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StaffSeptember 15, 2023


This story was reprinted with permission from Crain’s Detroit and written by Dave Eggert.

Among the bribes paid to top marijuana regulator Rick Johnson was $2,000 so he could have sex with a sex worker multiple times, federal prosecutors said Thursday as they requested that he be sentenced to a minimum of nearly six years in prison.

Johnson, 70, was a lobbyist and a former Republican House speaker before being appointed to the since-disbanded Michigan Medical Marijuana Licensing Board. He has pleaded guilty to accepting at least $110,200 in bribes from lobbyists and companies seeking licenses when he chaired the board from 2017 to 2019. He will be sentenced Sept. 28.

“This bribery scheme resembled a well-orchestrated organized crime operation: Johnson used a second ‘burner phone’ registered in the name of a limited liability company; bribe payers used an alias (‘Batman’) when referring to Johnson in messages; bribe payments were laundered through multiple limited liability companies controlled by Johnson to help conceal their purpose; and Johnson and others devised false cover stories involving Johnson’s wife should anyone discover and inquire about the payments,” the U.S. attorneys wrote in a sentencing memorandum to District Judge Jane Beckering in Grand Rapids. “Although ultimately laid bare, these machinations served to conceal Johnson’s corruption long enough for the damage to be done, giving at least two companies a head start in Michigan’s new and lucrative marijuana industry.”

They said Johnson, a LeRoy resident who was a lobbyist for a dozen years after leaving office, made it known to others that he was angling for an appointment to the board. In May 2017, then-Gov. Rick Snyder appointed him and made him chair. He had been nominated by Republican former Senate Majority Leader Arlan Meekhof.

“Johnson and others used his past and current political connections as leverage to obtain nearly $2 million in payments for his lobbying services from individual entities related to the medical marijuana industry prior to his appointment to the MMLB,” prosecutors wrote while recommending a sentence of at least 71 months.

They said Johnson accepted no fewer than 38 cash bribes over a period of 21 months. At Johnson’s request, one of the two lobbyists who has pleaded guilty — Brian Pierce of Midland — paid $2,000 to a woman who had sex with Johnson, according to the government. It said Johnson’s repeated use of the sex worker who was paid by businessmen seeking his help and licenses is “abhorrent behavior.”

Johnson solicited regular cash payments from Pierce and another lobbyist, Vincent Brown of Midland, using payment streams from medical marijuana clients, prosecutors said. The cover story for those payments was that Johnson’s wife, Janice, would do accounting work for their lobbying firms, Philip Alan Brown Consulting and Michigan Growers Consultants.

“If anyone ever asked, they would say that Johnson’s wife was their accountant — even though they used an outside accounting firm. Johnson had regular contact with Pierce and Brown while he was MMLB Chair, including at meetings with applicants who sought state licenses from the MMLB where Johnson was present. He even shared office space with them.”

The government has agreed not to prosecute Janice Johnson as part of her husband’s plea agreement.

Prosecutors filed the memo the same day that another of the three other defendants who have pleaded guilty, businessman John Dawood Dalaly, was sentenced to 28 months in prison for bribing Johnson. Pierce and Brown will be sentenced Oct. 18.

StaffSeptember 8, 2023


This piece was reprinted with permission from Crain’s Detroit and written by David Eggert

The lawyer for a Detroit-area businessman who pleaded guilty to bribing a top marijuana regulator is disputing a recommended prison sentence range and asking that a federal judge give John Dawood Dalaly a lighter punishment regardless.

In a motion filed Wednesday, Raymond Cassar contended that the correct guideline range is 24 to 30 months in prison, not 37 to 46 months as calculated by the probation department. Prosecutors are seeking 30 to 37 months to account for his cooperation in the investigation in which three others have pleaded guilty, too.

Cassar objected to a four-level increase because the bribed official, Rick Johnson, chaired the state’s now-former medical marijuana licensing board — a high-level decision-making or sensitive position. Johnson held one vote, and three of the five members were needed to support an application, Cassar wrote.

“The fact that Defendant Johnson is a chairperson does not mean he had the ‘direct authority’ to make decisions for, or on behalf of, the Board. Defendant Johnson did not control the Board’s decision.”

He also asked District Judge Jane Beckering to depart downward from whatever non-mandatory guideline is determined when Dalaly, of West Bloomfield Township, is sentenced on Sept. 14, saying he is remorseful and has taken responsibility. He did not specify what he thinks an appropriate sentence would be.

While it appears the motivation for bribing Johnson was to obtain licensing approvals for a company Dalaly formed, PharmaCo Inc., the original motivation was to get help answering complicated questions on the application, Cassar wrote. He said the state Department of Licensing and Regulatory Affairs did not have the staff or ability to provide answers following the passage of a law establishing the licensing system.

After Johnson was appointed chair in May 2017, Dalaly was introduced to Johnson — a Republican former House speaker — over dinner by former Rep. Mike Callton, according to Cassar. Dalaly asked Johnson to whom he could go with questions because of difficulties with LARA. Johnson told Dalaly to contact his wife, Janice, who would act as a consultant.

Dalaly asked if it was legal, and Johnson said it was because she had her own consulting company. When Dalaly asked how much to pay, Johnson said $4,000 a month.

“This was not some well-planned out bribery scheme and as much, the Court should take this into consideration when forming a fair and just punishment,” Cassar wrote.

He said $20,000 of the $68,200 in bribes, a July 2018 wire transfer, was intended as a loan because Johnson told him he was losing his farm.

Cassar also provided background on Dalaly, 71.

His parents immigrated from Iraq when he was 11. He was the only one in the family of eight to graduate high school. He has been married for 45 years and has three children and eight grandchildren. He is a devout Catholic and volunteers as a Eucharistic minister, or communion steward, at hospitals and his church.

“He is the caregiver for his entire family,” Cassar wrote, citing how he cared for sick relatives, paid their hospital and funeral bills, and is involved with charitable works.

His 13-year-old granddaughter confronted him about what happened after she read about him on the internet.

“John responded, ‘Papa did business with a bad guy.’ John lives with regret and punishment every day when he sees what this has done to his family.”

Cassar also noted Dalaly’s business accomplishments, including his management of hospitals. He organized more than 3,000 workers in the Middle East to help create medical schools and medical facilities, according to the filing.

Johnson, of Leroy, and two lobbyists — Brian Dennis Pierce of Midland and Vincent Tyler Brown of Royal Oak — are due to be sentenced on Sept. 28. Johnson accepted about $110,000 worth of bribes and benefits, according to his plea agreement.

Toronto-based Red White & Bloom Brands (OTC: RWBYF) bought Southfield-based PharmaCo in 2022 after providing financing to the company since 2018 through an RWB subsidiary. Michicann Medical Inc. RWB was transferred 21 medical and adult-use licenses, including dispensaries and grow operations.

Dustin WalshAugust 25, 2023


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

Cannabis cultivators take great care. Transferring a seedling from its mother plant to new pots. It joins its siblings in a highly-controlled room. Twelve hours of light, 12 hours of darkness. Its vegetative state is critical to its maturation. Temperature, humidity, and airflow are tightly monitored.

The weeks-long result is pounds and pounds of marijuana buds, set to be flash-frozen, dried, or distilled for consumption. There’s no doubt the process mimics vertical indoor vegetable farming.

But is cannabis agriculture?

In June, a Circuit Court in Cass County ruled that it was, potentially creating a legal frenzy of Michigan growers seeking to overturn a common property classification in hopes of saving thousands of dollars in their annual tax bills in 2024 and beyond.

Local municipalities have always classified cannabis properties across the state as industrial or commercial properties. The reason is simple: Most indoor grow operations set up shop inside former industrial buildings — and by maintaining the industrial use classification, those occupying the property pay the common taxes, including school millages. Properties categorized as agriculture, however, are exempt from paying school mils and other local taxes.

“It’s a nuanced area of property law,” said Ben Sobczak, partner at Detroit law firm Dickinson Wright PLLC and former chief legal officer for vertical marijuana company Pleasantrees. “But it’s big money for operators. And, until now, no one has really fought it because the local municipality has the leverage on your permits. Challenge them and they may not renew your permit to operate next year.”

Due to the result of the case in Cass County, experts believe a horde of new lawsuits will crop up as cannabis operators look to shrink their tax bills as profits remain fickle due to low prices across the state’s industry.

Technicality for THC?

Sunset Coast Provisions, which operates a grow operation and dispensary on E. State Street in the village of Cassopolis, received its tax assessment in February 2022 where the local assessors categorized the grow side of its operation as industrial.

The owners of HRP Cassopolis LLC, doing business as Sunset Coast, quickly contacted property tax attorneys at Detroit-based law firm Dykema Gossett LP to challenge the assertion. They declined a request for comment Thursday.

The local review board quickly denied the appeal. Carl Rashid Jr. and Mark Magyar, partners at Dykema, then appealed the ruling to the State Tax Commission.

“It’s the growing of a plant,” Rashid Jr. said. “But the State Tax Commission said it didn’t have any evidence that cannabis is agriculture. We filed a motion to reconsider and showed a bulletin from the Michigan Department of Agriculture that spelled out what is considered agriculture. Even with that evidence, we were still denied.”

Under the General Property Tax Act in Michigan, any property involving the “growing and harvesting of any agricultural, horticultural, or floricultural commodity” is considered an agricultural property, among dairying, raising livestock, and tree farming.

The Dykema attorney appealed the tax commission’s ruling to the Cass County Circuit Court, which in June ruled in favor of Sunset Coast. Cultivating marijuana was agriculture according to Judge Carol Bealor.

“Giving the words in the statute their plain and ordinary meaning, as case law dictates this court must do, cannabis cultivation falls squarely within (the property tax act)’s definition of an agricultural operation,” the judge wrote in her June 29 ruling. “The statute’s language is unambiguous, using words that have a clear meaning. No further judicial construction is required or permitted, and the statute must be enforced as written. Considering the record before this court, and the absence of the use of any standards or objective criteria by the assessor that demonstrated cannabis cultivations did not fall within the plain meaning of the definition of an agricultural operation, the assessor’s conclusion that cannabis cultivation is not an agricultural operation is not authorized by law.”

By being classified as an agricultural property, Sunset Coast saves about 30 percent on its annual property tax bill, Rashid Jr. said. That works out to about $20,000 annually.

Given that the state’s marijuana industry has been plagued with collapsing prices for the last 18 months — product oversupply has dropped recreational marijuana prices from $494.77 per ounce of flower in February 2020 to just $98.65 per ounce in July — margins are thin, and any way to save costs is celebrated.

“It’s just not true that the industry is making a ton of money right now,” Sobczak said. “This is just another incredible expense on top of the other specialized expenses licensed cannabis companies carry. The only reason cannabis isn’t considered agriculture is because it puts more money in (the municipalities’) coffers.”

Cultivation or depredation?

The state’s funding sources for education come from a variety of places, including sales tax, use tax, tobacco taxes and the lottery. But agricultural properties in the state are given exemptions from certain local school operating taxes, which can tax up to 18 mills — or $18 for every $1,000 in taxable value.

The state has more than 10 million acres of farmland, with one out of six acres in the state designated as farmland. It’s unclear how much in total taxes are exempt due to agricultural land.

The Michigan Association of School Boards did not respond to inquiries on the matter.

But it’s clear the Cass County ruling is going to lead to more property classification challenges for local communities come March 2024, when companies are able to appeal their property tax assessment again.

Mike Elias, CEO of Common Citizen, which operates a 40,000-square-foot grow operation in Marshall, located in Calhoun County, called the Cass County ruling “a cornerstone” for the industry in an emailed statement to Crain’s.

“As a leading cannabis cultivator, we believe this ruling is not only appropriate but also a critical step forward for the normalization of the industry,” Elias wrote in a statement. “Given the significant economic challenges our sector has faced, punctuated by artificial and steep price declines due to various factors, the industry is in dire need of such supportive legal precedents. The Cass County Circuit Court’s decision to rule in favor of HRP Cassopolis, clarifying the legal classification of cannabis cultivation and confirming its eligibility for agricultural tax-related benefits, is a watershed moment that couldn’t come at a more needed time.”

Crain’s reached out to several other cannabis cultivators, but all declined to comment on the record.

However, whether the ruling in Cass County is indeed a watershed moment or just an anomaly remains to be seen.

Gerald Fisher, distinguished professor emeritus at Western Michigan University Cooley Law School and local government law consultant, said while the circuit court ruling is favorable for the industry, it does not set a precedent for the entire state.

“Owners are certainly going to cite this case, but what one circuit court does in one county is not a precedent-setting ruling,” Fisher said. “This sounds like a hometown ruling to me. Cannabis is not considered food and fiber like most agribusinesses. While I can certainly see the rationale for why they would want to be considered agriculture, there’s a completely different marketing pattern and network than food and other vegetation the state considers agricultural. The better interpretation, from my view, is that cannabis would be industrial because it’s part of a network between grow operations and ultimately to a dispensary, not for traditional consumption of calories.”

Washington state and Massachusetts legislators carved cannabis out of being included in agricultural tax exemptions to protect school funding in recent years. There’s currently no legislation in the state of Michigan to remove marijuana from exemption considerations.

“Policy decisions are for the legislature,” Rashid Jr. said. “We provided those two examples in court … but in Michigan no such law exists.”

But the village of Cassopolis and LaGrange Township, where the village is located, are now seeking to intercede in the case brought against the State Tax Commission. They are seeking to become parties of the case so they can file an appeal. A ruling on whether they can intercede has not yet been made.

Lawyers for both municipalities declined to comment.

So while Sunset Coast may save on their tax bill this year, it’s unclear whether that will continue. Though it may not make a difference statewide, as others are prepping their own cases in 2024.

Sobczak said he’s referred clients to the Dykema team, and Rashid Jr. said several clients have begun to reach out to begin preparing their own challenges to property classification.

Dustin WalshAugust 18, 2023


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

Weed. Jazz cabbage. Ganja. Jolly green. Righteous bush. Sin spinach.

Regardless of the name, Michiganders fully embraced marijuana’s legalization and commercialization.

Michigan is now the top marijuana market in the country — based on per capita spending.

Through the first seven months of the year, Michigan’s marijuana industry sold $1.7 billion worth of products ($58.8 million in medical marijuana and $1.644 billion in recreational), according to data from the Michigan Cannabis Regulatory Agency. Michigan weed is outselling distilled booze in the state and is on track to easily top $3 billion in 2023.

While Michigan won’t top California in overall sales, totaling $5.3 billion in 2022, it beats out the Golden State and other competitors, including the OG in legalization, Colorado, on per capita spending.

Sales in the Rocky Mountain State through June topped $782 million for a per capita spend of $134.03. California is less than $136 per capita. Michigan, however, topped $142.13 in per capita spending on marijuana products in the first half of this year.

So are Michiganders just more in tune with getting baked than Californians and Coloradoans? Probably not.

Don’t step on the grass, Sam

Michigan’s success in the marijuana game is correlated directly to the state’s regulatory, tax, and overall business framework.

Following the legalization of adult-use recreational marijuana by voters in 2018, Michigan’s framework solidified it into an unlimited licensure state with comparatively low taxes.

The unlimited licensure allowed businesses to get approved to operate grow operations, processing plants, and retail stores quickly. Yes, there were and still are problems with local municipality business licensure, but those roadblocks are eroding.

Michigan also taxes consumers among the lowest in the U.S. with a 10% excise tax on recreational marijuana sales. Colorado has a 15% excise tax on wholesale and retail sales. California has a 15% excise tax on wholesale and a per-ounce tax on fresh plants and cultivation. Other top players like Washington and Oregon have a 37% excise tax and 17% excise tax on retail, respectively.

It should be noted that Michigan crossed $1 billion in excise and sales tax revenue collected from the marijuana industry last month, the Michigan Department of Treasury confirmed. That’s a number that almost seems unbelievable given the low excise tax.

The low taxes resulted in the Michigan market maturating very quickly due to easy access to marijuana and prices that shrank precipitously — maybe too quickly for some.

Recreational marijuana sales were only $9.83 million in January 2020, the second full month of legal dispensary sales in the state. By July 2020, six months later, rec sales topped $57.4 million. In July this year, rec sales were north of $270 million.

No more illegal smile

And that’s all about cost. The average cost of an ounce of flower in July 2020 was $402.72. In July of this year, the average cost of an ounce of recreational flower was $98.65 — prices have stabilized since a low in January this year of $80.16 per ounce.

That price collapse, of course, has crippled several business operators — Skymint and at least six others are under a court-ordered receivership — a natural byproduct of any new industry wrangling supply and demand.

Businesses still struggle under the weight of operating at low margins, but it’s certainly helped demand. Low prices and abundant product has pushed more and more Michiganders into the legal marijuana market, according to 2022 data provided by Oregon-based Whitney Economics and published by the National Cannabis Roundtable.

According to the data, 75.5% of all marijuana sales are in the legal market, as opposed to the illicit market. California is only at 44% legal sales; Oregon at 74.8% legal sales; and Washington state at 61.3% legal sales. Colorado is the bright spot here, with Whitney Economics projecting 99.8% of all marijuana sales in the state are in the legal market.

That means it’s likely Michigan still has some runway to its total market potential, but also shows there is a peak. Whitney Economics projects the total market demand for marijuana in Michigan to top out at just over $3.2 billion, compared to $11.93 billion in California. Michigan is likely to come near that total in 2023.

The industry is yet to recognize any slowdown in the market. As of June 31, there were roughly 1.9 million marijuana plants actively being grown in legal operations for recreational sales, according to CRA data. That’s well up from the under 1.3 million plants in June 2022.

Passing the Dutch?

But whether Michigan remains a top marijuana state by any metric will likely be determined not by Michigan’s market, but by whether other states coming into the market follow Michigan’s lead and let the industry blossom under less restrictive rules or whether they cultivate a slower, more steady market. Illinois, for instance, limits how many marijuana dispensary licenses it issues annually, limiting the supply to prevent steep price declines like those seen in Michigan and elsewhere. Florida is still a medical marijuana-only state, as well as Pennsylvania. Texas still doesn’t have any legal marijuana.

Ohio will be the one to watch, alongside maybe Indiana. A ballot initiative in Ohio gathered enough signatures and received approval earlier this week to be on the November ballot.

It’s likely many Ohioans drive up to dispensaries in Michigan to purchase marijuana. But it’s still unknown if recreational legalization there would impact Michigan’s market.

Ohio is a more populated state and if the Ohio regulators get legalization right, we could see Ohio emerge as a dominant player in the coming years.

But until then, Michigan is tops for dope smokers, edible eaters, vape vendees, and those who serve them.

Dustin WalshJuly 31, 2023


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

Michigan’s marijuana industry is among the most competitive industry in the state. With basement-low wholesale prices, the industry is becoming increasingly more vertically-integrated. The most profitable way to do business in weed is for growers to be sellers, realizing margins on both sides of the business.

Some consolidation has occurred and more is likely. The large players remain large, such as Lume. But others are growing their presence in retail, like Common Citizen, which acquired Liv Cannabis last year and is amassing a larger retail operation.

Below are the largest cannabis retailers in Michigan, according to Crain’s research. This list is not exhaustive and only a snippet of the entire retail sector of the industry, which has hundreds of dispensaries.

Lume Cannabis Co.

Headquarters: Troy

Retail stores: 34

Retail locations: Adrian, Ann Arbor, Berkley, Big Rapids, Cadillac, Cedar Springs, Coldwater, Escanaba, Evart, Gaylord, Grand Rapids, Honor, Houghton, Iron Mountain, Jackson, Kalamazoo, Kalkaska, Lowell, Mackinaw City, Manistique, Monroe, Mount Pleasant (2), Negaunee, Owosso, Oxford, Petersburg, Petoskey (2), Portage, Saginaw, Sault Ste Marie, Southfield and Walled Lake.

Popular strains: Jenny Kush, Blackout Marshmallow OG, GMO Crasher.

Jars Cannabis Co.

Headquarters: Troy

Retail stores: 17

Retail locations: Battle Creek, Center Line, Detroit (2), Fennville, Flint, Grand Rapids, Lansing, Monroe, Mount Clemens, Mount Pleasant, Muskegon, Owosso, Oxford, River Rouge, Saginaw and Ypsilanti.

Popular strains: AK-47, Tangie, Moroccan Kush

Skymint Cannabis Co.

Headquarters: Dimondale

Retail stores: 21; four branded as 3Fifteen.

Retail locations: Ann Arbor (2), Battle Creek (2), Camden, Coldwater, East Lansing, Flint, Gaylord, Grand Rapids (2), Hazel Park, Kalamazoo, Lansing (2), Morenci, Muskegon, Nunica, Portage, Saginaw and Traverse City.

Popular strains: Lemon 18, Beng Beng OG, Cheetah Piss, Animal Mint Cake

Note: Skymint is currently under the control of a receiver and is expected to be auctioned to the highest bidder in the next month.

Gage Cannabis Co.

Headquarters: Ferndale

Retail stores: 19; five branded as Cookies, five branded as Pinnacle and one as Lemonnade.

Retail locations: Addison, Adrian, Ann Arbor, Battle Creek, Buchanan, Burton, Camden, Center Line, Detroit, Edmore, Ferndale, Grand Rapids, Jackson, Kalamazoo (2), Lansing, Morenci, Oxford and Traverse City.

Popular strains: Gelato Driver, Zweet Inzanity #1, Banana Bread

Cloud Cannabis Co.

Headquarters: Troy

Retail stores: 11

Retail locations: Ann Arbor, Cedar Springs, Detroit, Gaylord, Grand Rapids (2), Kalamazoo, Muskegon, New Baltimore, Traverse City and Utica.

Popular strains: Do not manufacture their own strains.

Exclusive Brands

Headquarters: Ann Arbor

Retail stores: 10

Retail locations: Ann Arbor, Coldwater, Gaylord, Grand Rapids, Kalamazoo, Lapeer, Lowell, Monroe, Muskegon (medical only) and Oxford.

Popular strains: Wonka Bars #13, Gelato Pebbles, Gorilla Zkittlez

Common Citizen

Headquarters: Marshall

Retail stores: 9; six branded as Liv Cannabis, one as Pure Cannabis Dispo, one as Xplore Cannabis and one as Cannavista Wellness.

Retail locations: Buchanan, Detroit, Ferndale, Grand Rapids, Lake Orion, Lansing, Lapeer (2), Westland (opening soon).

Popular strains: Puffo Gelato, LA Pop Rockz, Electric Peanut Butter Cookies

House of Dank

Headquarters: Madison Heights

Retail stores: 9

Retail locations: Center Line, Detroit (2), Grand Rapids, Lapeer, Monroe, Saginaw, Traverse City, Ypsilanti.

Popular strains: Runtz, Lemon Bubba Temple, Peach Crescendo #1

Dustin WalshJuly 26, 2023


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

Chris Webber’s planned $175 million marijuana development in Detroit remains unfinished in southwest Detroit nearly two years since it was announced.

The NBA Hall-of-Famer and University of Michigan Fab 5 basketball star had planned an industry training complex, a 180,000-square-foot cultivation site, consumption lounge and dispensary at 2599 22nd Street south of Michigan Avenue. Webber’s Players Only broke ground on the site in September 2021 and originally planned to finish the first phase of the build-out in March 2022.

But market conditions that sank marijuana prices by more than 56% between breaking ground and now have kept Webber from advancing on the project. He said the company still has plans but is scaling them back.

“The cannabis industry has really shifted in Michigan,” Webber told Crain’s. “Since the landscape has changed, we’ve had to adjust because we would not be smart to go with that plan.”

Webber said prices remain too low in the state to follow through on planned investment.

“Where do the prices settle? The bottom of the ocean?” Webber said. “I am from Detroit and I love the city, the environment and the people. But this would not be the best time for the community or us in Detroit to have a profitable outcome.”

Webber mentioned that companies that invested big in the state suffered from the price crunch, and he worried the $175 million investment would sink Players Only.

It’s a reality that has been playing out for cannabis companies across the state. Many are under the control of a receiver after running afoul of lenders and tax payments. The largest example is Dimondale-based Skymint, which entered receivership in March after being sued by an investor for more than $127 million. Skymint has since downsized and will be auctioned off as early as next month.

But Webber said his company has no plans to abandon the Detroit site and will still develop it, likely with a smaller footprint.

“We’re not going to abandon that space and we think the new plan will invigorate the community,” the former NBA star said. “But there will be adjustments. The numbers aren’t the same.”

Webber would not comment further on the new plans, citing the previous announcement that did not materialize.

“We have a lot of plans we’re excited about, but we’re not ready to share,” he said. “Given the excitement of the last announcement, we’re being a little more cautious.”

The original plan involved a training center that would offer training and placement as well as programs for getting criminal records expunged and GED certification. In 2021, Webber partnered with California cannabis brand Cookies to launch Cookies University in Northern California.

Players Only also had a distribution deal with Gage Cannabis, now owned by Canadian public cannabis company TerrAscend Corp. Gage operates Cookies-branded stores in Michigan.

For Webber and Players Only to complete the Detroit project, the company will need to secure a Detroit license to open a dispensary on the property. The city of Detroit said it will start accepting applications for the second round of its limited marijuana businesses on Aug. 1.

The city is authorizing only 60 licenses for marijuana retailers, half of which are relegated to “legacy Detroiters” who have lived in the city for 15 of the last 30 years. It’s unclear if Webber maintains a residence in the city.

The city offers unlimited licensure for grow operations.

Webber, however, believes a dispensary license will not be difficult to secure.

“There are a lot of options for a license, like having a licensed partner,” Webber said. “We don’t have a license because we can’t acquire a license. This isn’t a problem, and we’re excited for this labor of love.”

Webber has been involved in getting in the equity space of the brimming marijuana industry as well.

Webber, who owns a cannabis and CBD health company called Webber Wellness, launched a $100 million cannabis private equity fund in 2021 for businesses owned by people of color with Jason Wild, a healthcare investor and president of New York-based JW Asset Management LLC. The Webber Wild Impact Fund is investing with the goal of addressing equity barriers: White people have gotten the vast majority of cannabis dollars in the relatively new industry across the country.

Webber was also placed in charge of New York’s social equity fund and after severe delays closed on raising $150 million late last month.

It’s unclear whether the new plan for the property in southwest Detroit will feature new equity partnerships.

Dustin WalshJune 23, 2023


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

Cannabis real estate developer Jeffrey Yatooma could soon have dominance of Auburn Hills’ marijuana market.

Yatooma’s impending dominance comes after a creative and successful ballot initiative that led to Auburn Hills voters approving weed businesses in the city in November 2022.

But the path for the city has not been straightforward. A month before the vote, City Council effectively blocked marijuana licensing, and Yatooma, with an amendment to zoning rules. And now the council is flipping again. The city’s economic development team is expected to recommend a new marijuana ordinance to council next month that would approve licenses for just four properties, three of which are owned by Yatooma.

Auburn Hills Mayor Kevin McDaniel and his economic development team declined to comment on the matter, and more than a dozen emails to members of the Auburn Hills City Council were not returned.

The events in Auburn Hills highlight the fractured world of marijuana licensure where the state allows unlimited licenses, leaving local communities with broad authority to develop their own purported competitive methods to dole them out. Expensive lawsuits against municipalities by motivated operators and their lawyers over those rules are common and, as is the case in Auburn Hills, the players in the marijuana space are more than willing to use all legal means to reduce competition and maximize profits.

‘Say Yes’ pushes

Yatooma and his associates set their sights on Auburn Hills last year as the state’s marijuana industry began to falter under product oversupply and plummeting prices — the grow side of the industry has quickly outpaced the retail side.

In January 2020, an ounce of marijuana flower retailed at an average of $512.05. Oversupply sank prices to an average of just $121.58 per ounce by July 2022, and marijuana companies were getting desperate, looking to open more retailers as fast as possible to have more outlets for product.

When there are limited locations to sell marijuana in a community, that holds potential to boost the value of real estate and marijuana operating licenses.

The city of Auburn Hills had previously banned medical marijuana businesses within its borders in 2010 and followed suit in 2019 for adult-use recreational sales as cultivation and retail operations prepared to begin operation in December that year.

In July 2022, Yatooma and associates created a ballot drive committee in several municipalities in the hope that voters would force city councils to welcome weed businesses.

Yatooma’s “Say Yes” committees cropped up in Sylvan Lake, Brighton, Farmington, Auburn Hills and other communities last summer.

According to reporting by the Livingston Daily, those associated with the ballot drives were Yatooma, under his Canna Zoned MLS real estate business; Joey Kejbou, an attorney who owns dispensaries under the names Consume Cannabis and Mint Cannabis Co. in Michigan, Ohio, Arizona and Illinois and processors in Michigan; Kerri Knipple, a real estate agent employed at Yatooma’s Canna Zoned; Benjamin Bayram, a former partner in the law firm of Yatooma’s brother, Norman Yatooma; and John Janiszewski, a senior attorney representing Yatooma and the Say Yes committees.

Ballot proposals had been successful in other Michigan communities that had previously banned marijuana, including a 2020 ballot referendum in the village of Pinckney.

The Say Yes to Auburn Hills Committee gathered the required amount of signatures and moved a ballot initiative to the election in November last year.

“… there was an overwhelmingly positive response to surveys that were sent out prior to the November vote so it’s clear the majority of people in the city wanted safe and regulated access to cannabis products,” Yatooma told Crain’s in an emailed response sent through his lawyers at Dykema. “Auburn Hills has a really strong business community and a large population. Auburn Hills is in the heart of metro Detroit and thousands of commuters come into and pass directly by the city on a daily basis, so this is all conducive to a strong retail business.”

But as Yatooma fought to legalize marijuana sales in Auburn Hills, he was also setting up to own a majority of the licenses in town.

The city’s new green zone, coincidentally, did not include any of the three properties owned by Yatooma, located at 1801 N. Opdyke Road, 2548 Lapeer Road and 2561 Lapeer Road, according to the latest information available from the Oakland County Register of Deeds.

Yatooma acquired the properties last year under three different LLCs.

A fourth property that qualifies, located at 2705 Lapeer Road, is owned by Green Pastures Land Co. It’s unclear whether that entity intends to be involved in the marijuana business in Auburn Hills. It’s also unclear whether it’s related to a Green Pastures Group LLC that is a co-owner of several Michigan growers and processors.

And that’s where the issue has stood for months.

But behind the scenes, Yatooma and his lawyers have pushed hard against the city, according to emails between Janiszewski of Dykema and city attorney Derk Beckerleg obtained by Crain’s.

In an email to Beckerleg on Nov. 14, Janiszewski urged the city council to reconsider its zoning ordinance as it violated the “will of the people.”

In that email, Janiszewski alleged the new ordinance violated the Michigan Zoning Enabling Act and potentially open meetings rules by not having a public hearing on the green zone. Janiszewski called into question the legality of the move by city council amending the ordinance.

“… the city council did not follow numerous procedural and substantive requirements for enacting a zoning ordinance …,” Janiszewski wrote in the emailed letter.

The lawyer demanded a meeting with city officials, who agreed to a Nov. 28 meeting at Auburn Hills City Hall. City officials copied on the email from Beckerleg were City Clerk Laura Pierce, City Manager Thomas Tanghe, Assistant City Manager Brandon Skopek and Steve Cohen, director of community development.

According to an email from Janiszewski, he planned to attend the meeting with Yatooma, Bayram and Yatooma’s other brother, Gregory Yatooma.

Gregory Yatooma, a Crain’s 20 in their 20s honoree in 2007 and self-employed attorney, holds licenses for grow operation Candid Inc. in several communities throughout the state.

When asked about his brothers’ operations, Yatooma told Crain’s: “I really have no idea what any of my brothers might own. We aren’t business partners and haven’t been for over four years.”

In a phone call with Crain’s, Gregory Yatooma said he was at the meeting representing a client, but declined to reveal who that client was.

And the contents of the meeting remain a mystery as Janiszewski sought to have documents Say Yes provided to the city officials at the meeting exempted from the Freedom of Information Act, which allows the public to access documents drafted and used by public employees and officials.

Handing over the keys

But in May, Cohen from the city’s community development office unveiled a plan to amend the ordinance to give four licenses to the three properties owned by Yatooma and the owned by Green Pastures.

It’s unclear whether a threat of a lawsuit was the impetus behind proposed change or why those properties were selected, other than they could have been the only four properties to meet the criteria set under the ordinance passed by voters orchestrated by Yatooma’s Say Yes.

When asked why the city is pushing those specific properties, Yatooma said he didn’t know.

“I couldn’t possibly speak to the city’s motivation, but I would like to think that the city is following the initiated ordinance and honoring all of the residents that signed petitions in favor of putting it to a vote and the nearly 5,000 registered voters that showed up and voted to pass it,” Yatooma wrote in the email to Crain’s.

Kevin Blair, partner and cannabis attorney for Detroit law firm Honigman LLP, said in an email to Crain’s that he’s confounded by why the city is pushing for near exclusive market access for Yatooma.

“While this certainly isn’t the first time that a cannabis company or real estate flipper has tried creative measures to stack the deck in their favor, what’s somewhat surprising here is that Auburn Hills so far hasn’t done anything to repeal the built-in monopolistic provisions, whereas other municipalities did so immediately,” Blair said.

If Yatooma receives licenses, it’s also unclear whether he would open dispensaries in the locations, become a landlord to another operator or sell the property and licenses — which would likely have an elevated value as he would control three of the only four available licenses in the city.

“If I am fortunate enough to get a license I would certainly explore all feasible options, but I think it’s premature to consider any plans at this point,” Yatooma told Crain’s. “I do think Auburn Hills would be the perfect place to operate a retail store and I would love the opportunity to be a long-term member of the community. I’m an entrepreneur at heart and I’m a supporter of the cannabis industry; I have seen the economic benefits that flow directly to communities, and I also firmly believe in the benefits of cannabis products. I have many friends and family members that use cannabis products for medicinal purposes as well, so providing greater access is important.”

Legal mania

Legal positioning has dominated the local municipal licensure arena since recreational marijuana went legal in late 2019. More than a dozen communities have been wrapped up in expensive lawsuits over their marijuana licensing and zoning rules, including Pontiac, Berkley, Royal Oak and Warren.

Under state law, communities are required to create a competitive process for handing out marijuana licenses if they are limiting the number. Some communities, like Auburn Hills, have used zoning rules to either limit the number of available licenses or simply eliminate the possibility of licensure.

“If a city attorney is paying attention at all, they’ll understand almost any ordinance they put forward will result in a lawsuit against the city,” Lance Boldrey, partner at Dykema, and Janiszewski’s colleague, previously told Crain’s. “They should also know they pay more for fighting the lawsuit than they could possibly earn in licensing fees or revenue sharing.”

Yatooma has been behind several lawsuits against municipalities, including suits against Birch Run Township and Say Yes’ lawsuit against Brighton last fall.

A circuit court judge ordered Brighton’s City Council to certify the ballot language brought forth by Yatooma’s group. Ultimately, the Say Yes ballot drive failed when 57.76 percent of voters in the community rejected the ordinance.

Yatooma also has a history of using creative ways to attempt to gain access to licenses. Beyond the ballot language gambit, Yatooma also reportedly took out a Craigslist ad in Chicago to recruit people negatively impacted by drug laws in Illinois to gain access to an equity license.

The ad, reported on by the Chicago Sun-Times and placed by Yatooma’s Canna Zoned, offered $2,000 to anyone that could prove they were eligible under the Illinois social equity license guidelines.

Canna Zoned offered another $20,000 if that person’s involvement led to a social equity license. A Chicago resident Edna Patterson, who had been a victim of gun violence, received $2,000 from Yatooma’s group to be listed as the majority owner on the application for an equity license. After the Sun-Times reached out to Yatooma and Canna Zoned, Patterson’s contract was terminated but she was offered a $400 referral bonus for others that could qualify.

MSY Capital Partners, another cannabis real estate firm that is run by Gregory Yatooma, gave a $75,000 loan to former Michigan House Speaker Rick Johnson when he was chair of the Michigan Medical Marihuana Licensing Board.

Johnson later voted to prequalify one of Gregory Yatooma’s companies, the Detroit News reported in April.

Johnson pleaded guilty earlier this year to taking bribes from Detroit businessman John Dalaly tied to his chairmanship of the now-defunct licensing board. No criminal charges have been levied against Gregory Yatooma or MSY Capital.

Council in the way?

The ballot language drafted by the Say Yes committee, which was ultimately certified by the city clerk in Auburn Hills, sets boundaries on who can get a marijuana license in the city.

The language reads: “The city shall allow marihuana activities only within a building located on a parcel in which the individual or entity to hold the state license to operate has a recorded interest and CRA pre-qualification status before 30 days after the ballot wording of this ballot question is certified to the county clerk …”

A recorded interest means direct ownership, a titleholder, or a mortgagee on a real property.

Basically, unless a motivated marijuana business or its representatives had control of a property prior to Sept. 9 last year, 30 days after the ballot language was certified, there was no chance of gaining access to a license in Auburn Hills.

Yatooma did not directly answer whether the language was intended to make him one of the only people to have a license under the ordinance.

“I believe this language requires a prequalified entity to have a recorded interest in a property … by a certain date,” Yatooma wrote in an email.

But prior to the election, the Auburn Hills City Council preemptively moved to adopt and amend its existing marijuana ordinance to create a new “green zone,” where marijuana businesses could be located. On Oct. 17, the council conditionally approved the ordinance if voters approved the Nov. 8 ballot measure — which they did with 4,870 voting to establish the new ordinance and 3,653 voting no.

Dustin WalshMay 12, 2023


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

Lawyers entangled in the court-ordered receivership of Lansing marijuana giant Skymint continue to battle over the company’s finances.

The alleged trouble stems from Skymint‘s $78 million acquisition of Birmingham-based competitor 3Fifteen Cannabis in April 2022.

Skymint, which primarily operates under the parent company of Green Peak Innovations Inc., owes more than $127 million to Canadian investment firm Tropics LP tied to the acquisition. Tropics has since come on as the primary funder of operations as Skymint works through receivership. But the minority lender in the acquisition, New York-based cannabis investment firm Merida Capital Holdings and a majority shareholder in 3Fifteen, is challenging whether its stores should be involved in the receivership at all.

Its lawyers have sought on several occasions to disjoin the company from the court-order receivership, despite the acquisition closing more than a year ago.

In the days prior to Skymint entering receivership, 3Fifteen Cannabis retook control of several stores acquired by Skymint, including dispensaries in Hamtramck, Grand Rapids, Camden and two in Battle Creek, according to court records.

But the circuit court judge in Ingham County ordered 3Fifteen to cede control back to Skymint, according to court records, as well as return control of bank accounts with nearly $500,000 in funds to Skymint.

Lawyers for Skymint and the receiver argued in a court hearing last week that 3Fifteen had not returned the bank accounts and should be held in contempt of court. 3Fifteen’s lawyers argued the order should be reversed and control of those stores and accounts should remain in 3Fifteen’s control.

“(The March 29 order) … required a return to the status quo, required return of money that was improperly taken, and so if you were to enter a stay of that March 29 order, it would reignite the chaos and the smash-and-grab tactics that we sought this court’s intervention and protection for,” David Dragich, partner at The Dragich Law Firm PLLC and attorney for the receiver in the case, argued in the hearing to the judge.

According to arguments in the hearing, 3Fifteen had used more than $600,000 from the accounts in question at Live Life Credit Union to pay leases and payments linked to the acquisition.

“What we want from the stay pending appeal is these locations to be shut down,” Max Newman, partner at law firm Butzel Long and attorney for 3Fifteen, argued in the hearing. “Smash-and-grab is what the other side is doing, and particularly how we see Tropics and Skymint. These operations under Skymint’s management, and I’d call it mismanagement, are losing hundreds of thousands of dollars a month …”

3Fifteen and Merida accused Skymint’s former CEO Jeff Radway of several misdeeds, including using the company as his personal piggy bank in several extramarital affairs. Radway left the company on an “indefinite leave of absence” on April 7, according to an email to employees from Jeff Donahue, Skymint’s executive vice president and general counsel, that was obtained by Crain’s.

The Ingham County judge, however, did not buy into 3Fifteen’s claims that it should be separated from the receivership or authorize an appeal in another court and refused to reverse the March 29 order, according to the transcript from the May 3 hearing.

“The March 29 order restored the status quo and, again, 3Ffiteen isn’t asking for a stay that would just stop this case from proceeding, they’re asking to reverse parts of the March 29 order,” Judge Joyce Draganchuk said in the hearing. “So I think in balancing harms, there would be greater harm in granting the stay than in not … in my view, businesses should not be thrown into upheaval and the order appointing a receiver and the March 29 order stabilizes the businesses and allows them to continue in smooth operations.”

And with that, the judge denied 3Fifteen’s request. The judge also denied 3Fifteen’s request to enter arbitration over the purchase agreement with Skymint.

The plaintiff and defendant lawyers also argued over the $600,000 in funds 3Fifteen took from accounts to pay itself and expenses for the operations it believes it controls.

3Fifteen’s attorneys argued those expenses needed to be paid and the receiver would have done it anyway. The receiver’s attorney disagreed.

“It’s like robbing a convenience store and saying, ‘Well, we paid the wages of the employee because we gave the guy a $100 on the way out the door,'” Dragich said. “You don’t get to make that decision. You’ve taken the money from the receivership estate and all we’re asking for, again, is that those funds be returned and they be returned promptly.”

3Fifteen’s lawyer, Newman, argued the use of those funds was done because the order appointing a receiver was “ambiguous, vague, overwrought, verbose.”

Judge Draganchuck reminded Newman her signature was on that order.

“I know but it’s got typographical errors in it, misuse of apostrophes, literally repetition of the same phrase twice in a row that suggests that nobody proofread that order and the reason nobody proofread that order is, quite frankly, it’s unreadable,” Newman replied.

The judge ordered 3Fifteen to repay the more than $600,000 to Skymint, including the repayment of $375,000 within 24 hours of the May 3 hearing and the remainder by May 17.

The judge, however, declined to hold 3Fifteen in contempt of court over the ordeal.

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