. It says don’t enforce the law as the council wrote the law, Derezinski contended. With respect to the idea that the enforcement would be delayed until the council decides what to do, Derezinski felt that’s pretty “loosey-goosey” and that it left open the possibility that enforcement could be delayed for quite some time – until licensing ordinance revisions are decided on. The council had passed an ordinance, and the city attorney is obliged to enforce it, Derezinski said, so he’d be voting against the resolution.

Addressing the amendment proposed by Smith, Carsten Hohnke (Ward 5) asked if it’s an action reserved for the council in any case – to call a special meeting and rescind a resolution. Briere confirmed that was the case – it’s a belt and suspenders approach.

Responding to Derezinski’s concern about the indefiniteness of the delay in enforcement, Briere pointed out that by its decision to postpone the ordinance revisions until June 18, there was a date in the future by which time the council expected the issue to be settled.

Christopher Taylor (Ward 3) stated his belief that the status of medical marijuana in the state law as currently articulated by the courts is inconsistent and at odds with the way that most Ann Arborites would like it to be. He included himself in that view. That resulted in a tension between the council’s action and the state of the law generally. He characterized the resolution as “wandering towards” that tension and seeking to resolve it. But he said he did not believe that the council should do that. The council is a body that is subordinate to state law. The council has also enacted local laws and he felt that until the council chooses to change the law, the law should be enforced. So he said he would not support the resolution.

Mike Anglin (Ward 5) asked for clarification of the request of a delay. He asked what information the city attorney was requesting of dispensaries – was it information that’s supposed to be protected? Briere confirmed that this was the case. The letter sent by the city attorney’s office requested the names of individuals involved in providing medical marijuana to dispensaries and other information as well. She said that for her part the line was crossed when the city began seeking information that it’s not supposed to be seeking.

As the legislation was being crafted, Briere noted that the council had talked about whether to require dispensaries to maintain lists of patients or people growing marijuana. The council learned that if it did collect such a list, it would in any case not be able to confirm that someone was allowed to grow marijuana, or have a patient card, because that information is restricted and the state would not release it. For the city’s purposes, they could not match a name with patient or caregiver numbers.

Briere said she could appreciate the desire of the city attorney’s office to verify that a dispensary operation is in compliance with the Michigan Medical Marijuana Act, but indicated she felt it was as difficult for the city attorney’s office to do that as it was for the licensing board to develop any criteria by which to evaluate applications.

It shouldn’t be sufficient that someone merely fills out all the paperwork in the right order in order to get a license, she said. But the board didn’t try to set criteria, because there were so many other issues in front of the board. The city attorney’s office is, through its recent letter, trying to set those criteria – which includes the collection of information that the council had agreed it shouldn’t collect. That caused a problem for the licensing board and it caused a problem for her, Briere concluded.

Derezinski invited city attorney Stephen Postema to tell his side of the story, because he’d been mentioned as the staff person involved. In an aside to Derezinski, Briere pointed out that she’d cited the city attorney’s office, not Postema.

Postema then spoke at length on the issue, characterizing his office’s letters as simply trying to verify that a dispensary is in compliance with state law. He argued that the council should be considering whether to award licenses to dispensaries recommended by the licensing board, not thinking about revising the licensing ordinance.

… frankly I don’t know why, under the ordinance, the business licenses aren’t before the council. Ordinarily they’d come there. So again, this is all sort of backwards in one sense, because what they’re trying to do is get a license. They can’t operate right now, they’re not allowed to operate at all – without a license. And that is what they should be wanting to be in front of you, so you can rule on it. So if they do comply with state law, they can get a license. So asking them for basic information is part of what needs to be there. And that’s nothing surprising. The fact that the licensing board somehow took offense to this, that’s because they’re operating in a different realm in some ways than what I’m being asked to do. So there’s nothing surprising there.

[Postema's claim that the lack of a license, while an application is pending, precludes operation of a dispensary is contradicted by the ordinance language, which specifically allows a dispensary to operate while its application is pending. For more detail, see "Ann Arbor Marijuana License: Who Decides"]

Postema expressed puzzlement that the licensing board was recommending that compliance with the MMMA be struck from the zoning ordinance. [The zoning ordinance issue was discussed by the council later in the meeting.]

With respect to the sensitivity of the information that his office was requesting, he contended that dispensary owners have been told specifically that they can disguise the information in “the way it’s talked about in the ordinance.” The ordinance provides for unique alphanumeric codes to be used in labeling as follows:

(4) All marijuana delivered to a registered qualifying patient shall be packaged and labeled as provided in this chapter. The label shall include:
(a) a unique alphanumeric identifier for the person to whom it is being delivered;
(b) a unique alphanumeric identifier for the registered primary caregiver who is delivering;
(c) a unique alphanumeric identifier for the medical marijuana cultivation source of the marijuana;

[In asking "... does [Dispensary Name] ever pay, donate, or in any way give money to the person or entity who delivers the marijuana or to anyone else? If so, to whom is the money paid, donated, or given and how much?” the city attorney is apparently seeking to establish whether a “sale” of marijuana is taking place at the dispensary. The McQueen case turned in part on the court’s view that the dispensary in that case was not providing assistance to patients in the medical use of marijuana beyond the provision of the raw material and was thus engaged merely in the sale of marijuana.]

Briere countered Postema’s contention that the names could be disguised by pointing out that the letters sent by Postema’s office asked, “… to whom is the money given?” She said that she understood that to mean, “… give me the name of the person …” And that’s how dispensary owners and the licensing board had understood it, she said. Briere recalled the lengthy council discussion about whether to collect the names of people who were involved.

She also said that given all the intricacies, the licensing board is not asking that other laws not be enforced, but that until the council decides what it will do with the ordinances, it asks the city attorney not to consider anything else. The members of the licensing board don’t want to talk about whether a license should be granted, if they believe that the council will be advised that no licenses should be granted. The board wants the council to consider amendments to the ordinances first. What she hears from the city attorney is that he can’t assert at this time that anybody complies with the ordinances. So why should licenses be considered, if the advice from the city attorney will be that nobody is in compliance? The licensing board was asking the council to deal with the ordinances, she said.

Stephen Kunselman (Ward 3) zeroed in on Postema’s question about why the licenses were not in front of the council. He noted that Briere had implied that if the licenses came before the council, the council would be advised that the dispensaries don’t comply with state law. He alluded to the public commentary about the narrow interpretation of the McQueen case.

So Kunselman asked Postema why the licenses are not in front of the council. Who would bring them, he asked? Would it be the city attorney, or the city administrator? That seems the most rational thing to do, he said, to start moving forward, rather than delaying enforcement. “Let’s get the license applications in front of us,” Kunselman said. Postema then contended, “I think they are in front of you in one sense. I don’t really know why, in the ordinary course of something like this, they would just come in front of you … it is before you, it just doesn’t show up on the agenda.” He indicated that his office would not ordinarily put such an item on the agenda, but that it would happen “automatically.”

Briere responded to Postema’s remarks by noting that the council had been provided with the licensing board’s report, which includes the dispensaries that have been recommended for licenses. She said that if it’s the council’s desire, she could bring the license recommendations to the council for a vote – she could do that as soon as the next meeting. But she noted that if the ordinances have not been resolved, then the council may not believe it has the ability to approve a license. It’s the council’s decision about the order in which things flow, she said. But the licensing board wants the ordinances dealt with first.

Mayor John Hieftje said that in following reports out of Lansing, it seemed to him that the state law is in “flux” – alluding to the supreme court’s decision to hear the appeal of the McQueen case and possible new legislation that’s being considered.

Postema told Hieftje that the state of the law is not in flux. The body of law in the court of appeals has been consistent, he said. Postema said it was not a surprise that the supreme court had agreed to hear the McQueen case. He said most people who are following the case don’t believe the ruling would change. However, he allowed that there could be a change in the analysis of McQueen. He indicated he’d shared his thoughts with people working on new state legislation. He said he was not going to pursue the issue right now. But he repeated his contention that “… right now they don’t have a license, they’re not in compliance with the ordinance.”

Hieftje noted how much time the council had spent on the issue over many months, and said he was reluctant to “do anything concrete” with the possibility that legislation might move in Lansing and court cases still being considered. He said he didn’t want to spend any more time on the issue than they needed to: “We’ve spent way too much time on this issue for what it should have warranted.” He laid that at the feet of the state legislature in Lansing, saying they’d totally dropped the ball on providing guidelines for local governments.

Sandi Smith (Ward 1) asked for confirmation from Postema that other cities have collected fees and issued licenses for dispensaries. Postema allowed that was true. Smith ask if there’d been any state action against the cities that had done that. Postema said he didn’t think there’d been state action.

Smith felt the council’s discussion had provided fodder for the licensing board to reconsider the methodology of trying to get the licenses to go forward. She suggested that the council send the message back that the council wants to look at the licenses – that was the approach she wanted to take. If the state does something, the council could make adjustments as needed.

Carsten Hohnke (Ward 5) expressed concern about the order of things. He indicated support for Smith’s desire to go ahead and have the council consider the licenses. He felt that if the council considered the licensing applications after changing the ordinances, the council might find itself wishing that it had maintained the same ordinance language. He felt that the point is to get some better understanding of how dispensaries are conforming. In the discussion of whether to approve licenses, the council might come up with an approach to dealing with that.

So Hohnke moved to table the resolution directing the city attorney. It did not feel like the right order of things, he said. Hieftje said his concern was that the council could consider the licenses and then find that six months later the rules have changed at the state level and the council would be back to considering the licenses again. “It doesn’t seem to end, is the problem here,” he said. Hieftje was somewhat reluctant to consider the licenses, given what he thinks the city attorney’s advice would be in the context of the state law. What he liked about the resolution is that it says basically, “Listen, there’s nothing really wrong right now, and we haven’t had any particular problems, let’s give ourselves some time …”

Hohnke said it would be nice to get direction from the legislature. But absent the consideration of a license, Hohnke said, the need for asking questions about whether there is compliance to support approval of the licenses would be moot. It’s not clear then what might happen that the resolution would address. So Hohnke moved to table the resolution and it was seconded by Smith.

Briere noted that it’s completely in the control of the council to postpone to a date certain or to table. She allowed that the need to bring this back off the table might not exist, if the council evaluates licenses. Things might not be resolved at the state level in three months. To delay this longer than three months seems wrong, she said. If the council wants to see licenses before June 18, it may never need to come off the table.

Christopher Taylor (Ward 3) said that as he understands the status quo, one suspects businesses are operating and people are obtaining medical marijuana under what they believe to be safe and comfortable conditions. He said he had a problem with the idea of ceasing the enforcement of existing laws, so he’d support the tabling.

Outcome: The council tabled the resolution on a 6-4 vote. Dissenting were Sabra Briere (Ward 1), Margie Teall (Ward 4), Mike Anglin (Ward 5) and mayor John Hieftje.

Given the sentiment expressed by Smith, Hohnke and Kunselman, there is at least some interest on the council in seeing the license recommendations come before the council. However, the city attorney has told at least one councilmember that his office would not be prepared to give advice on the issue at least until June.

Direction to Planning Commission

Another resolution on the April 2 council agenda would direct the city planning commission to review the medical marijuana zoning ordinance, including the licensing board’s recommended change. The one board-recommended change is to strike the following sentence: “Medical marijuana dispensaries and medical marijuana cultivation facilities shall be operated in compliance with the MMMA (Michigan Medical Marijuana Act).” [.pdf of the recommended zoning ordinance change. For analysis of the implication of striking the sentence, see "Ann Arbor Marijuana Licenses: Who Decides?"]

The discussion at the licensing board’s Jan. 18, 2012 meeting on this issue included concern expressed by dispensary owner Chuck Ream, who indicated that deleting the phrase could cause alarm and attract unwanted attention to Ann Arbor if it were incorrectly perceived as sending a message that Ann Arbor’s dispensaries would not be following Michigan’s medical marijuana law.

Tony Derezinski (Ward 2) led off deliberations on April 2 by saying that with the action the council had just taken – postponing the licensing ordinance revisions and tabling the direction to the city attorney – giving direction to the planning commission didn’t make sense. He said that action should be postponed.

Sabra Briere (Ward 1) pointed out that one reason for postponing the licensing ordinance revisions was to allow time for the planning commission to consider the medical marijuana zoning ordinance. There was no other reason to postpone it. So she did not encourage postponing the resolution.

Christopher Taylor (Ward 3) asked if there was any reason to think the planning commission would not take action on the licensing board’s request in due course. Briere said that if the council were to ask the planning commission to take a look at the recommended change, the commission would take some action.

Taylor followed up by saying that his understanding was that the ordinary course of things would have the planning commission considering the licensing board’s request [without involvement of the city council]. He asked if the licensing board had communicated its request to the planning commission. Briere indicated that it’s the council that would make the request, not the licensing board. Taylor questioned whether the planning commission really would not consider any zoning change unless it’s been specifically requested by the council. Briere replied that this was the order in which she’d been told she had to do things. Based on her conversations with the city attorney’s office, this was the order in which things needed to go.

Jane Lumm (Ward 2) asked if there were a legal reason why for the recommended change to delete the explicit mention of MMMA compliance. She felt it was not an unreasonable requirement to include in the zoning ordinance. She wondered if the suggestion was that dispensaries don’t need to be in compliance with the MMMA.

Briere explained that during the course of the application process, the licensing board members learned that in part because of that specific clause, that [in the city attorney's view] each license applicant had to prove they were in compliance. The rest of the zoning ordinance has requirements that mirror the requirements in the MMMA. But the specific clause prevented any of the dispensaries from obtaining a zoning compliance permit – because they couldn’t, to the satisfaction of the city staff, prove they were in compliance with the MMMA. Without a zoning compliance permit, no application was complete, Briere said.

Postema said he didn’t think it was unreasonable for the process to go to the planning commission and come back to the council.

Carsten Hohnke (Ward 5) said that the merits of the appropriate changes could be discussed later, but he felt that the proper order of things was to send it to the planning commission. Mayor John Hieftje felt it wouldn’t take the planning commission an inordinate amount of time to act.

Derezinski asked if the city council was asking the planning commission to delete the section that had been recommended for deletion by the licensing board. Postema clarified that the resolution was asking the planning commission to take a look at it – it would not require the planning commission to make any particular recommendation. Derezinski asked if this were a case of making a change to an ordinance through a resolution. No, said Postema. Derezinski confirmed with Postema that the planning commission could do whatever it felt was best.

Lumm found the deletion of the sentence confusing, from the perspective of a planning commissioner. Postema noted that any change would need to come back to the council. Briere observed that it’s within the purview of the planning commission to make any recommendation.

May 7 was specified in the resolution as the date by which the planning commission was supposed to act. Mike Anglin (Ward 5) asked if the May 7 date was appropriate. Planning manager Wendy Rampson noted that they’d need 15 days for noticing any public hearing on the issue. Also it might be hard to respond quickly without additional background. It would be helpful to have some additional time, say until the end of May, Rampson said. Hieftje proposed June 1, for which there was general agreement.

Outcome: The council approved the resolution giving direction to the planning commission to review the zoning ordinance over the sole dissent of Tony Derezinski (Ward 2).

Present: Jane Lumm, Mike Anglin, Margie Teall, Sabra Briere, Sandi Smith, Tony Derezinski, Stephen Kunselman, John Hieftje, Christopher Taylor, Carsten Hohnke.

Absent: Marcia Higgins.

Next council meeting: April 19, 2012 at 7 p.m. in the council chambers at 301 E. Huron. [confirm date]

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Most notably, the meeting featured remarks from city attorney Stephen Postema indicating that he believes medical marijuana dispensaries should not be in business now because they lack licenses: “… [dispensaries] can’t operate right now, they’re not allowed to operate at all – without a license.”

That contradicts the city’s ordinance, which allows dispensaries to operate while their license applications are still pending. (The city is still in the process of issuing its first licenses for dispensaries.) From the ordinance: “The medical marijuana dispensary may continue to operate pending final action on the application unless the Building Official determines that it must be closed for safety reasons.” When The Chronicle sent Postema an emailed query questioning the accuracy of his statement, he responded by insisting his statement was accurate. However, Postema declined to provide any foundation for his feeling that dispensaries lacking a license – even those with applications pending – are not allowed to operate by dint of having no license.

If dispensaries are assumed to be operating in violation of the Michigan Medical Marijuana Act, then they would not be allowed to operate – whether they had a license or not. However, at the April 2 meeting Postema did not identify a basis for such an assumption. He stopped short of describing an interpretation of a recent Michigan court of appeals ruling (the McQueen case) as banning all dispensaries, but said the ruling presented “severe difficulties” for dispensaries.

The council’s deliberations on Monday night can be understood in the context of a struggle between the city attorney’s office on the one hand, and some members of council and the medical marijuana licensing board. The struggle relates to who has the decision-making authority for awarding licenses, and when those licensing awards should be decided. From a formal, procedural point of view, it’s not an open question: The licensing board makes recommendations to the city council, which has the ultimate decision-making authority. The board has already recommended that licenses be awarded to 10 different dispensaries.

However, from a practical point of view, the council will act only under the advice of the city attorney’s office. Since the licensing and zoning ordinances were enacted by the city council last year, Postema has proceeded in a way that reserves a role for city staff in the licensing process that has an uncertain basis in the actual ordinances approved by the council. Revisions to those ordinances, meant in part to address some of those uncertainties, were part of the council’s April 2 agenda.

Here’s a summary of the outcome on medical marijuana issues at the April 2 meeting: (1) the council unanimously postponed consideration of licensing ordinance revisions until June 18 – the council’s second meeting that month; (2) on a 9-1 vote, the council approved giving direction to the city planning commission to review the zoning ordinance; and (3) on a 6-4 vote, the council tabled a resolution directing the city attorney to delay enforcement activities against dispensaries. A tabled resolution will demise if it’s not brought back off the table in six months.

Deliberations suggested in sum that the current arrangement in Ann Arbor, under which patients are still able to get medical marijuana from dispensaries, will persist at least until the city council votes on licenses. But the timing of that vote appears fairly uncertain, given the mixed signals currently being sent by the city attorney.

Provided in this article is analysis of some of the local issues related to medical marijuana licensing and zoning. The analysis culminates by showing how the interpretation of a single requirement in the city’s zoning ordinance – that dispensaries adhere to the Michigan Medical Marijuana Act – makes a significant difference in who makes the practical decision on whether dispensaries receive a license and can legally operate, and where the burden of proof lies for MMMA conformance.

Local Ordinances

The city council passed two pieces of legislation on medical marijuana at its June 20, 2011 meeting – a licensing ordinance and a zoning ordinance. The final approval of the legislation came after more than a year of legislative work, which began in closed sessions by the council held with its city attorney. The council’s first public discussion and action, however, did not come until the council’s Aug. 5, 2010 meeting, when the council imposed a moratorium on the “initiation or expansion” of medical marijuana business uses within the city. So the moratorium, which was extended several times from its initial 120-day period, did not apply to existing businesses.

Local Licensing: Pending Applications

Existing medical marijuana businesses with ongoing operations before Aug. 5, 2010 were recognized in Ann Arbor’s local licensing ordinance in at least two ways. [.pdf of Ann Arbor medical marijuana licensing ordinance] First, they were able to submit applications for a license before businesses that were not in operation before the moratorium. Second, the licensing ordinance explicitly provides for a dispensary’s continued operation while its application is pending [Emphasis added]:

7:504. Application requirements for new annual license or renewal of existing license; license requirements for new license and for renewed license.
(1) Application Submission.
A medical marijuana dispensary that commenced operation prior to passage of the moratorium by City Council on August 5, 2010, shall have until 60 days after the effective date of this chapter to submit an application for a new annual license. If the medical marijuana dispensary commenced operation prior to passage of the moratorium in a zoning district where its operation is not permitted under the zoning ordinance, the application shall be for a location in a zoning district where operation of a medical marijuana dispensary is permitted under the zoning ordinance. No other applications will be accepted by the City until 75 days after the effective date of this chapter. The medical marijuana dispensary may continue to operate pending final action on the application unless the Building Official determines that it must be closed for safety reasons. Within 60 days after an application is denied, the medical marijuana dispensary shall discontinue all operation.

Postema’s characterization of the situation at the April 2, 2012 council meeting is at odds with the content of the ordinance. His remarks came in the context of an argument he was making that the council should be thinking about voting on the license awards for the 10 dispensaries that had been recommended for licenses. Final action on their applications is still pending, because the city council has not yet voted on them. From Postema’s remarks to council [inaccurate statement emphasized with italics]:

… frankly I don’t know why, under the ordinance, the business licenses aren’t before the council. Ordinarily they’d come there. So again, this is all sort of backwards in one sense, because what they’re trying to do is get a license. They can’t operate right now, they’re not allowed to operate at all – without a license. And that is what they should be wanting to be in front of you, so you can rule on it. So if they do comply with state law, they can get a license. So asking them for basic information is part of what needs to be there. And that’s nothing surprising. The fact that the licensing board somehow took offense to this, that’s because they’re operating in a different realm in some ways than what I’m being asked to do. So there’s nothing surprising there.

An emailed query from The Chronicle to Postema pointing out the contradiction between the actual ordinance language and Postema’s inaccurate statement at the meeting was met with this reply: “There is no inaccuracy in the statement as a careful review of the entire zoning and licensing ordinances demonstrate.”

Unanswered by Postema was a follow-up invitation to explain how he reasoned that a dispensary with a pending license application is illegal (by dint of lacking a license), in light of the specific language of the ordinance.

Beyond the part of Postema’s statement that is contradicted by the licensing ordinance, his remarks raise some interesting issues, most notably whether a detailed demonstration of a dispensary’s compliance with the Michigan Medical Marijuana Act (MMMA) could be a pre-requisite to receiving a license under Ann Arbor’s local ordinance.

Local Licensing: Role of State Law (MMMA)

The city’s licensing ordinance includes two provisions that allow the city to revoke a license, after has been granted, if a state law is violated:

7:508. License revocation.
…
(4) Marijuana is dispensed on the business premises in violation of this chapter or any other applicable state or local law, rule or regulation;
(5) The medical marijuana dispensary is operated or is operating in violation of the specifications of the license application, any conditions of approval by the City or any other applicable state or local law, rule or regulation.
…

The licensing ordinance also includes violations of state law under its prohibited acts:

7:507. Prohibited acts.
…
(b) Produce, distribute or possess more marijuana than allowed by any applicable state or local law.
(c) Produce, distribute or possess marijuana in violation of this chapter or any other applicable state or local law.
…

And the licensing ordinance requires that the conduct of business at a dispensary conform to a specific quantity requirement of the MMMA:

7:506. Conduct of business at a medical marijuana dispensary.
…
(3) No more marijuana than is permitted under the MMMA shall be kept on the premises of a medical marijuana dispensary.
…

However, the licensing ordinance does not establish as a pre-condition for licensing a demonstration that a dispensary has a business model that conforms with the MMMA.

The licensing ordinance does, however, establish a requirement that a license application include a zoning compliance permit:

7:504. Application requirements for new annual license or renewal of existing license; license requirements for new license and for renewed license.
…
(2) Application requirement for new licensee
…
(h) A zoning compliance permit that shows the proposed medical marijuana dispensary is located in a zoning district that would permit its operation.

Based just on Chapter 95, which contains the medical marijuana licensing code, it appears that a “zoning compliance permit” is simply a certification that a dispensary is in the correct zoning district. Otherwise put, as described in Chapter 95, a zoning compliance permit is simply a formal mechanism for ensuring that an applicant for a medical marijuana license intends to operate in a district that has been explicitly zoned for medical marijuana dispensaries.

By way of background, in Ann Arbor, medical marijuana dispensaries can be located only in those districts zoned as D (downtown), C (commercial), or M (industrial), or in PUD (planned unit development) districts where a retail use is permitted in the supplemental regulations.

Local Licensing: Chapter 95 Zoning Compliance Permit

But a zoning compliance permit is a notion that’s not unique to Chapter 95. The fact that there are other uses for a “zoning compliance permit” within the city bureaucracy – besides certifying that a business is in a district zoned for medical marijuana dispensaries – is made explicit in Chapter 95. In describing how the fee for a zoning compliance permit is assessed, Chapter 95 states [emphasis added]:

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.

So Chapter 95 acknowledges that a zoning compliance permit as described in Chapter 95 serves a different purpose from zoning compliance permits mentioned elsewhere in the code. The purpose of a Chapter 95 zoning compliance permit, then, is none other than to establish that the dispensary is located in the correct zone. Nothing in Chapter 95 connects the granting of a zoning compliance permit to any type of compliance with the MMMA.

Local Zoning: Chapter 55 Zoning Compliance Permit

In evaluating license applications, however, the city attorney’s office and planning staff have applied an additional condition on granting zoning compliance permits – beyond a requirement that a dispensary is correctly zoned. That additional condition is for a dispensary to demonstrate compliance with the MMMA, which the city attorney’s office ascribes to the Chapter 55 zoning.

Local Zoning: Chapter 55 ZCP Conditions

The basis that staff is using for this additional requirement is not in Chapter 95, the medical marijuana licensing ordinance, but rather in Chapter 55, the general city ordinance on zoning. Chapter 55 includes the zoning regulations for medical marijuana dispensaries. [.pdf of medical marijuana zoning ordinance]

The Chapter 55 zoning compliance permit for medical marijuana dispensaries is described as follows:

(4) Medical Marijuana Dispensary and Medical Marijuana Cultivation Facility Regulations
…
(h) A zoning compliance permit shall be required consistent with Section 5:92

What is Section 5:92 of Chapter 55? It includes the following:

5:92. Zoning compliance permit required.
(1) It shall be unlawful to begin the excavation for the construction, the moving, alteration, or repair, except ordinary repairs as defined in Chapter 98 of the Ann Arbor City Code, of any building or other structure, including an accessory structure, costing more than $100.00 or exceeding 100 square feet in area until the Planning and Development Services Manager has issued for such work a Zoning Compliance Permit which includes a certification of his determination that plans, specifications, and the intended use for such structure do, in all respects, conform to the provisions of this Chapter.

Hypothetically, a dispensary that did not need to undertake any construction or alteration of a premises costing more than $100 or exceeding 100 square feet could meet the (4)(h) requirement without having a zoning compliance permit. That is, even though it did not have a Chapter 55 permit, it would still be consistent with 5:92. Such a hypothetical dispensary could then reasonably expect to be issued a Chapter 95 zoning compliance permit, if it simply demonstrates it is located in the correct zone.

So what is the basis of the city attorney’s contention that it’s his obligation to verify compliance with the MMMA? Consider a dispensary that undertakes enough work on the premises to trigger the 5:92 requirement that it obtain a Chapter 55 zoning compliance permit. In that case, the planning manager would need to determine that the “intended use” – as a medical marijuana dispensary – conforms to all the provisions of Chapter 55.

And one provision of Chapter 55 is this:

(4) Medical Marijuana Dispensary and Medical Marijuana Cultivation Facility Regulations
…
(k) Medical marijuana dispensaries and medical marijuana cultivation facilities shall be operated in compliance with the MMMA.

Local Zoning: State Law in Chapter 55 ZCP Conditions

Some licensing board members had this understanding of the city’s ordinance: If a dispensary owner states that the dispensary will or does conform with the MMMA, then the city planning manager could determine that the intended use as a medical marijuana facility conforms with (4)(k). Some board members felt that such an assurance would meet the conditions of a Chapter 55 zoning compliance permit.

It’s also possible to analyze the licensing requirements in a way that would result in the granting of a license, based on a Chapter 95 zoning compliance permit, but that could be followed by an immediate revocation of the license if the dispensary tried to operate, for failure to have a Chapter 55 zoning compliance permit.

The city attorney’s office sees the issue differently from the licensing board. The city attorney has interpreted the (4)(k) requirement to mean that a dispensary must demonstrate MMMA compliance to the city attorney’s office before it will be issued a zoning compliance permit. So the zoning compliance permits of the dispensaries that have been recommended for licenses are still pending. To evaluate compliance with the MMMA, the city attorney’s office required that dispensaries submit with their license applications a clear statement of exactly how their business models would conform with the MMMA.

For example, Cannabis Counsel, the attorney for MedMarx at Arborside, included a statement explaining its MMMA conformance in the wake of Michigan v. McQueen (Compassionate Apothecary). An Aug. 23, 2011 court of appeals ruling on the case has been interpreted by many authorities to mean that no medical marijuana dispensaries are legal. [.pdf of letter from Cannabis Counsel regarding Arborside's business model] The McQueen case has been accepted for review by the Michigan Supreme Court, which means that it’s not yet settled case law. And the broadest interpretation of the McQueen case – that it bans all dispensaries – is itself controversial.

The Cannabis Counsel letter lays out why the court of appeals in the McQueen case found that the Compassionate Apothecary business model was not in compliance with the MMMA: The problem was that Compassionate Apothecary did nothing to “assist” patients in administering or using marijuana, beyond exchanging marijuana for money. In contrast to Compassionate Apothecary, argues Cannabis Counsel, Arborside does assist patients in the manner described by the court – by assisting the patient “in preparing the marihuana to be consumed in any of the various ways that marihuana is commonly consumed.” Those ways include providing patients with “cleaned prepared de-stemmed cannabis including pre-rolled joints, medibles which have been inspected, tested, cleaned, grinded and rolled, or cooked in combination with foodstuff.”

The Ann Arbor dispensaries met the city’s request to submit with their applications an explanation of their compliance with the MMMA. And on Jan. 31, 2012, the city’s licensing board voted to recommend licenses to 10 dispensaries. Yet after that, when dispensary owners felt like they’d completed the application process with the final step to be a vote by the city council, the city attorney’s office sent out letters demanding additional data.

Among the questions posed to all dispensaries in the letters are the following: “Does any person or entity deliver marijuana to [Dispensary Name]? If so, does [Dispensary Name] ever pay, donate, or in any way give money to the person or entity who delivers the marijuana or to anyone else? If so, to whom is the money paid, donated, or given and how much?” [.pdf of set of letters]

Dispensaries have balked at the additional data request – the information is sensitive and the collection of such data by the city was explicitly removed by the city council during the legislative process that resulted in approval of the licensing and zoning ordinances. But the city is currently not granting Chapter 55 zoning compliance permits to license applicants – on the grounds that compliance with the MMAA cannot yet be verified.

Significance of (4)(k)

The interpretation of the seemingly innocuous requirement in (4)(k) of the zoning ordinance – that a dispensary operate in compliance with the MMMA – has a significant impact on two things: (1) Who makes the practical decision on dispensary license awards? and (2) Who bears the burden of proof with respect to the MMMA?

Significance of (4)(k): Applicability of the MMMA?

Absent the (4)(k) requirement, the city would need some other basis to deny a Chapter 55 zoning compliance permit to a dispensary. And that is one reason that the licensing board has recommended that (4)(k) be struck from the ordinance. At the council’s April 2 meeting, the idea of striking the (4)(k) was met with professed puzzlement by some councilmembers as well as the city attorney. Their rhetorical position trades on the idea that striking the provision would somehow mean that dispensaries do not have to operate in accordance with the MMMA. In fact, of course, removing the requirement would have no effect on the applicability of the MMMA. It’s not possible to render a state law inapplicable by failing to mention it in a local ordinance.

Significance of (4)(k): Decision Point

But it’s not entirely true – as city attorney Stephen Postema claimed at the April 2 meeting – that “… the [proposed] changes in the zoning or the other ordinance aren’t going to change the issue of whether they are compliant with state law.”

Under Postema’s understanding of the (4)(k) requirement, there’s a decision point before a city council vote on license awards. That decision point is effectively made by the city attorney – about granting a Chapter 55 zoning compliance permit. The decision has a material effect on a dispensary’s ability to operate. If a Chapter 55 zoning compliance permit is denied, or still pending, then it’s not clear why a councilmember would vote yes on the award of such a license.

From a practical point of view, operating without a zoning compliance permit would be a violation of the zoning ordinance (even if the zoning compliance permit were still pending), and that would be grounds for revocation of the license, even if one were awarded. So even if a license were awarded by the council, it would not give the dispensary the ability to operate in the absence of a Chapter 55 zoning compliance permit. On that scenario, a dispensary would have a meaningless license and could not operate until the city attorney decided to issue a zoning compliance permit.

Postema’s office has still not made decisions on the issuance of Chapter 55 zoning compliance permits for the dispensaries that have been recommended for licenses by the licensing board. The permits are still pending. So it’s not clear why Postema would say at the council’s April 2 meeting: “… frankly I don’t know why, under the ordinance, the business licenses aren’t before the council. Ordinarily they’d come there.” It’s especially not clear why Postema would say that, when he has told at least one city councilmember that his office would not be prepared for licenses to come before the council until June.

Postema’s feeling – that a zoning compliance permit can be issued only if he is satisfied that the dispensary is MMMA compliant – has a consequence for the practical decision point on awarding licenses. In order for the council to take a vote on awarding licenses with any practical consequence, a dispensary will need to have a zoning compliance permit. And if a dispensary has a zoning compliance permit, that means the city attorney has been satisfied that a dispensary is MMMA compliant.

So for any meaningful council vote on a dispensary license award, Postema will have publicly indicated that the dispensary is MMMA compliant – through granting a zoning compliance permit. If Postema were to present the opposite view confidentially to the city council in advising against the award of a license, that would be inconsistent with his public decision to grant a zoning compliance permit. So from a practical point of view, Postema’s interpretation of the criteria for granting a zoning compliance permit – the (4)(k) provision – moves the decision-making step on licenses from the city council to his office.

In contrast, on the licensing board’s interpretation of the (4)(k) requirement, dispensaries would simply need to do what they’ve already done – provide an assurance that their intent is to comply with the MMMA and a rationale for why their business model is MMMA compliant. On that interpretation, a dispensary would qualify for a zoning compliance permit if it’s located in the correct zone.

At that point, a license award could be voted up or down by the city council, with the city attorney free to provide the council whatever legal advice he felt was appropriate. For example, Postema’s advice could run along the following lines: Even while the dispensary owner has given an assurance of intent to operate in compliance with the MMMA, thus earning a zoning compliance permit, the opinion of the city attorney is that this dispensary will not or does not achieve actual compliance with the MMMA, based on a stated set of reasons.

Significance of (4)(k): Burden of Proof

The licensing board’s interpretation of (4)(k) would also have a practical effect on the issue of state law compliance – with respect to who has the burden of proof. The city attorney’s office contends that under the current zoning and licensing legislation, a dispensary has the burden of proof to demonstrate to the city attorney that it’s in compliance with the MMMA before it can be issued a zoning compliance permit. In any case, the zoning compliance permit is required under the zoning ordinance in order for a dispensary to operate – whether it has a license or not.

On the licensing board’s interpretation of (4)(k) – or if (4)(k) were deleted, as the board recommends – dispensaries would be issued zoning compliance permits. That issuance would be based on their appropriately-zoned location and their intention and rationale for compliance with the MMMA.  The city council could then weigh the city attorney’s advice in making its decision on a license award. And it’s possible that the city attorney’s advice would be that a particular dispensary already did not conform to the MMMA, or did not have a business model that would conform.

But suppose the council made a decision to award a license, against the city attorney’s advice. Then, if Postema believed the dispensary were operating in violation of the MMMA, the burden of proof would be on him to demonstrate that’s the case, in the context of starting a license revocation process.

Conclusion

The interpretation of the (4)(k) requirement thus has a significant impact on: (1) who makes the practical decision on license awards and the ability of dispensaries to operate; and (2) who has the burden of proof for determining MMMA compliance. On the city attorney’s interpretation, a practical decision on license awards can be made by his office, and the burden of proof for compliance rests with the dispensaries. On the licensing board’s interpretation, the practical decision about a license award is made by the city council, and the burden of proof on MMMA compliance rests with the city attorney.

So by suggesting that (4)(k) be struck from the zoning ordinance, the licensing board is not suggesting that dispensaries be allowed to operate in violation of the MMMA. Rather, the licensing board is suggesting that the question of interpreting (4)(k) – and its impact on the granting of zoning compliance permits and license awards – be removed from the discussion. With no (4)(k) left to interpret, the practical decisions on license awards would be made by the city council, and the burden of proof for violation of the MMMA would rest with the city attorney.

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The council unanimously postponed consideration of the licensing ordinance revisions until the council’s second meeting in June – June 18.

The council approved the  resolution that gives direction to the planning commission to review the medical marijuana zoning ordinance, on a 9-1 vote.

The council tabled the resolution directing the city attorney to delay enforcement activities until the revisions to the local ordinances have been either adopted or rejected. The tabling was achieved on a 6-4 vote. Voting against the tabling were mayor John Hieftje, Sabra Briere (Ward 1), Margie Teall (Ward 4) and Mike Anglin (Ward 5). A tabled resolution will demise if it’s not brought back off the table in six months.

The board-recommended revisions to the medical marijuana licensing ordinance are laid out in detail in The Chronicle’s coverage of the medical marijuana licensing board’s Jan. 31, 2012 meeting. [.pdf of recommended licensing ordinance revisions] Representative of the revisions is a change that strikes the role of city staff in evaluating the completeness of a license application. The following phrase, for example, would be struck: “Following official confirmation by staff that the applicant has submitted a complete application …” The changes also establish a cap of 20 licenses, and grant the city council the ability to waive certain requirements. The power to grant a waiver to provisions in an ordinance through a simple resolution did not meet with a positive reception from several councilmembers, most notably Tony Derezinski (Ward 2).

The zoning ordinance revision recommended by the medical marijuana licensing board was not itself considered by the city council on April 2. Instead, the council considered a resolution directing the city planning commission to review the medical marijuana zoning ordinance, including the licensing board’s recommended change. The one board-recommended change is to strike the following sentence: “Medical marijuana dispensaries and medical marijuana cultivation facilities shall be operated in compliance with the MMMA (Michigan Medical Marijuana Act).” [.pdf of the recommended zoning ordinance change] Derezinski was the sole vote against giving the planning commission direction. He’s the council’s representative to the planning commission.

The tabled resolution to direct the city attorney to delay enforcement activity against dispensaries would have directed the city attorney to “… delay all enforcement activities against medical marijuana dispensaries and cultivation facilities except for claims that they violate Section 5:50.1(3) of the City Code [zoning regulations], until the Council amends or rejects amendments to the zoning and licensing ordinances for medical marijuana.”

The resolution stemmed from recent action taken by the city attorney’s office, demanding that dispensaries submit additional details of their business operation, contending that such details were required in order to evaluate a dispensary’s  compliance with the MMMA. Dispensaries recommended for licenses by the board had already been required to submit a written explanation of their conformance with the MMMA. So the additional demand for information was not well-received by dispensary owners.

The general background of the current medical marijuana climate includes enactment of  two kinds of regulations for medical marijuana businesses last year, at the city council’s June 20, 2011 meeting. One piece of legislation established the zoning laws that apply to such businesses – establishing where medical marijuana dispensaries and cultivation facilities could be located. The other piece of legislation established a process for granting licenses to medical marijuana dispensaries. Cultivation facilities are not required to be licensed.

This brief was filed from the city council’s chambers on the second floor of city hall, located at 301 E. Huron. A more detailed report will follow. Meeting Report: [link] Analysis of meeting issues: [link]

The city of Ann Arbor has received 10 applications from businesses seeking to be licensed as medical marijuana dispensaries. Their locations are indicated with the green pushpins. In January, the licensing board will decide whether to made recommendations to the city council to award licenses. (Image links to dynamic Google Map)

At its Dec. 14 meeting, the board continued to review materials that had been submitted to determine completeness of other applications, and heard an argument from a business owner that his application should be considered as a pre-moratorium business.

The moratorium had been imposed by the Ann Arbor city council on Aug. 5, 2010 for 120 days – it prohibited the future use of property inside the city for cultivation facilities or dispensaries, and was extended several times in the course of the council’s consideration of the medical marijuana issue. That consideration culminated on June 20, 2011 in the enactment of zoning and licensing requirements for medical marijuana businesses.

Ann Arbor’s local laws require that businesses operate in conformance with the Michigan Medical Marijuana Act, which was enacted by statewide voter referendum in 2008. The city has explicitly required of applicants for dispensary licenses that they explain how their business conforms with the law, including an Aug. 23, 2011 court of appeals ruling that has been interpreted by many authorities to mean that no medical marijuana dispensaries are legal. [.pdf of the McQueen case ruling]. Based on remarks made at the Dec. 14 meeting, it appears that Ann Arbor’s city attorney is open to the possibility that dispensary business models may exist that do conform to the McQueen case ruling.

Recommendations by the board on the award of licenses, along with recommendations for any revisions to the ordinance, are due to be submitted to the city council by the end of January 2012.

The licensing board’s work comes even as some marijuana advocates have begun to recruit volunteers for an eventual petition drive that would seek an amendment to Michigan’s constitution to repeal the state’s general marijuana prohibition. If successful, such a constitutional amendment would appear to remove state-level legal hurdles to obtaining medical marijuana or operating a medical marijuana dispensary. However, the legal ability of federal agents to enforce federal drug laws would be unaffected by a change to Michigan’s constitution.

A sign-up sheet for people to indicate willingness to help with the petition campaign was passed around by audience members at the Dec. 14 licensing board meeting. To place the constitutional amendment on the Nov. 6, 2012 ballot, the beginning and end dates for the signature collection period (based on typical strategies used by petition initiatives and Michigan’s election law) translate to Jan. 12 and July 9, respectively. To qualify, 322,609 valid signatures would need to be collected.

The Jan. 12 petition start date comes a day after Michigan’s Supreme Court is scheduled to begin hearing arguments in two medical marijuana cases. One involves the growing of medical marijuana in an “enclosed, locked facility” (People v. King) and the other involves the timing of a physician’s recommendation that is needed to support a defense against prosecution (People v. Kolanek).

Summary of the Status of 10 Applications

By the time of the Dec. 14 medical marijuana licensing review board’s meeting, the city had received 10 applications. Three have foundered on zoning compliance issues, but two of those businesses have filed appeals with the city’s zoning board of appeals (ZBA). Of the other seven, five have been determined by the board to have been in business before the Aug. 5, 2010 moratorium was imposed, but the other two were not.

• Green Planet, 700 Tappan St. Status: ZBA appeal
• Treecity Health Collective, 1712 S. State St. Status: ZBA appeal
• Ann Arbor Health Collective, 2350 E. Stadium Blvd. Status: zoning issue, no appeal filed as of Dec. 31, 2011
• OM of Medicine, 112 S. Main St. Status: pending licensing board decision on recommendation
• People’s Choice, 2245 W. Liberty St. Status: pending licensing board decision on recommendation
• Greenbee Collective, 401 S. Maple St. Status: pending licensing board decision on recommendation (parking space requirements are problematic)
• Ann Arbor Wellness Collective, 321 E. Liberty St. Status: pending licensing board decision on recommendation
• MedMarx at Arborside, 1818 Packard St. Status: pending licensing board decision on recommendation
• Medical Grass Station, 325 W. Liberty St. Status: pending licensing board decision on recommendation as post-moratorium business
• PR Center, 3820 Varsity Dr. Status: pending licensing board decision on recommendation as post-moratorium business

The board discussed various pieces of additional information that had been submitted since their Nov. 30 meeting. That information included items ranging from contact information to statements about any felony convictions that people associated with a business might have. Not all the information has yet been submitted, but city planner Jill Thacher concluded that there were essentially five applications for which she’d been able to put together full staff reports.

The two dispensaries generating the most discussion were Greenbee Collective and the Medical Grass Station. For Greenbee, the issue related to adequacy of parking. For the Medical Grass Station, the issue related to its status as a pre- or post-moratorium business.

Parking Requirements

Greenbee Collective, located at 401 S. Maple, drew a question from city councilmember Sabra Briere (Ward 1) about parking space requirements. City planner Jill Thacher indicated that Greenbee wanted to work with two of the adjoining parcel owners to get the additional six spaces the business would need. Wendy Rampson, head of planning for the city, noted that what’s required to make that solution work would be to get a permanent easement – it would need to come from either Kroger or Top of the Lamp.

From the audience, local attorney Dennis Hayes ventured that Greenbee was only one of two units in the building. However, Rampson explained that parking requirements are a function of the entire building. Greenbee has 8 and needs 14, said Thacher. Briere noted that the requirement is for one off-street parking space for every 310 square feet of retail space.

Briere questioned whether the existing building currently has enough parking to comply with zoning. Thacher explained that parking is based on use, not zoning. Dispensaries are treated as retail space. Briere ventured that Greenbee’s application is not “ready for prime time.” Asked if Greenbee had an option to ask for a variance, Rampson and Thacher expressed skepticism: any such variance would be granted in perpetuity and no exceptions are supposed to be granted for existing non-conforming parking. Rampson indicated that Kroger does have excess parking, but board members expressed doubt that Kroger would grant a permanent easement. Rampson clarified that the relevant parking requirements are found in Chapter 59 of the city code.

Pre- or Post-Moratorium Applications

The status of a business in operation before the city council imposed a moratorium on Aug. 5, 2010, is important – because the application process timing is different for the two kinds of businesses (pre- and post-moratorium).

The board spent much of its Nov. 30 meeting discussing the merits of the documentation provided by different businesses to indicate that they were in operation before the moratorium. At the Dec. 14 meeting, that discussion focused mostly on the Medical Grass Station.

Pre- or Post-Moratorium: Medical Grass Station

The name of the Medical Grass Station, owned by Garth Bolgos, is a play on the former use of the building – a gas station at the corner of Second and Liberty streets. The city’s concern about the location as a possible marijuana dispensary was reflected during the city council’s deliberations in the spring and summer of 2011. At one point, the idea was floated to bump the size of the buffer around schools from 1,000 feet to 1,010 feet. The tweak would have ruled out the Grass Station’s location, because the corner of its parcel would have been nipped by the buffer around Bach Elementary School.

Images are extracted from the city of Ann Arbor's maps showing the buffer zones around schools, which are depicted as salmon-colored cross-hatching. The top image shows a 1,010-foot buffer. The bottom image shows the 1,000 buffer. The yellow-highlighting, added by The Chronicle, shows the parcel where a former gas station was located – and the current site of the Medical Grass Station. The salmon-colored cross-hatching is the buffer zone, originating at Bach Elementary School on Jefferson. (Image links to higher resolution file.)

At the licensing board’s Nov. 30 meeting, board members had concluded that the Medical Grass Station had not been in operation before the council imposed its Aug. 5, 2010 moratorium. But Bolgos, the property’s owner, addressed the licensing board during public commentary on Dec. 14, saying he wanted to rectify misconceptions about when the Grass Station went into business. He contended that he was in business at the location before the moratorium was imposed, and described the documentation to that effect, which he’d provided to the city.

It included a tax bill for the property and a letter from a patient who’d received marijuana from Bolgos at the location as early as January 2009, as well as a letter Bolgos had written to the mayor. Bolgos also pointed to an article that had appeared in the Ann Arbor Observer, which described his plans to open a medical marijuana dispensary business there. The article, “Medical Marijuana Center,” was written by John Rosevear, who is also a member of Ann Arbor’s medical marijuana licensing board.

Bolgos described to the board how he’d struck a deal to sell the old gas station, but it had fallen through. [The arrangement was contingent on the developer of the neighboring Liberty Lofts getting approval from Ann Arbor's historic district commission (HDC) to demolish two houses next to the gas station. The outcome of the HDC's decision was to grant permission to demolish the gas station but not the two houses, so the deal was not completed. For Chronicle coverage of HDC deliberations from early 2009, see "Demolition in Historic District" and "Historic Commission: No Approval for Demolition"]

During the board members’ deliberations on the Grass Station, they reviewed how they’d concluded at their Nov. 30 meeting that the Grass Station needed to be considered as a post-moratorium business. Board member Patricia O’Rorke noted that both the PR Center and the Grass Station had been determined to be post-moratorium applications.

Board member Sabra Briere noted that during public commentary, some uncertainty had been raised about the Grass Station. Board member Jim Kenyon indicated that the board’s previous conclusion about the Grass Station had been based on a lapse in continuity. O’Rorke, too, noted that the board had decided it was a new business.

Briere then responded to the arguments that Bolgos had brought forth during public commentary. The documentation provided addressed the desire of Bolgos to open a dispensary, not the fact that he’d opened one, she said. From the audience, Bolgos said he had treated patients at the location since 2009 – it doesn’t matter how big or small the business is, he said.

Garth Bolgos, owner of the Medical Grass Station at Second and Liberty.

Briere asked assistant city attorney Kristen Larcom if a park bench would become a dispensary if patient met their caregiver there to receive medical marijuana. Larcom stated that those were not the facts before the board – she asked if Briere’s question related to the Grass Station.

Board member Gene Ragland asked Bolgos: Did you have an interruption in the business? Bolgos told him, no – they had to move from a different Fourth and Washington location. But he met most of his patients at the gas station, he said.

The kind of documentation Bolgos had submitted was again recited: a copy of his caregiver card; a copy of a letter to the mayor saying he wanted to open a dispensary; The Ann Arbor Observer article describing how he wanted to open a dispensary; a delinquent tax notice saying he owns the property; and a letter from a patient stating she received care there.

Briere stated that the board had heard at the Nov. 30 meeting that there was a gap in service provided by the business – that the Fourth and Washington location had ceased operation. Larcom indicated that the location had been raided by LAWNET and shut down. It was not operating and there were convictions that came out of that raid, said Larcom.

Briere concluded that the board had heard evidence that there’d been a desire to open a dispensary, not evidence that one had opened at that location. Briere assured Bolgos that if the board considered his business as a post-moratorium business, it was just as fair. Ragland clarified that pre-moratorium businesses are in the queue first, but post-moratorium businesses are “still in the queue.”

Ordinance Revision Recommendations

Ragland’s assurance notwithstanding, being in the application queue as a post-moratorium business is not as advantageous as being in the queue as a pre-moratorium businesses. That’s because the number of licenses to be granted in the first year – which is the current review cycle – is tied to the number of applications received for pre-moratorium businesses.

Board members discussed the fact that they had the ability to make a recommendation to the city council on adjusting the number of licenses, as well as a number of other points.

Ordinance Revision Recommendations: Number of Licenses

The fact that a post-moratorium application likely stands a smaller chance of being recommended for a license is not explicitly stated in the city’s ordinance. But that conclusion results from the interplay between two parts of the law. First, pre-moratorium businesses had 60 days to apply after the effective date, while post-moratorium businesses had to wait until at least 75 days after the ordinance’s effective date, which was Aug. 22, 2011.

7:504(1)
Application Submission. A medical marijuana dispensary that commenced operation prior to passage of the moratorium by City Council on August 5, 2010, shall have until 60 days after the effective date of this chapter [Aug. 22, 2011] to submit an application for a new annual license. If the medical marijuana dispensary commenced operation prior to passage of the moratorium in a zoning district where its operation is not permitted under the zoning ordinance, the application shall be for a location in a zoning district where operation of a medical marijuana dispensary is permitted under the zoning ordinance. No other applications will be accepted by the City until 75 days after the effective date of this chapter.

But the number of licenses available is capped, based on the number of applications received in the first 60 days – i.e., from pre-moratorium businesses.

7:502(4)
The first year’s licenses shall be capped at a number 10% higher than the number of complete applications for licenses submitted to the City in the first 60 days after the effective date of this chapter, but not more than 20 medical marijuana dispensary licenses shall be issued in the first year. Any license terminated during the license year returns to the City for possible reissuance.

Assuming all the applications from pre-moratorium businesses result in a recommendation for a license, the number of post-moratorium applications that could receive license recommendations would be no more than 10% of the number of pre-moratorium applications. It appears the city has received seven applications from pre-moratorium businesses. So, at the Dec. 14 meeting of the board, Sabra Briere pointed out that if the board has accepted seven applications from pre-moratorium businesses, the additional 10% would allow the board to add up to one for a total of eight recommendations to be made to the council in January 2012.

Ann Arbor medical marijuana licensing board member Gene Ragland. In the background is board member John Rosevear.

What if there are five applicants for that one additional recommendation? asked Wendy Rampson, head of city planning. Briere indicated that the board would have to make a choice. There’s no guarantee that you get a license, even if you’ve jumped through all the hoops.

Briere went on to note that the board could also recommend in January that the number of licenses be changed. Responding to questions from board members about why the number of licenses had been capped at 20, Briere told them there’d been a lot of dickering about the exact number when the council deliberated on the issue.

City planner Jill Thacher raised the question of new dispensaries that wanted to apply for a license. Briere indicated that anyone who wants to apply for this first year’s application cycle should get their application submitted. Briere didn’t feel the board wanted to see new applications in January. Thacher indicated that she’d been putting people off. She said there were two dispensaries she’d told to hold off. Briere indicated that Thacher should tell those dispensaries that they need to get all their materials in. Briere noted those dispensaries didn’t need to address Section 7:504(2)(a) – proof of operation before the council established the moratorium on Aug. 5, 2010.

Gene Ragland wondered why receiving applications would not trigger the board to convene, instead of meeting to make recommendations once a year. Patricia O’Rorke echoed the sentiment, asking why someone would need to wait a year. Briere indicated that the city council [on which she serves, representing Ward 1] did not want to be confronted with the issue more than once a year. John Rosevear said he felt that once a year was appropriate, given the complexity of the situation.

Ordinance Revision Recommendations: Timing Issues

In the course of working its way through the applications for dispensary licenses, the board has identified some aspects of Ann Arbor’s ordinance that it’s found problematic. Identified at the Dec. 14 meeting were two passages that express different timing requirements for reapplication:

7:502(8) A license issued under this chapter shall expire 1 year after the date of issuance. To renew an existing license, the licensee shall submit an application in the same manner as is required to apply for a new license no sooner than 90 days before the expiration date an [sic] no later than 60 days before the expiration date.

Elsewhere, the timing requirement is given as 70 days, not 90 days:

7:504(3b) An application for renewal of an existing license shall be submitted no sooner than 10 weeks (70 days) before the existing license expires.

Board member Jim Kenyon indicated he preferred the 90-day condition.

Ordinance Revision Recommendations: Licensing Fee

Briere noted that the board would also need to recommend the amount of the licensing fee. Board members discussed the fact that the fee would need to cover the costs of administering the license. Assistant city attorney Kristen Larcom explained that building inspections would be separate from the license fee and the license application fee – the fee for licenses per se is a separate issue, she explained. While the application fee has to be limited to administrative costs, that’s not the case for license fees, she explained.

The cost of Ypsilanti’s medical marijuana dispensary license fee was briefly discussed. It’s $2,500 for the initial license and $1,100 for renewal.

Larcom indicated she was not sure what the city’s legal advice would be. Kenyon asked why there is a license fee at all. O’Rorke ventured that it’s because you pay for the privilege. Briere noted that one key difference between the medical marijuana dispensary licenses and liquor licenses is that dispensary licenses are not transferable. Kenyon indicated he would vote for a nominal amount.

Ordinance Revision Recommendations: Entry of Premises

O’Rorke questioned why a building inspector needed to be allowed to enter the premises:

7:506(7)
An authorized person shall consent to the entry into a medical marijuana dispensary by the Building Official and Zoning Inspectors for the purpose of inspection to determine compliance with this chapter pursuant to a notice posted in a conspicuous place on the premises 2 or more days before the date of the inspection or sent by first class mail to the address of the premises 4 or more calendar days before the date of the inspection.

Larcom pointed out that the city must provide notice to the facility. O’Rorke countered that the law says that building inspectors can come in. Larcom clarified that the law did not enable the city to break in to the facility. The dispensary can refuse. If the city wants to insist on entering the premises, the city would need to go to court to determine if there’s sufficient cause, Larcom explained.

Larcom felt it’s better to keep the language in there. O’Rorke wanted to avoid having a statement in the ordinance that allows consent to entry to determine compliance with the ordinance. Larcom responded to O’Rorke by indicating that it’s up to the board to make that recommendation. Briere noted that when the city council debated the ordinance, some councilmembers didn’t like the passage at all, and some wanted to make it even stronger.

Compliance with McQueen

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]

By Sept. 30, the Ann Arbor 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]

The McQueen ruling found that one particular business model for dispensaries, that of Compassionate Apothecary, does not conform to the Michigan Medical Marijuana Act. And at the Dec. 14 meeting of the licensing board, Gene Ragland alluded to a representation made by the city attorney to the board about a particular vision of what would be a compliant business model, and the city attorney had described what he would consider legal. Sabra Briere agreed with Ragland’s characterization, but said the board could not assume that the city attorney’s view today would be the same.

Assistant city attorney Kristen Larcom noted that additional court opinions could be issued between now and the time the city attorney gives advice to the city council about whether to accept board recommendations to award licenses. In a subsequent phone interview, Wendy Rampson, head of planning for the city, indicated to The Chronicle that her understanding was that the city attorney’s office was open to the possibility that a dispensary business model can exist that complies with the McQueen ruling. However, no written set of criteria defining such a business model has been provided.

The advice provided to the city council by the city attorney will likely depend on the nature of the business model that applicants describe in the statements they’ve provided at the city’s request.

The statement provided by Cannabis Counsel, the attorney for MedMarx at Arborside, could be typical of the kind of argument that dispensaries will make. [.pdf of letter from Cannabis Counsel regarding Arborside's business model]

The Cannabis Counsel letter lays out why the court of appeals in the McQueen case found that the Compassionate Apothecary business model was not in compliance with the MMMA:  The problem was that Compassionate Apothecary did nothing to “assist” patients in administering or using marijuana, beyond exchanging marijuana for money. In contrast to Compassionate Apothecary, argues Cannabis Counsel, Arborside does assist patients in the manner described by the court – by assisting the patient “in preparing the marihuana to be consumed in any of the various ways that marihuana is commonly consumed.” Those ways include providing patients with “cleaned prepared de-stemmed cannabis including pre-rolled joints, medibles which have been inspected, tested, cleaned, grinded and rolled, or cooked in combination with foodstuff.”

The Cannabis Counsel letter also explicates how compliance with other aspects of the MMMA are met, including maintaining a sufficient number of caregivers on site to possess all the marijuana present there. Another point of emphasis of the letter is that no “sale” of marijuana takes place, and that money is given to a caregiver to compensate for costs associated with assisting a patient in the medical use of marijuana, which does not constitute a sale of a controlled substance under the MMMA.

Next Steps

The licensing board discussed its next meeting times in the context of its Jan. 31, 2012 deadline to make recommendations to the city council on license applications and ordinance revisions. The outcome of that discussion was to establish that they’d plan to meet again on Jan. 18, 2012. The zoning board of appeals will hear appeals on zoning issues from two of the businesses on Jan. 25. And the medical marijuana licensing board could possibly meet on Jan. 30 as well, if necessary.

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.

The Chronicle could not survive without regular voluntary subscriptions to support our coverage of local government and civic affairs. Click this link for details: Subscribe to The Chronicle. And if you’re already supporting us, please encourage your friends, neighbors and colleagues to help support The Chronicle, too!