Cannabis Operators Sue Detroit Over Facility Near High School

It’s unclear why the city issued the permits in the first place.

This story was reprinted with permission from Crain’s Detroit and written by Dustin Walsh.

Schools are a drug-free zone.

Yet the city of Detroit approved a group of marijuana companies to operate a multi-use marijuana facility near Detroit Community High School, including signing off on a certificate of occupancy this fall, according to a lawsuit transferred to U.S. District Court late last month.

But six weeks later, the city allegedly discovered the school’s proximity to the building housing the marijuana operations and revoked the operating licenses linked to the companies after the operators allegedly invested millions of dollars and secured lucrative customer contracts.

Credit: CoStar Group Inc. The city revoked a group of marijuana companies’ business licenses because their operation at 20601 Glendale St. on the city’s west side is too close to a drug-free zone.

The operators — Cannabis Professional Design LLC, MB City Transportation LLC, HZ Detroit Holdings 1 LLC and HZ Detroit Holdings 2 LLC — in turn filed a lawsuit seeking an immediate injunction from Wayne County Circuit Court on Nov. 9. Dave Bell, director of the city’s Buildings, Safety Engineering and Environmental Department, and Detroit City Clerk Janice Winfrey are named as defendants in the case.

The case has since been moved to U.S. District Court because the plaintiffs allege their constitutional rights were violated, which is a federal matter, not a state issue.

Neither the city nor representation from the companies responded to requests to discuss the lawsuit.

The plaintiffs allege the city issued building, mechanical, and plumbing permits as well as a special land use permit for the buildings in 2022 that would house a marijuana processor, testing lab, and transporter.

The companies claim in the lawsuit they invested $15 million in retrofitting the building to prepare it for operation, as well as securing “verbal” contracts with customers worth an additional $20 million. State law does not allow companies to secure written contracts until they have secured state licensure, which had not yet occurred. Three of the four companies did secure prequalification for state permits. It’s unclear what Cannabis Professional Design does, but a non-plant-touching company does not require a marijuana license to operate.

The city issued the final building permit for the operation at 20601 Glendale St. on the city’s west side on May 3, followed by a post-inspection certificate of occupancy on Sept. 13.

However, on Oct. 27, the city revoked the companies’ business licenses due to the marijuana businesses being within 1,000 feet of a drug-free zone, the Detroit Community High School charter school, in violation of the city’s marijuana ordinance.

The companies were licensed to process bulk marijuana, test and transport marijuana. The plaintiffs did not seek to operate a dispensary, which has even stricter rules near schools.

The plaintiffs allege the city’s original zoning map did not include the school, which has been open for 14 years.

“… the city’s new map included the school; however, the city’s former map on which it relied in granting the property’s (special land-use permits) — twice — did not include the school despite the school being in operation since at least 2009,” the plaintiffs’ attorney argues in the lawsuit.

It’s unclear why the city issued the permits in the first place or whether the property lines changed for either the school or the building housing the marijuana companies.

The plaintiffs are seeking an immediate injunction to prevent the city from revoking its licenses and a declaration that their permits are valid and enforceable.

The companies’ lawyers allege the city violated the 14th Amendment by depriving them of property without due process.

“Plaintiffs have a legal right to its property under the substantive due process doctrine of the Fourteenth Amendment coupled with several formerly issued permits, including but not limited to, multiple building permits, at least two (special land-use permits) and a certificate of occupancy, and millions of dollars in investment,” the lawsuit says.

On Dec. 1, Judge David Lawson denied the plaintiffs’ request for an expedited hearing.

The city is required to file a response to the companies’ request for an injunction on or before Dec. 21. The first hearing on the case is set for Jan. 30.

Dustin Walsh

Dustin Walsh is a senior reporter for Crain’s Detroit Business, covering health care with a focus on industry change and operations, as well as the state's emerging cannabis industry. He is also a regular columnist on all things health, labor, economics, and more.

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